With annual revenues for 2014 projected at $1.8 billion, over 3,200 employees, nearly half a million customers, 81 localized websites and a daily fulfillment schedule that averages over 16,000 orders per day, Digi-Key Corp.'s leadership team inevitably faces complex challenges and typical operational growing pains in figuring out the best way to scale the business.
The company has steadily grown over the years under President Mark Larson. After posting record sales this past quarter, including over 30 percent year-over-year growth in Europe, Digi-Key is gearing up for accelerated global growth by improving operating efficiencies and deepening its executive bench. Digi-Key executives said the company remains focused on its core values – broad product selection, strategic supplier relationships, efficient fulfillment and customer service excellence.
As Digi-Key continues to expand and scale its operations, the organization is also evolving to support the next level of infrastructure, processes and operational excellence. With an increased focus on Product Distribution Center (PDC) efficiencies and scalability, as well as ecommerce infrastructure, IT and marketing initiatives, Dave Doherty was recently appointed executive vice president of operations. At the same time, Chris Beeson was appointed executive vice president of sales and supplier development, focus on global new business development, customer growth and global supplier-facing programs.
The appointment of the two seasoned Digi-Key leaders into broader executive-level roles will give Larson more time to focus on strategic initiatives and long-term planning, according to sources at the company. They also noted Digi-Key’s commitment to fostering internal team development, improving company-wide processes and efficiencies along with enabling individual growth and career development, incenting all employees to develop and grow within the organization.
“Digi-Key continues to view its continuity in leadership as a strategic advantage,” said Tony Harris, chief marketing officer at the company. “As Digi-Key continues to grow at an industry-leading rate, we continue to expand our top management team to ensure the quick decision-making and nimbleness required to serve dynamic customer requirements.”
Relative to the larger, broad line distributors and other competitors, the Thief Rivers Falls, MN-based Digi-Key has outpaced the industry average growth rate by at least three times. Today, the company remains a medium-sized player in a market dominated by Avnet Inc., Arrow Electronics and WPG Holding Inc., the Taiwan-based distributor that has leveraged its position in Asia to rise swiftly in a matter of years to become the world’s No. 2 electronics components vendor.
In recent years, Digi-Key has honed in on the competition through aggressive global expansion designed to serve larger customer accounts while continuing to build its core customer base of design engineers. In EMEA and Asia, the company’s model has expanded to include sales and support offices and experienced field teams available to support assigned accounts with more complex supply chain needs. The company’s value proposition, however, remains its commitment to the design engineer community, which it continues to serve with a broad selection of electronic components complemented, a deep arsenal of product design tools and resources and a world-class ecommerce infrastructure.
CMO Harris said Digi-Key continues to add suppliers in strategic market segments, increasing the breadth and depth of its offerings while supporting rapid growth areas like lighting, microcontrollers, sensors and embedded technology solutions. Supplier relationships and an expansive product line represent important strategies for the company. Over the past two and a half years Digi-Key has expanded its line card to include over 700 authorized component manufacturers. During this same period, the company has aggressively expanded its available, in-stock inventory from 625,000 to one million, with over 4 million searchable parts on its main website.
Sales Heading Higher
Larson, the long-term president of Digi-Key, believes the company can accelerate its growth to push annual sales up to $2 billion in 2015. While Digi-Key continues to grow in North America, the greatest sales expansion opportunities are in Asia-Pacific, especially in China where the company is in the early stages of fostering partnerships. The push for higher sales growth may be behind some of the recent appointments that would also allow Larson to focus on strategic relationship building, according to Digi-Key executives.
“Digi-Key has been on an aggressive global growth track these past few years and, as a result, we’ve covered a great deal of ground in building out our teams, resources and infrastructure in Europe and now, Asia,” said Beeson in an interview. “We've hired experienced in-country sales leaders and recruited technical and customer service professionals so that we can have a more local conversation with customers and with suppliers.”
A core value that Digi-Key’s brand exudes is its unwavering commitment to the customer. This common theme is prevalent company-wide and it’s clear that Digi-Key is dedicated to doing whatever it takes to keep the customer satisfied. As one of few privately-held distributors in the industry, Larson attributes much of the company’s success to the organization’s flexibility, focus, and commitment to the customer, employee dedication, and the earned customer loyalty that is central within the organization.
Company executives said Digi-Key’s long-term focus is on continued growth, evolving ecommerce capabilities, new technologies and ever-changing customer expectations. The design engineer is at the heart of these services, they said. “As the Digi-Key model continues to gain traction on a global scale, we fully intend to continue to lead and disrupt the distribution market by serving the needs of the design engineer better than anybody else can,” said Harris.
"As we round out 2014, Mark Larson will be especially focused on the company's next phase of growth which includes an eye on Europe and Asia,” continued Harris. “In addition, he and the rest of the team will continue to leverage Digi-Key's unique approach as we develop global supplier relationships and increase customer count by proving our commitment to our core values and company-wide operational excellence.”
"I'm very bullish on our future here at Digi-Key,” said Larson. “We remain keenly focused on our brand promise to our customers of quality, service, expansive component selection and self-service tools to fuel their designs and innovation requirements. We remain humble and, although showing great success, we don't rest on our laurels. To quote Bill Gates, ‘Success is a lousy teacher. It seduces smart people into thinking they can't lose.’ ”