U.S. Manufacturing Contracts for First Time in 3 Years
by 
TTI Inc.'s Phil Gallagher
Phil Gallagher is no stranger to change. After spending most of his 32-year career at Avnet Inc. in its component business, Gallagher was named president, Avnet Technology Solutions, in 2009. During Gallagher’s tenure, the industry’s largest distributors grew from roughly $1 billion to $25 billion in revenue; hundreds of small to mid-sized distributors were acquired; and the industry expanded globally. Following a short hiatus after leaving Avnet in 2014, in April Gallagher joined the industry’s leading IP&E specialty distributor, TTI Inc., as corporate officer, senior vice president, member of CEO Paul Andrews’ executive staff and the functional role of president, sales and marketing, TTI Americas.
Gallagher’s decision to join TTI was based in large part on the company’s position as a respected competitor, he said. Gallagher has been active with many of the TTI executive team through the Electronics Components Industry Association (ECIA). “I’ve known [past and present] TTI executives for a long time,” Gallagher told EPSNews. “Their values are in alignment with mine and everything I’ve seen over the past 30 days confirms that relationships – with employees, customers and suppliers – are important in this organization.”
TTI’s specialization in interconnect, passive and electromechanical components means semiconductors – typically the centerpiece of most engineering designs—don’t drive TTI’s sales strategy. Gallagher said that broadlines, specialists and low-volume catalog distributors all add value in the electronics industry. “There is a market out there for all players,” Gallagher said. “A specialist is really just that − a ‘specialist’, bringing focused value to a supplier, commodity and translating that value to the customer,” he explained. “In the grand scheme with fewer high tech lines, it allows TTI to focus, be more efficient, proficient, and go deeper with the supplier/technology. You really must commit to the suppliers you have, and make them feel, because they are, the most important line in house.”
IP&E components account for as much as 80 percent of a typical bill of material (BOM), which is where specialists such as TTI find their sweet spot, he added. “I fundamentally agree that often the processor, if you will, leads the design. There is still a huge amount of technology around that processor that is not in the semiconductor commodity space. When you look at the opportunities around IoT, for example, the BOM support on and off the board in products supporting transportation, aerospace, appliances, security, lighting...etc. − there are game changing technologies being introduced well beyond the semiconductor.”
Specialists focus on one area of technology and become the experts in that niche. IP&E component suppliers carry a variety of distributors but prefer specialists that can focus on their products rather than semiconductors. “That is what we live and breathe, and no one does it better in [the IP&E] space,” Gallagher said. “Suppliers invest in brands, and TTI supports those brands 110 percent. And relative to broadline distributors, we have fewer suppliers to support, so can give them more of what they want and need.”
There’s no shortage of innovation in the IP&E market, Gallagher added. “I just met with three of our top five suppliers. One just had a three-day distributor conference and they are sizable. Believe me, they would not count themselves out of being a high technology, leading edge supplier, and part of making the market.”
Still, TTI, like all electronics distributors, is facing a number of challenges. Component prices continue to decline, profit margins are being squeezed, new competitors are on the horizon and the internet continues to change the way companies interact with one another. Gallagher sees opportunity within these changes.
“One would say online buying or new entrants to the market could be a challenge; I see it as an opportunity. It forces us to get better, and sharpen our value skills to the customer and supplier. We don't just want to be in the classic fulfillment business,” he added, “we want to help provide solutions and add value. I am estimating only roughly 10 percent to 15 percent of our shipments for TTI are classic ‘time, place utility.’ With the balance [of the shipments] we are modifying the product with special handling, etc. Does that mean we should rest on our laurels in the industry? No way. We understand there will always be new entrants.” Gallagher added, “I think another interesting question to consider on this topic is – do the new guys bring real and additional value to the suppliers?”
In his new position, Gallagher hopes to bring some new ideas to the organization. He has a “100-day plan” that involves asking a lot of questions, taking a lot of notes, and listening. “TTI has an incredible value equation, along with its subsidiaries Mouser and Sager: there is not too much that we can't offer the customer and supplier.” He is humble when asked about the successful 32-year run he had with 2015’s leading global distributor. “Well, it was a job during college that became a great 32-year career,” he said. “I learned that we, although in the highest of technology industries in the world, we are still very much in the people business. It’s about keeping strong relationships, built on trust over many many years. “
“My first day here after being out for a while felt like my first day in kindergarten -- all new,” he added. “It has been exhilarating: the people − to the person − have been incredibly helpful as I learn my way through TTI."
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