Mouser Electronics Inc. has carved a niche for itself in the electronics components distribution market as a leading facilitator of design services for OEM and EMS engineering teams across the world. In the last several years the company has strengthened operations globally even while expanding product offerings to design engineers in North America, leading to a double-digit surge in 2014 sales.
As the market has faced some turbulence this year, including currency pressures and a slowdown in manufacturing in China, Mouser executives say they have simply doubled down on the strategy that has propelled growth at the company and expect to continue pacing the market through the current situation. Mouser has been adding to its product roster and has kept inventory at a healthy level, according to Jeff Newell, senior vice president of products. The company’s goal is to remain a top provider of components to design engineers and their No. 1 partner in new product introduction activities, Newell said in an interview.
“We believe our focus on new products and new product introductions protects us from market fluctuations as customers continually look for the next great thing,” Newell said. “We want that design to start at Mouser.”
Being a global distribution partner to engineers at OEMs and electronics manufacturing services (EMS) providers helps. Mouser has footprints all over the world and ships products to engineers in the Americas, Asia, Europe and parts of Africa, providing the uniformity of service and support that designers need for both new product introduction activities and redesigns.
While the company is willing to support all customer needs, including volume production where necessary, design engineers will remain at the core of its operations, Newell said. That focus will remain through the current market conditions and for the foreseeable future, he noted.
In the interview with Electronics Purchasing Strategies, Newell addressed other industry issues in addition to steps being taken by Mouser to support customers through weakening market demand and the negative impacts of currency fluctuations. Excerpts from the interview follow:
EPS: What are the biggest opportunities that Mouser has identified in its market segment and how is the company responding to these opportunities?
Newell: Right now, the areas that seem to be doing the best are automotive/transportation, sensor technology, and power. In each of these areas, we continue to look for new and exciting products to stock and promote, both with our current supplier base as well as with potential suppliers with products or technologies in these areas.
EPS: Similarly, what are the biggest challenges facing the distribution industry and how is Mouser responding to these?
Newell: There are a couple of headwinds we see this year. One is the currency fluctuations in Europe and Asia. The other is a perceived slowdown of customer demand in the industry. In both cases, we try to find ways to grow relative to the marketplace. With customer demand specifically, we believe our focus on new products and new product introductions (NPI) protects us from market fluctuations as customers continually look for the next great thing. We want that design to start at Mouser.
EPS: In 2014, Mouser posted nearly 22 percent growth in North America. What were the biggest reasons behind this sales spurt?
Newell: A few reasons, the biggest being inventory position. We do a really good job of managing inventory relative to market demand. In addition, we focus on ensuring that the newest products from our supplier base are on the shelf. This is a message that engineers like to hear, and that enables them to secure product for their newest designs.
EPS: Which market segments and applications do you see driving growth in 2015 and what are the steps Mouser is taking to take advantage of these?
Newell: Right now, the automotive/transportation market place is seeing continued growth. Mouser continues to stock and promote products that are targeted at that market space. The Internet of Things (IOT) frenzy is still a driving force as well, and we are seeing great growth in two primary design products related to IOT: microcontrollers and sensors.
EPS: How are inventory levels in the channel and do you have any concerns about these in the second half of the year?
Newell: Right now inventory levels are very healthy in the channel — maybe even a bit heavy. With demand moving sideways, most suppliers that had small delivery challenges last year have been able to fix those this year. I would expect the overall channel to reduce inventory a little bit in the second half, as demand still seems to be stagnant and most companies are proceeding cautiously due to financial issues in the general market (for example, currency fluctuations and China growth).
EPS: What are the issues that you believe will have the biggest impact on demand and supply over the next year? To what extent do you expect to be impacted by recent financial and fiscal developments in Europe?
Newell: Financial instability will likely be the biggest culprit of slowing global growth in the next few quarters. While Europe continues to be a bigger piece of our business, I don’t think the issues we are seeing with the Euro right now will be long term. Normally the U.S. Presidential elections have some impact on demand, but that will be hard to forecast.
EPS: Will Mouser’s growth strategy stay the same or have you or are you refining these in response to any changes in the market?
Newell: We are committed to our model and strategy, and I don’t see us reacting in large ways to market changes.
EPS: Have customers ever asked Mouser to move into the prototype/production business? If so, have you chosen to do this or not? Why/why not?
Newell: Customers buy prototype and production business from us all the time. As much as possible, we try to accommodate any customer request within reason. While we don’t cater to that kind of high volume demand, we try to serve customers so they like their experience with Mouser and want to buy from us again.
EPS: From Mouser’s point of view, is the U.S. still the center of product design, or do you see it shifting toward Asia-Pacific? How is Mouser responding to shifts in customer requirements with regard to designs and fulfilment?
Newell: Our view is that there are large areas of demand creation in various spots around the world. Certainly, the U.S. is the largest; however we believe there is a lot of design work being done in Europe and Asia, as well. Our view is that local, new design work will continue to grow worldwide. But with the number of engineers in Asia growing at a much faster rate than in the U.S., it’s likely a matter of time before Asia competes with the U.S. for the largest demand creation marketplace.
We continue to grow our model worldwide, both in terms of translated product content as well as the ability for customers to do business with us anywhere, in any language, and in any currency. We try to make it as easy as possible, giving customers a great buying experience.