Q&A with Digi-Key: European market update
01 July 2022
Digi-Key PDC Expansion
2022 is already well on its way to being another strong year for the electronics distribution sector, despite tight supply from component manufacturers & continued supply chain disruptions. In this Q&A, EPDT talks to Ian Wallace, Digi-Key VP of Americas & EMEA Business Development, who provides an update on how the firm is faring in 2022, what he's looking forward to & new developments that electronic component distributor, Digi-Key is working on to better serve customers…
This Q&A was originally featured in EPDT's H2 2022 Electronics Distribution supplement, included in the July 2022 issue of EPDT magazine [read the digital issue]. And sign up to receive your own copy each month.
Q: How has 2022 started for Digi-Key?
A: It has been a very busy year – as busy as last year, if not more so. We wrapped up 2021 growing faster than Digi-Key has ever grown in its history – we had a 65% growth rate last year.
Through the first quarter of 2022, every single transaction driver of the business for Digi-Key was high. Our bookings are up more than 25% over last year, as is quote activity, shipments going out the door and customers searching the website. By every measure we look at, we are just as busy, if not busier, than last year.
Q: What are your observations & predictions for the rest of the year?
A: Our key observations are that customer demand remains extremely strong across all industries and verticals, and we expect that to continue throughout this year and into 2023, as customers catch up, and then perhaps build some safety stock. Specific components still remain a big challenge, however.
DKE PDCe automated conveyors
Gradually, we’re seeing some lead time trends improve from some suppliers; however, within semiconductors, lead times for many components remain at 40+ weeks.
While keeping inventory in stock is still a challenge, it is stabilising. In March 2022, we received the most product that we have ever received in the history of the company, and Q1 2022 was the highest receiving quarter we’ve ever had, so we are making meaningful progress on continuously increasing our inventory.
Q: What challenges are you anticipating & addressing this year?
A: We’re very fortunate to have suppliers that understand the importance of getting product to the engineers and makers that Digi-Key serves. Inventory flow is the biggest challenge for us, and there are a lot of commitments we’re doing our best to keep.
We’re trying to keep commitments to our customers that we’ll expedite and get product from suppliers as quickly as possible. We’re trying to keep commitments to our suppliers that our forecasts are accurate and customers will purchase the inventory and not cancel orders. And we’re also focusing on our commitment to our employees to keep them safe and healthy, both our people on-site, and those working remotely.
The biggest challenge we’ll face this year is keeping those three big promises – and if we can do that, we’ll have a fantastic year!
Q: Is any Digi-Key business at risk with the conflict happening in Eastern Europe?
A: It’s heart-breaking to see what’s happening in Ukraine right now. Our first thoughts are with family members and friends, as well as some former colleagues that we have who are impacted by Russia’s invasion of Ukraine. We stand with the people of Ukraine and are eager to see de-escalation soon.
From a business standpoint, it’s been a very low impact for Digi-Key. We do not have any employees living in Russia or Ukraine, and prior to the Russian attacks on Ukraine, Digi-Key was doing relatively little business in Russia, due to compliance policies.
The biggest thing we’re monitoring is the supply chain. We already have a stressed supply chain, and this certainly will add more pressure. With the associated impact on rail traffic and shipping traffic, we’re monitoring to see what impact it will have on raw materials and logistics.
Q: What industry trends are you most excited about in 2022?
A: Digi-Key’s mission is to enable the world’s ideas – and that comes from the innovations that engineers and makers are dreaming up every day. Sometimes we get to see what they’re working on months, or years, before it even hits the market. That’s what I’m most excited about.
Our customers design all types of products, and some hot areas we’re seeing right now are in climate mitigation (including renewable energy and electric vehicles), automation & control, healthcare, robotics, smart devices and IoT (internet of things). All those things are not only inspirational, but they’re heavily dependent on the parts that we stock.
We feel very fortunate to be at the centre of the innovation that’s happening around some of these emerging technologies!
Q: What is new coming up this year?
A: This year, we are opening the doors to our brand-new, 204,400 square metre Product Distribution Centre expansion (PDCe), which will dramatically increase the amount of space we have to store product – and it’s also highly automated to decrease turnaround time and increase order fulfilment to customers same day.
Right now, we’re in what we call our soft launch, and we expect it to be fully operational in the coming months. Since Digi-Key stocks millions of parts, we’ll be spending the next 18 months repopulating the inventory to the new PDCe, which is right across the street from our existing facility in Thief River Falls, Minnesota in the US.
Ian Wallace, Vice President, Americas & EMEA Business Development, Digi-Key Electronics
Q: What are you most looking forward to this year?
A: I’m really looking forward to having a greater ability to travel and meet more people in person – meeting with fellow colleagues at Digi-Key, spending time with customers, spending time with our suppliers, as well as attending trade shows and events. You just gain so much more when you’re there in person.
As long as COVID cases remain relatively low, Digi-Key is returning to in-person events, so we’re looking forward to being very active in the events that happen this year. Overall, it’s the return toward a sense of normality, having an increased amount of inventory from our suppliers and therefore having more product in stock for our customers and attending the in-person events.
About the author:
Ian Wallace is Vice President, Americas & EMEA (Europe, Middle East & Africa) Business Development for Digi-Key Electronics. Digi-Key is both the leader and continuous innovator in the high service distribution of electronic components and automation products worldwide, providing more than 10.9 million components from over 2,300 quality name-brand manufacturers.
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