How OEMs Can Compress Their Cash-Conversion Cycle
by 
Mark Burr-Lonnon, senior vice president for Mouser’s EMEA and APAC businesses
E-commerce has effectively demolished the geographic boundaries that used to limit electronics procurement through the distribution channel. Component suppliers authorized distributors to sell their brands in geographic markets to avoid over-distribution and linecard conflicts. The first time a distributor offered all of its brands internationally online tested those boundaries. The supply chain found that expanding its reach without adding local resources was both cost-effective and customer-centric. Still, global distributors are selectively setting up local offices around the globe. Mouser Electronics, which specializes in low-volume orders supporting the engineering and design community, recently opened its South Korea Customer Service Center located in Seoul. Although Mouser can easily service global orders from its centralized warehouse in Mansfield, Texas, Mark Burr-Lonnon, Mouser’s senior vice president for APAC and EMEA, told EPS the distributor adds – and derives – a lot of value from a local presence. “There is a balance between having a global and a local presence, but what we found is, while many people want to conduct business over the internet there are those that still want to connect by phone, e-mail or in another way,” Burr-Lonnon said. “From the customer standpoint we want to give our customers a choice in how they want to interact with us, whether it’s the web, a phone call or an office. Customer service is the driver behind where we open offices.” Technical support is the main function of the local offices so customers can work in their local time zones, languages and currencies. The distribution channel, though, is under constant pressure to increase efficiencies and cut costs. Many distributors have transferred services they’d normally provide locally—certain levels of sales, technical support and training, for example – online. From a practical standpoint, Burr-Lonnon said, Mouser’s local offices support a concentrated customer base. “In South Korea, our business grew over 170 percent in the last five years, and our customer base grew 135 percent. We probably wouldn’t open an office in Greenland,” he said. But with a linecard as expansive as Mouser’s – the distributor carries more than 600 semiconductor, interconnect, passive and electromechanical suppliers – understanding the regional needs of a customer base is essential. “We are a new product introduction (NPI)-focused company,” Burr-Lonnon explained. “We want to make sure new products are introduced in line with the needs of the local customer base. If we have a new product that is focused on the civil aviation market, we’d promote it in France, where Airbus is headquartered, or in the U.S. It wouldn’t make sense to feature that in regions where there is not a lot of aviation activity.” Mouser works with its local employees to identify vertical markets in their region and then works with suppliers to promote relevant products. Although Mouser’s website has a global transactional platform – it offers all of its products for sale -- it also provides options in local languages and in local currencies. Mouser develops much of its marketing content with local sources. “The kind of thing we do is provide content that demonstrates how various products can be used or integrated into a design,” Burr-Lonnon said. “In addition to new parts there are existing parts that can be used. If we develop something that features, for example, TI and Vishay, it’s a win-win,” he said. Mouser has learned a lot about its customers’ buying habits by enabling global access to all of its products and infromation while a maintaining a local presence. “First, there are a lot of customers that don’t want to jump from a TI website to a Molex website while they research a design,” Burr-Lonnon said. “We provide all that technical information in one place. What we’ve also found is not all of our customers jump on our site and immediately check out. We’ll see them come in and look at parts, and then select something else. Then after many months they’ll order components. We often see buyers come in and swap out parts.” The distributor also discovered that payment preferences differ significantly across the globe and even within regions. Many distributors figured that enabling transactions online in local currencies or via credit cards such as American Express and MasterCard would suffice for global customers. Burr-Lonnon said in China, buyers prefer methods similar to PayPal. “In China we found a preference for UnionPay and Alipay,” he said. “Big businesses use UnionPay and small businesses use Alipay.” Ultimately, Burr-Lonnon said, Mouser relies on its local offices to break down barriers between customers and their purchasing transactions. “We don’t want to have anything that stops a customer from checking out,” he said. “That means offering the right payment methods. You also have to understand how prices differ from region to region. It’s not just about having the right part—you have to make sure the customer has the ability to buy it.” Mouser has 22 offices worldwide, with nine locations in the Asia Pacific region. “We have to keep in touch with our customers,” Burr-Lonnon concluded. “If there are different things they prefer in their region we have to integrate – and then improve on – those things.”
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