Global Passive Component Sales up 25.2% in 2018
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Rising adoption of electronics across all sections of the global economy is one of the primary drivers of growth in the electronics market and this pace is likely to accelerate in the near future, according to industry executives. This realization is forcing players in the entire supply chain to keep a tab on emerging technologies as well as new applications for non-traditional electronic equipment, says Alex Iuorio of Avnet Inc.
Iuorio should know. As head of supplier business development at the global electronics component distributor’s Electronics Marketing Americas business unit, Iuorio wears three different hats. He leads a group of 17 managers whose jobs involves managing B2B connectivity, contractual negotiations and pricing negotiations with suppliers. Their goal? To optimize relationships between Avnet and the suppliers by ensuring all facets of the business are extensively covered.
The Avnet EM America executive is also responsible for marketing in the Americas, a task that involves positioning high technology products through technical marketing, supplier marketing, and customer marketing to clients in the region. The third component of Iuorio’s job centers on business development, which basically involves the continuous evaluation of suppliers and their products to ensure Avnet is able to support its own customers with the latest and most innovative components. As OEMs introduce electronics into more devices across the economy Iuorio and his team have their hands full ensuring they monitor and support this development, he said.
In an interview with Electronic Purchasing Strategies Iuorio discussed the factors driving this change across the electronics industry and how Avnet is responding. The key to winning, he said, is identifying and being well-positioned to support next-generation products supplied by manufacturers.
“All of the [new products], to varying degrees, present opportunities for Avnet as a value-added distributor of technology,” Iuorio said. “How we would go-to-market to address those specific segments may be a little different, but it always comes back to having leading edge products and technical personnel that are well-versed in these products and their associated roadmaps.”
Iuorio said Avnet works closely with its suppliers to identify new trends, innovative applications and markets. Here are excerpts from the discussion:
EPS: What are the significant changes that you are seeing in the electronics industry?
Iuorio: We can synopsize the changes into faster technology adoption, shorter product lifecycles and adoption of technology in sectors that were previously not electronic. That is how I would characterize change. At that point you would have to really get into the specific vertical as to how that change manifests. One example might be automotive where all the recent studies show semiconductor content rising in automobiles.
So there is rapid technology adoption on top of technology that already existed in segments like automotive. Now you have more technology and more processing power in a given model. That would cover one segment but don't forget that there are myriad segments out there that have never used semiconductor technology before. For example, electronic rice cookers that historically were not electronic are the single largest growth segment for some of our power semiconductor manufacturers.
Another example is the transition from incandescent lights to LED lights. This involves things like optics, thermal considerations and power semiconductors to drive the LEDs to create light. What we now have are segments that want to adopt more technology, and those segments that want to become technology adopters and never were before.
EPS: How is Avnet positioning its business to manage these changes?
Iuorio: All of those segments, to varying degrees, present opportunities for Avnet as a value-added distributor of technology. How we would go-to-market to address those specific segments may be a little different, but it always comes back to having leading-edge products and technical personnel that are well-versed in these products and their associated roadmaps. This compliments Avnet as a major player in the high technology value chain having factory relationships, and business unit relationships that can be shared with the customer and leveraged by the customer. Also, we can have input on product roadmaps based on what we see from 100,000 customers and what requirements they have in any given technology segment, and then of course once we have taken care of the design chain portion then there's the supply chain portion.
Although all those segments are a bit different in terms of what the needs are it really does all get encompassed in varying degrees to how we go to market with our core objective being support of the design chain and subsequently the supply chain. Those are not discrete elements. The design chain is inextricably linked with the supply chain. You have to have the right expertise designing the right products at the right price that are available at the right time supporting that design and then be able to take that and translate it into supply chain requirements, such as the number of units that are going to be built, and so forth.
EPS: Can you explain more about Avnet’s collaboration on technology roadmaps in an environment of accelerated technology adoption?
Iuorio: Successful electronic companies have always employed multiple generation roadmaps so that's no real change. If there is any change it's in terms of how quickly technology changes within those roadmaps. If I see any changes I think that today's process for product definition and roadmap establishment may include third party contributors which it did not in the past. If you are a communications company you may use a third-party communications manufacturer, or a software manufacturer to support your products so there are more entities involved, but that's driven by the complexity of the product and the requirements of customers. If they include more players that have specific core competencies, specific expertise if you will, that's the change that I see – speed and entity involvement.
EPS: What do you look for when discussing products with procurement managers at electronic manufacturers?
Iuorio: I always love the studies that take prices of components and they move that down the list of importance to number 6, 7, 8, or 10. The reason that price or price competitiveness is not at the top of the list is not because it's not important, it's because it's a given. I think that being price competitive is an absolute essential in dealing with the customer base and it's very important to offer world-class pricing.
By the way, world-class pricing is provision of the goods with potential value-added services wrapped around them at the most competitive price. Beyond price I think consistency and quality which takes the form of not only incoming lot quality but on-time delivery, integrity of information, information optimization in the form of B2B connectivity and all those things are important – no one more important than the other because it really is a package. You can't be the lowest price provider and never deliver on time.
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