Distribution adapts to new global market needs

Author : Dean Hassell, Arrow Electronics

29 March 2016

Anyone who has had any involvement in, or with, the electronics distribution channel in the past decade will know that it has changed significantly. The first word that will spring to most people’s minds is the Internet because, of course, that has affected everything in our lives. 

Any business activity that involves researching, buying and selling products and services has been impacted by online developments, but it would be wrong to think that this is the only major change to affect the distribution sector.

The global nature of the electronics industry, in terms of suppliers and customers, and the associated standards, approvals and logistical issues leads to an inherent complexity. This must be negotiated before a company can get to the activity in which it is a specialist – namely, creating and supplying its own product. Because of this situation, some distribution companies have evolved to meet the more holistic needs of manufacturers. It is not just about price and delivery anymore.

The complete lifecycle approach

Arrow Electronics has taken an approach that offers services for the complete product lifecycle. The aim of this is to simplify the whole product lifetime process – enabling companies to concentrate on their own differentiators – and gain flexibility, scalability and reliability, regardless of the changing market conditions they encounter. 

Product developers have always had to master design, test, production and shipment. Today they must also deal with ever-reducing new product development cycles, multiple international regulatory regimes, more stringent environmental requirements, and the necessity to retain responsibility for many products long after they have left the factory gate. It is a lot to manage, and many manufacturers would prefer to outsource some or all of these responsibilities, allowing them to concentrate on their own specialties. This has opened up opportunities for support companies. Of these, distributors, with their knowledge of underlying components and logistics, are well placed to assist.

Arrow’s technical expertise and international logistics organisation have made it a good match for the operations and traditional needs of global manufacturers. More recently, the company has expanded its competencies beyond design and production to also cover reverse logistics and end-of-life services. This has been part of an overall plan to serve the comprehensive needs of electronic product makers.

The strategy has several strands: first, strengthening internal resources through training and recruitment and focusing them on specific technology or vertical market sectors has enabled Arrow to provide high-quality expertise to support design and specification; secondly, working closely with third-party hardware and software experts has led to the creation of bespoke development platforms that can help to accelerate projects and reduce time to market; and, thirdly, a series of acquisitions has allowed Arrow to very quickly establish a strong range of service offerings in areas such as obsolescence management and value recovery. Lastly, but linking together all the other advances, is a process of digital transformation that adds to, and magnifies, the benefits of the other changes. 

Design support & application engineering

The Arrow engineering team provides unbiased guidance and system-level analysis on specific applications to help at each stage of product development. Local Arrow field application engineers not only serve as a regular single point of contact, but also help customers with technical resources aligned to their end markets. Component suppliers generate many resources, and Arrow’s TestDrive programme allows customers to select from hundreds of supplier and third-party development tools and try them free-of-charge for 28 days in order to help make the best decisions. 

However, as new application areas emerge and gain momentum, companies want to short circuit the development process and get to market quicker by getting a head start in their designs. Recognising this, Arrow works with design houses to create its own reference designs and plug-and-play hardware modules that help designers to fast track new projects into prototypes and on to production (Figure 1). Existing solutions available include LED lighting, embedded networking, energy harvesting and a multifunction development board for the Internet of Things (IoT).

The Arrow SmartEverything IoT board

The Arrow SmartEverything IoT board helps to reduce design cycles and development times, allowing users to rapidly connect to, and control devices through, the Internet (Figure 2). It offers a wide range of sensor and communication interfaces and enables simple, low power, low-cost connection to the Cloud. Based on the popular Arduino form factor, Arrow SmartEverything incorporates sensors for proximity, humidity, temperature and acceleration. The board also includes a SIGFOX module and GPS with antenna for localisation. SIGFOX’s ultra narrow band radio technology requires very low energy usage and UNB devices operate within globally available licence free ISM frequency bands.

As well as providing hardware and software development tools (and online specification tools), distributors are also increasingly offering hands-on engineering support. Arrow’s power solutions team, for example, provides a portfolio of value-added services. These range from the simple – adding cabling and connectors to a standard power supply; to the demanding – creating a custom power solution for a challenging application. The in-house capabilities for 3D modelling of PCB layouts and mechanical designs, thermal analysis, and prototyping would certainly not have been expected within a mainstream distributor a few years ago. The same applies to the ability to conduct and advise upon testing for regulatory approvals in the areas of EMC, safety, thermal, shock and vibration. 

Production and beyond

It may not come as a surprise that the level and sophistication of design support available through the distribution channel has increased dramatically in recent years. What is less expected, perhaps, is how integral distributors have become to the production process. Production is a major component of Arrow’s lifecycle services portfolio, addressing all aspects of the supply chain, logistics and value-added services. The benefits of having a single supplier providing both the parts and customisation before delivery include simplified ordering processes and lower overall costs. 

Device programming is one service that has proved extremely popular for Arrow. It allows customers to realise cost and process benefits by taking ownership of customised parts only after their own specific code has been loaded. Over 25,000 component types can be programmed in a wide range of batch sizes and on very short lead times, if required. These parts could come from the customer as well as from Arrow’s suppliers. Connector assembly is another growing area, both for industry-standard and custom connectors that are commonly used in rugged and high-reliability markets.

However, as many manufacturers appreciate, the story does not end when a product is shipped out. The requirements to support aftermarket services, including the supply of spare parts, handling of product returns and management of end-of-life strategies have opened up a host of new opportunities for distributors such as Arrow. 

Digital transformation

As mentioned earlier, the rise of online selection and purchasing resources has been the most visible change in the distribution space in recent years. For instance, Arrow launched arrow.com – an online platform designed for buyers and engineers that goes far beyond pure online purchasing. The multilingual website help users find their electronic components by searching millions of parts from hundreds of suppliers, using comprehensive features such as product selectors, cross referencing and Bill of Material capabilities.

This has been, and will continue to be, a defining element in the way in which the distribution sector can increase service levels to the electronics industry. But we should not overlook the fact that an equally important transformation has been taking place in the range of services offered by distributors and that this will have equally significant effects on the efficiency and performance of electronics manufacturers.

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