Distributors Evolve Beyond The "Component Store" Tag

May 26, 2005
The days of just "order and ship" are long gone. Distributors' value-added services make them a trusted partner in the design process.

Designers know where to turn when they need parts. Distributors have provided the nuts and bolts of OEM designs for decades. But now, it's not just about supplying parts. Today's distributors also offer value-added services that smooth the path from concept to manufacturing.

In the past, distributors mainly provided simple fulfillment services, delivering components to customers when needed. But new challenges and requirements have altered the playing field: shrinking product lifecycles, increasing product variety, multiple design and manufacturing partners, mounting global competition, and environmental compliance. The simple order-and-deliver model no longer meets designers' changing and complex needs.

Because design engineers must be more productive with fewer resources, many rely on distributors' value-added services at various design cycle stages. Examples of service span a wide range, from simpler tasks like part labeling and kitting to technical support and inventory control. Though distributors always offered some assistance in component selection, their deeper-than-ever well of resources helps designers make optimal picks.

Design engineers do need the assistance. A 2004 Electronic Design reader-profile survey asked participants to list the professional issues that kept them up at night. Almost a quarter (22.5%) of the engineers surveyed stated "specifying the right products/ vendors for my design." Almost half (49.8%) indicated "staying current with new and emerging technologies," while 24.4% listed "component availability issues." On a scale of one to 10, 44.3% of respondents rated finding the optimal component for their designs an eight or higher as a pressing problem in their work. Distributors' value-added services address these issues that plague today's stressed designers.

"I've been with Avnet Electronics for 25 years," says Greg Frazier, executive vice president for Avnet Electronics Marketing. "I've seen Avnet evolve from primarily picking and packing products from off the shelf to offering value-added services to providing solutions in collaboration with designers."

Distributors have worked hard to determine what assistance their customers need during the various phases of their product design cycle. "Customers require different technical services at different times," explains David West, vice president of marketing and design services for Arrow Electronics. "It's important to offer value throughout the entire process."

For example, distributors help with component selection early in the design cycle, deliver technical support during design, and offer inventory control during manufacturing. As a result, OEMs increasingly turn to distributors to help with tasks they used to handle in-house.

Distributors' rosters of services began to expand rapidly in the mid-1990s. Their service options have grown to a point where they're now often the distinguishing factors between distribution organizations. Though some value-added services are free of charge, most have an attached fee.

Early on, distributors can help in the conceptual phase of design. By considering cost, availability, and performance factors, they can optimize a designer's component choices. In addition, distributors can inform design teams about new and emerging technologies or about products that add previously unknown functionality or actually exceed the goals set forth by the engineer.

Many distributors employ application engineers to help with up-front component selection. Such engineers, trained by component manufacturers, can provide excellent support to designers who need to find the best-suited parts for their product design. Once designers define their product, distributors can present them with a list of parts that will meet or exceed their design goals.

For example, Arrow Electronics Inc. offers ArrowEDGE. This brochure highlights the new leading-edge products from Arrow's suppliers. It's customized with 40 to 50 parts that are appropriate for a given customer's particular market and design projects. Issued several times each year, the brochure gives designers a rundown of what's new in the industry.

DISTRIBUTORS IN CYBERSPACE While application engineers are available to help designers choose components, another critical resource is at their disposal 24 hours a day, seven days a week. Distributors' Web sites have become a vital tool in the part-selection process (see "Web Tools Foster Design Collaboration," p. 54).

Rather than sifting through potentially outdated catalogs, designers now have up-to-the-minute information at their fingertips. Catalogs are online, and many have parametric search capabilities. Designers can search for parts and check pricing and availability. Many distributors also link to manufacturers' Web sites, leading users to datasheets and application notes.

Further down the development cycle, distributors offer varying levels of technical support to help complete the design. Jeff Shafer, senior vice president of products at Newark InOne, explains that "technical support has become more vital as the sheer number of components across all product categories has grown, along with the associated complexity of component specification." The company's team of engineers helps designers with application and product questions, either through live chat on the company's Web site or by phone.

Just about all distributors maintain field application engineers (FAEs) on staff to aid designers with sticky problems. Arrow Electronics employs 150 FAEs in North America and more than 500 worldwide. Arrow's FAEs possess hands-on design experience, engineering expertise, and industry knowledge through continuous technical training from parts suppliers.

Arrow takes the FAE concept a step further through its Arrow Consulting Engineering Services (ACES) program. Arrow ACES matches customers with certified third-party design-services organizations. These firms are pre-screened to ensure they can help with specific design issues outside the customers' core competencies.

There's been a shift in the types of services engineers want from distributors. "Customers now turn to us for product development and design support because of our technical resources and knowledge," says Mike Doty, director of service operations at Avnet Applied Computing Solutions. "Today, we provide consultation and recommendations on the systems for their applications."

Distributors bring a great deal of expertise due to their close relationships with suppliers. Avnet Applied Computing Solutions, for example, has in-depth knowledge of suppliers such as Fujitsu, Intel, Intermec, Motorola, Nokia, NEC, Seagate, Sharp, and Symbol. It also offers insight into these suppliers' product roadmaps, which better equips them to help engineers plan their products' lifecycles.

Thanks to their tight relationships with suppliers, distributors are in a good position to provide designers with continuing education in the form of design seminars and workshops. Avnet's customers can sign up for workshops and seminars that will let them test-drive real hardware and software. They also can learn more about design alternatives and tradeoffs for targeted applications. The seminars are an opportunity for customers to request technical assistance from Avnet's application engineers as well.

Arrow Electronics offers its Arrow Technical Seminar Forums (ATSF). Like a barnstorming road show, this series of seminars travels to numerous cities to bring expertise on specific technologies directly to customers. In 2004, Arrow staged motor-control events in 16 North American cities. This year's ATSF series will focus on wireless system design.

Another Arrow program, called Testdrive, affords customers easy access to development tools by putting suppliers' evaluation boards in their hands for a short trial period. In stock at Arrow, these boards are shipped immediately to customers who want to evaluate a product before committing to it.

It can be a challenge for designers to round up all of the various development tools required for a system-level project. Arrow's new site, www.Arrowdevtools.com, provides easy access to hard-to-find development tools from a wide variety of vendors and semiconductor manufacturers. The site finds tools related to devices such as microprocessors, DSPs, FPGAs, CPLDs, and much more.

DESIGN TO MANUFACTURING Once the design is complete, distributors offer value-added services that help manage the manufacturing phase of the product design cycle. These range from delivery and logistics to product customization, to assembly and programming services.

Most distributors offer online ordering and order tracking. Newark InOne not only has online ordering, it also can connect to any eProcurement system. Its dedicated eProcurement team works closely with designers before, during, and after implementation. By embedding its electronic catalog into a customer's purchasing system, the administrative costs ($40 to $70 per transaction) associated with processing purchase orders, invoices, and payments are eliminated.

Not every engineer wants or needs to engage a distributor's sales force directly. Online ordering facilitates those occasions when a little impersonality is in order. Symmetry Electronics' Web site, www.semiconductorstore.com, is set up to provide quick, easy answers to customers' questions regarding technical information, cross references, inventory, leadtimes, and pricing.

"While a lot of customer communication is done face to face, we have found that the Internet provides an informational tool," says Avnet's Mike Doty. Avnet offers an online service that enables customers to review their bill of materials (BOM), determine the production status of their system-integration project, and manage their ordering process.

Inventory management is an important part of the value-added services. Newark InOne's Stockroom Solutions program ranges from on-site personnel to periodic inventory scans that trigger replenishment. Either way, the company relieves designers from managing their stock and lets them focus on design or maintenance responsibilities.

Like many distributors, Newark InOne offers a variety of just-in-time (JIT) inventory programs tailored to customer needs. These can be as simple as scheduled orders or as sophisticated as Kanban replenishment. One of the primary tools of a JIT system, Kanban signals a cycle of replenishment for production and materials. It maintains an orderly, efficient flow of materials throughout the entire manufacturing process.

Many inventory services revolve around making customers' supply chains more efficient. For example, Avnet's Supply Chain Services arm combines expertise in global warehousing and logistics, finance, information technology, and asset management with objective, external industry-wide data.

With the advent of global, distributed manufacturing, it's becoming harder for OEMs to manage inventory efficiently. "Supply-chain management has emerged over the last couple of years as one of the hottest services distributors offer today," says Robin Gray, executive vice president of the National Electronic Distributor Association (NEDA), a nonprofit trade group.

Even when customers don't buy their parts from a particular distributor, that distributor can manage its inventory to ensure that the right parts get to the right factory at the right time. It can supply regular reports showing inventory status at each facility.

On its Web site, NEDA offers a Supply Chain Savings Calculator tool, developed in collaboration with Texas A&M University. The tool uses a supplier's or customer's own data to determine supply-chain costs and compare them to distribution costs. It shows that a broad-line semiconductor supplier can save from 25% to 64% of a product's total cost by using an authorized distributor. Also, it helps customers and suppliers dynamically measure their individual supply chain and distribution costs to determine the most efficient strategy for getting their products to market.

SKIRTING OBSOLESCENCE A BOM with near-obsolete components can create real headaches once the design reaches full production. Avnet Electronics Marketing's Prómiere online tool enables designers to make their products more supply-chain-friendly. With Prómiere, designers can create BOMs that exclude components nearing their end of life.

Besides inventory control, distributors' back-end-oriented services include custom enhancements to products and assembly services. Enhancements can cover bar coding, kitting, tape-and-reel setup, package modification, and more. Services such as bar coding improve manufacturing efficiency. Assembly services can include custom connector, switch, and cable assembly, along with quality assurance testing for the resulting assemblies. Printers, LCDs, and interface modules can be custom modified.

One broad-line distributor, Jaco Electronics, operates a flat-panel-display integration center that creates customized display products. Jaco provides design help with display contrast ratios, brightness levels, sunlight-readable LCDs, and more. It's not uncommon for LCDs and flat panels to require modification to fit specific applications, and Jaco offers the flat-panel expertise that may not reside with the design team.

Jaco is developing a dedicated flat-panel product Web site separate from its corporate site at www.jacoelectronics.com. Navigation between the two will be user-friendly. On the flat-panel site, designers can access such resources as product specifics and design information.

Another important distributor service centers on programming of parts with customer-provided code. Programming services save time for overextended design teams and manufacturing facilities. For instance, Arrow Electronics offers programming centers in North America and around the globe. These centers help customers program nonvolatile memories, microcontrollers, complex programmable logic devices, and FPGAs.

HELP WITH COMPLIANCE Some distributors offer services related to the compatibility of products with each other, as well as compliance with industry and global standards. Avnet Applied Computing Solutions can test components of embedded systems to ensure interoperability. Thanks to its relationship with Underwriters Laboratories, Avnet can help guide customers through the UL certification process while providing assistance on compliance issues.

Many OEMs design products for global consumption, which means keeping an eye on international restrictions. With the Restriction of Hazardous Substances (RoHS) legislation in Europe, electronics companies must eliminate several toxic substances, including lead, from components by July 2006.

"RoHS compliance management is now at the top of the list of requested services," says Jeff Shafer, senior vice president at Newark InOne. "We, too, consider RoHS our number-one priority, and we'll continue enhancing our RoHS-compliant offerings and services."

Newark InOne has launched RoHS Express on its Web site at www.newarkinone.com, which serves as a central source for critical RoHS information and compliant products. Along with the latest "green" news from Europe and North America, the site features a step-by-step guide to RoHS compliance.

To help customers comply with green electronics initiatives, Arrow Electronics is taking to the Web with its Environmental Compliance Research Center at www.arrow.com/green/ (see "Distributors Help Designers Go Green," p. 52). This site covers RoHS, but it doesn't stop there. It also provides a wealth of information on the European Union's Waste Electrical and Electronic Equipment (WEEE) initiative. This covers the recovery, sorting, treatment, and recycling of electronic equipment, as well as two California green initiatives, SB 20 and SB 50. The site includes seminars, FAQs, links to regional compliance sites, online videos, and relevant news and updates.

Distributor services aren't a static entity. Instead, they're a constantly evolving field that reflects distributors' attention to their customers' wants and needs. Design has become decoupled from manufacturing, and both processes have gone global in scope. At the same time, time-to-market pressures, product complexity issues, and a deficit of resources keep design teams in a perpetual bind. Engineers depend more on distributors to provide support at all levels. Distributors will continue to provide value to the design community with services that meet their needs throughout the design and manufacturing cycles.

NEED MORE INFORMATION? Arrow Electronics Inc.

Avnet Inc.

Jaco Electronics


Newark InOne

Symmetry Electronics

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