Engineers, buyers need the independent channel

Customers rely on the independent channel, but they must take care in choosing the right distribution partner

Since the beginning of 2013, customer demand within the independent distribution channel seems to be on a steady rise. All signs are pointing to a healthy year of growth, and the results of a recent survey seem to support this.

Penton's Design Engineering & Sourcing Group recently surveyed design engineers and purchasing managers in the United States and asked how many of them purchase electronic components on the open market. An overwhelming 51% of the respondents answered “yes,” compared to just 39% who answered “no.” This particular question illustrates just how many original equipment manufacturers (OEMs) use the independent channel and that the engineering community has embraced it.

The survey also tells us that customers cannot—and do not—rely on franchise distribution alone. To keep their production lines running, customers must partner with independent distributors. Authorized distributors cannot service all the potential customers in a $300 billion semiconductor industry. In addition, OEMs, original component manufacturers (OCMs) and electronics manufacturing services (EMS) companies need a distribution partner that can help them reclaim revenue on excess inventory. It is estimated that 80% of the top contract manufacturers work with independent distributors in some fashion, so there is an obvious need for independent distribution. The key point is that customers must carefully vet and approve a preferred list of independent distributors. And they need help doing this.

In the same Penton survey, 54% of respondents said they need help identifying quality sources of supply in the open market. This, again, supports the need for independent distribution. Although they need the channel, customers also indicate that they require guidance in finding reputable distribution partners.

Successful independent distributors aren’t successful by luck. They spend years building their brand, refining their business, and earning their customers’ trust. Look to these large, experienced distributors when seeking a reliable partner. America II Electronics has been around for 24 years, for instance, and over the past several months the company has seen an increase in customer demand first-hand.

As its OEM base continues to grow, America II is growing as well. As one example, the company has grown its sale force—increasing it by 30% in the United States and expanding in Europe, Asia and Japan as well, bringing the total number of worldwide sales representatives to more than 200. America II also has added resources to its component engineering team and employs 59 IDEA ICE-3000 certified professional inspectors, one of the largest teams in the industry. The company is expanding its global presence in Latin America and Asia, as well.

America II’s Blended Distribution℠ model is another example of how the independent channel is changing.  Originally established as a supplier focused on the distribution of hard-to-find parts, America II continues its transition to a new model that blends the best traits of independent and authorized distribution.  While continuing to source from an approved list of more than 4,000 suppliers, America II is also forming new direct relationships with component manufacturers and regularly adding franchised lines to its product offering. In today’s economic environment, a blended model offers customers the best of both worlds: the value of direct relationships with independents’ flexibility, cost-savings and ability to find hard-to-source or end-of-life components.

Though customers clearly indicate that they need and use the independent channel, it’s critical to emphasize the importance of selecting the right distribution partner. Customers must carefully research and choose partners who have the credibility, experience and resources to help them succeed.

Anton Wurr is marketing director for Florida-based America II Electronics, one of the world’s largest independent distributors of semiconductors and electronic components.

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