Avnet Inc. says its acquisition of U.K.-based distributor Premier Farnell will help the company accelerate its digital transformation and make it a more critical partner to customers through the provision of a wider range of design engineering and supply chain solutions to move them swiftly and seamlessly from the idea and product conception stages to production.
Ongoing developments in the distribution market require companies to offer more services and products for efficient product rollout by OEMs and contract manufacturers, according to Gerry Fay, president of Avnet’s global components business. Such products are not limited to simple hardware but can also include software that has been integrated at the component level, enabling the early elimination of bottlenecks typically encountered in the new product development process.
In a presentation at Electronica 2016 in Munich, Fay said Avnet intends to operate Premier Farnell as a standalone and independent entity, maintaining its focus on the design and engineering community while adding the benefits of Avnet’s larger global reach, wider supplier bench and backend support resources. Some of Avnet’s current engineering outreach efforts will be transitioned to Premier Farnell, which would also be able to tap the parent company’s extensive supplier base. In turn, Premier Farnell, where necessary, would move component fulfilment activities to Avnet, which has greater capacity and experience in managing production level component sourcing and fulfillment.
“Avnet plans to keep Premier Farnell as separate as possible and it will continue to handle small orders for engineers,” Fay said. “The benefit for Avnet is that there are investments [in design engineering and digital services that] we’ve made previously at Avnet that Premier Farnell either already has or is better at managing. Now, we don’t have to make those investments anymore because Premier Farnell has the capacity.”
The acquisition of Premier Farnell added 430,000 active design engineers to Avnet’s global engineering database and opened up opportunities for the company to expand its involvement in the early product development phase and support customers through production. While Avnet had also been making investments to expand its global digital footprint, the Premier Farnell transaction gives it capabilities the company was lacking, according to Fay.
Avnet is also looking at adding investments to broaden Premier Farnell’s MRO business and expects further cost reductions at the two businesses through the leveraging of shared services, IT systems (where possible) and other backend functions. Fay said Premier Farnell and Avnet would be able to share critical data about customers’ needs and use this to customize services to specific industry segments.
Commenting on the broader distribution market, Fay said the industry is moving fast towards the provision of complete solutions that bridge gulfs between hardware offered by different manufacturers and the software needed by OEMs to complete their offerings. While suppliers can approach and sell components directly to OEMs they are often unable to offer the entire suite of parts, software and other services needed by customers. Avnet, as a solutions provider, can step into that space, he said.
“We are agnostic about the market,” Fay added. “We’ll provide what our customers need to get to market faster and with the right products.”