On his first anniversary as president of Chicago-based Newark element14, EPS spoke with Tom Hudak to discuss how far he has progressed on his first-year goals. When we spoke last year, Hudak was putting plans in place to make Newark element14 a great company to do business with, invest in, and work for, the three pillars of his five-year plan.
At the end of his first year as president of Newark element14, Tom Hudak is pleased with the results. Final numbers should show a “good solid year” in 2014 thanks to the company’s focus on getting back to basics. This includes focusing on its core industrial business, spending time with small- to mid-sized contract manufacturers (CM), and driving business through element14’s design community. The catalog distributor also made some key investments over the past year, including a new Americas headquarters facility, an upgraded web platform, a new design center, and increased head count.
In 2013, Newark element14 recorded revenues of $544.9 million, down 3.1 percent compared to the previous year. Early estimates for 2014 indicate that Newark element14’s sales will be up in the mid-single digits, returning to growth and profitability despite a slow start in the year.
Hudak admitted Newark element14 lost its way a bit, which was one of the key drivers for the back to basics focus, and it wasn’t fully leveraging its element14 design community of 285,000 engineers and educators. “We want to make sure that we are covering the industrial electronics MRO market because it is our core business. But we will expand into the design side with our element14 community and look more at the smaller to mid-sized CM businesses as we look to grow.”
As part of its focus on design engineering, Newark element14 launched its Design Center, a complete development resource for engineers. “The new design center is a great independent resource for engineers and educators where people can collaborate with others all over the world. Content includes new development kits, development boards – Raspberry Pi, Beaglebone Black, etc. – and new technologies,” Hudak said. (See sidebar: Element14 Digs Deeper into Engineering).
Hudak met his goal of ensuring that the company’s website, call centers and outside sales team performed at a world-class level. Over the past year, Newark element14 upgraded its web platform to allow for future growth, and continued to add new tools and rich content around new products. The distributor also increased head count in terms of customer facing employees by about five percent.
A multi-channel approach is part of the sales strategy to better serve customers. Newark element14 has three sales centers – Richfield, Ohio; Mexico and Brazil – that customers can call and talk to a live person if they can’t find what they need at the website. They also have access to an outside sales team for larger projects.
“It’s the customer’s choice,” said Hudak. “Whatever they choose, they are going to get great service.”
Hudak cites three key examples of how Newark element14 met its goals around the three pillars of its five-year plan.
- Finances: “Newark element14’s business has improved year-over-year from a financial perspective and that is good for all stakeholders - our suppliers, our customers, and our associates,” said Hudak.
- Workplace: “We moved our [Americas] headquarters facility to a brand new 65,000 sq.-ft. facility in downtown Chicago with an open office environment. We want to take care of our existing associates and our next generation of associates who want to be in an urban environment. They also want a collaborative work environment and office and we’ve accomplished both of those very well,” added Hudak. “This move puts Newark element14 in an ideal location to attract and retain the best tech and engineering professionals and strengthens our position as a leader in Chicago’s burgeoning tech community,” he said.
- Customer service: “We also made some investments around customer service – fill rates have held very well; we expanded our sales team; we expanded our sales center and we made investments in the web,” said Hudak. “The other major piece of making sure that the customer service experience is right is the introduction of the only guaranteed same-day shipment service. We take any order up until 8 p.m. and we guarantee to same-day ship it.”
Under the program, Newark element14 guarantees the shipment of in-stock items the same day of the order or it will be expedited for free. Hudak said it’s currently shipping 99.96 percent on the same day. Even if the company is late shipping an order, it will upgrade the service to second- or next-day UPS so the customer will receive the package on the expected delivery date. “Newark is known for getting product out the door and that is what we’ll continue to do,” said Hudak.
Hudak is optimistic about growth in 2015. “We see a nice momentum with improvements quarter over quarter in 2014. The Americas will be a good place to be from an innovations standpoint and a productivity standpoint, and if we become energy independent, all that bodes well,” he said.
“The Americas are positioned pretty well, and if Europe can get back to even or plus one percent, China remains at least at seven percent, and Japan continues to show some growth, we are optimistic about 2015,” he added.
Goals for 2015 are aggressive, said Hudak, and include achieving growth across the Americas, taking the new web platform to a higher level, making greater investments in its sales team and sales centers, focusing on small- and mid-sized CMs, and driving the design engineer through its element14 community. He also expects another five percent or higher increase in head count. The increases will be balanced across the U.S., Canada, Mexico and Brazil.
Purchasers also will benefit from some of Newark element14’s investments particularly around the multi-channel sales options and same-day shipments. In addition, the distributor plans to work on the industry’s perception that its prices are a little high. Buyers should expect competitive pricing, particularly for the distributor’s strategic lines, at the Newark website.
Still, the challenge for Newark element14 as well as other distributors, is margins. “There are no secrets in pricing so margins continue to get squeezed. Margin contraction is something that everyone is worried about as we move forward,” said Hudak.
Overall, Hudak is very pleased with the progress the company has made over the past year, as well as the overall distribution industry. “It is a terrific industry. It has a lot of bright and dedicated people. They were very welcoming of me into the industry and I certainly appreciate that.”