Gerry Fay takes on the role of global president at Avnet Inc.’s Electronics Marketing (EM) group at an interesting time in distribution’s history. The rampant consolidation of the 1990s has tapered off; offshoring has been around for a few years; and electronics continue to proliferate in new applications and new markets.
But the market is far from stable: suppliers and customers continue to extricate the most value they can from their channel partners; the global economy remains uncertain and everybody is looking for ways to increase profits. One of Avnet EM’s ongoing challenges is how to continue delivering the best-possible products and services to customers around the world in a cost-effective manner.
“We get up every day trying to stay one step ahead of the competition from an innovation perspective and go to sleep at night knowing that we’ve executed well,” Fay said in an exclusive interview with EPS editors. “We’re very focused on both innovation and execution because one without the other is failure. We know we have to continue to innovate and listen to our customers and provide the services and support that they need but if we don’t execute then we’ve failed. Both innovation and execution are very important and we take those very seriously and measure ourselves against them.”
While the market conditions remain challenging Avnet EM itself is on a roll. Its sales rose to $3.94 billion in the fiscal 2014 first quarter ended Sept. 28, up 8 percent, from $3.65 billion in the comparable year-ago quarter and helping to boost companywide revenue to $6.35 billion. A large portion of the increase in Avnet EM’s revenue occurred in Asia. A breakdown of the company’s latest quarterly revenue by CFO Kevin Moriaty showed Avnet EM’s sales in the Americas fell 7 percent, and rose almost 15 percent in EMEA and approximately 17 percent in Asia, which now accounts for 42 percent of the group’s sales, up from 38.5 percent in the year-ago quarter.
The increase in Asia sales represents both a positive development and a challenge for Avnet EM. While the higher sales means Avnet is gaining market share in the region, the corresponding margin pressure is also a concern to the company, executives said. Maintaining the growth momentum in Asia while finding ways to boost growth and productivity in weaker regions has therefore become a major focus for the company, according to Rick Hamada, CEO of Avnet.
“On a sequential basis, Avnet EM's gross profit margin declined 38 basis points [during the fiscal first quarter], primarily due to the previously mentioned geographic mix shift to Asia,” Hamada said while presenting the company’s latest results to analysts. “We continue to face competitive headwinds on gross profit margin in the Western regions. Given the current environment, we will continue to focus on profitable growth and continue to be vigilant in our management of expenses and working capital.”
If anyone is up to this task, it’s Fay. He most recently served as Avnet’s chief logistics and global operations officer and has a 30,000-feet-view of the complexities of the global supply chain. Many of the issues he tackled in his former position are similar to the ones he is encountering at Avnet EM, which he assumed command of at the beginning of October. Fay’s cool and affable demeanor belies his toughness and willingness to both discuss and take on some of the toughest issues facing not just the business unit he leads but also the entire industry.
In a wide ranging interview with editors of Electronics Purchasing Strategies, the distribution executive did not shy away from answering a single question. Neither did he mince words about the changes taking place in the industry and others that are being initiated via the web within the group he leads as part of a companywide online effort.
Fay also addressed the growth opportunities he believes Avnet EM will be exploring and the differences between how the market is evolving in Asia, North America and Western Europe. Even as he focused on finding solutions to the challenges the company faces and future opportunities, Fay also gave unqualified recognition and praise for the work done by Harley Feldberg, his predecessor at the helms of Avnet EM, who helped build the business into a $15 billion group.
“Harley led Avnet EM and expanded its growth for 10 years,” Fay said. “He had incredible long-term vision and the patience to see it through.”