When industrial equipment breaks down, companies have to source replacement parts as quickly as possible to avoid squandering profits. Now Electrocomponents, the owner of electronics distributors Allied Electronics and Automation and RS Components, is targeting that secondary supply chain with new maintenance, repair and operations services.
The company is getting a helping hand from its recent acquisition of IESA, which offers value-added services in sourcing, transaction processing and inventory management. Electrocomponents, which recently reported revenues more than $2.2 billion in 2017, up 12.8 percent from the previous year, acquired IESA for £88 million, or around $117.2 million.
IESA, which is based in the city of Warrington, England, helps customers to improve efficiency and consolidate their indirect vendor base through a cloud marketplace, MyMRO, which lists thousands of component vendors and allows customers to integrate invoices for all transactions, helping to manage costs. Customers can integrate the marketplace into their own systems.
The acquisition of the fee-for-services business gives Electrocomponents more ways to help customers that outsource sourcing and inventory management for maintenance and repairs. The company, which operates in 32 countries, could also give MyMRO, which primarily supports manufacturing, assembly and process customers in the United Kingdom, more international play.
“The acquisition of IESA will improve our value-added services proposition, significantly enhancing our offer for customers,” said Lindsley Ruth, chief executive of Electrocomponents. “We believe the combined digital capability of IESA and Electrocomponents is a market differentiator and will greatly enhance the experience we can offer our customers and suppliers.”
IESA will operate as a separate division within Electrocomponents. Over the last year, the company reported service fee revenue of around $33.3 million and $9.3 million in profits, while more than $200 million of inventory passed through its hands. The scale of Electrocomponents could help its new business unit, which has more than 27,000 suppliers, including RS Components, grow more quickly.
The acquisition was announced Thursday as Electrocomponents reported its annual financial results. Last year, the company, which makes around 60 percent of its revenue online, reported sales of £1.7 billion, or around $2.27 billion, up from £1.51 billion. Profits were £177.1 million, or around $235.8 million, as the company’s margin fattened up from 8.8 to 10.4 percent.