Avnet's Ed Smith: The opportunity in efficiency
Ed Smith, president of Avnet Electronics Marketing Americas, discusses the challenges and opportunities presented in this economic climate to components distribution and the role of efficiency in addressing them.
By Suzanne Deffree, Managing Editor, News -- EDN, April 14, 2009
Promoted to president of Avnet Electronics Marketing Americas in February, 20-year-plus electronics industry veteran Ed Smith had, for the five years prior, led the Avnet's Electronics Marketing Americas sales team as its senior VP. The freshly promoted executive recently discussed with Electronic Business the challenges and opportunities presented in this economic climate to components distribution and the role of efficiency in addressing them. What follows are excerpts of that conversation.
Electronic Business: What do you see as your group's biggest strength right now?
Smith: We are a battle-tested group. We've been around a long time. If you look at the seniority on the staff, I'm probably the least senior with 14 years at Avnet. Everybody else has much more significant time at Avnet. We're well known by customers, we're well known by suppliers, we're pretty consistent with how we go to market. It's really the seniority and consistency in what we give.
Electronic Business: The economic downturn is the obvious challenge right now. No one is immune. In fact, Avnet in March lowered its quarterly revenue guidance citing weaker sales in the Americas and EMEA regions. How are you going to address that going forward?
Smith: It's like anything: We'll continue to address the markets that we think there is growth potential in. So the medical and military market, we'll continue to put resources in there. Elsewhere, we will try to get more efficient in the markets that are taking the biggest drops. We'll model our business around where the business is today, instead of where it was a year ago. A year or two ago, you could afford for investments in markets that were up and coming. Today you need to focus on the markets that are a little more mature, which are the medical and military, instead of going after adjacent markets that are a little less mature.
Electronic Business: What about the LED market? That's still emerging, but it has a lot of potential.
Smith: It is still emerging, but for Avnet it's mature in some portions. The sign guys are pretty mature. I think the part that's emerging is more of what I would call public lighting -- light fixtures, those types of things. And we have a dedicated team of people in the field focused on what I would call adjacent markets. They hadn't traditionally been distribution customers -- they had a bulb, a cord, and a fixture -- but today they need electronics to drive the LEDs. It's really training and getting the right products into those customers hands and showing them how to use the heat sinks and the electronics to control the LED lights. That's an exciting market for us. I think that will continue to grow no matter what happens in the market place.
Electronic Business: Have relationships with suppliers and customers changed at all in the last few months?
Smith: Customers in a downturn ask us to do more for them, both on the design-chain side and the supply-chain side. They don't want to hire more people to do design; they want us to do more of that. And on the supply-chain side, they want us to act a little bit more like a bank and do a few more things: hold some more inventory, be a little more flexible, they want better terms. Clearly, for customers there is more of a reliance on the relationship. There is also some opportunity that's changing. As the OEMs get more efficient and cut some of their sales force, some of those direct customers become distribution customers. So there's some better opportunity there, no doubt about it. You asked about change and suppliers. We are a variable field sales force for them. Some of them are asking us to do more for them and call on more customers for them. Our job is to be more efficient for them than them having a direct sales force.
Electronic Business: How are inventory levels looking?
Smith: I think the big difference between now and 2001 is inventory levels. First of all, we reacted much quicker than we did in 2000/2001. The inventory levels are much more appropriate for the market. The market moved quickly so the inventory levels are probably not in perfect shape, but they are no where near where they were in 2000/2001. We are burning it off much quicker. We are able to react quicker. We are [better] tied in to our suppliers. I think a lot of the supply-chain inventory is still in die banks, so it's not finished product on the shelf.
Electronic Business: Have you noticed any changes to order patterns from the Americas overall in the last few months?
Smith: We call it "30-day window." People are ordering closer in the 30-day window. Where they would give us much more visibility out, with six months being pretty standard, customers are giving us a lot less visibility and asking us to react much quicker to actual demand. Customers forecasted more [before] and today they are buying to actual demand.
