Avnet Inc. has wasted little time in leveraging new and existing design assets to reach up-and-coming businesses. The distributor’s acquisition of Premier Farnell, Hackster.io and Dragon Innovation has enabled the often-unwieldy global organization to support the makers and entrepreneurs that could be developing the next must-have computing, communication or consumer device.
Broadline distributors such as Avnet typically pursue high-volume component orders to drive sales. Assembling and shipping the low-volume, high-mix orders required by engineers and inventors is labor-intensive and profitable only on a large scale. Likewise, distribution field applications engineers (FAEs) that assist designers don’t directly generate revenue. FAEs ideally are stretched across a wide swath of customers seeking engineering support.
Avnet’s New Business Development and Internet of Things initiatives are structured to cater to makers, engineers and startups. By engaging with customers at the design phase, distributors hope to retain these relationships if products reach production volumes. Both efforts draw from Avnet’s considerable array of hardware, services and design resources. Organizationally, Avnet personnel and customer service systems help match developers with the products and services they need. Customers can engage with Avnet at any level from component-engineering assistance through product prototyping and volume manufacturing.
“We took inventory of everything from our components line card to our software and service offerings,” explained Lou Lutostanski, longtime Avnet veteran and vice president for Avnet IoT. “We had a lot of pieces of the IoT. We now also have digital services capabilities: a 500-person cloud, web and mobile-applications development team; and software-as-a-service (SaaS). So, we laid an IoT organization over all of these assets so we could provide a one-stop-shop solution. We help customers from proof of concept to producing thousands of items.”
Avnet also provides a single point of contact for IoT customers. “The customer, with one phone call, can develop an end-to-end solution,” Lutostanski said.
New Business Development is backed by the same products and services with an emphasis on “how-to” offerings such as videos, design schematics, self-help options and engineering communities.
“The overarching theme we see in electronics is the accessibility – or the democratization-- of technology,” said Bob Merriman, head of the new business unit. Products such as the Raspberry Pi, he pointed out, provide an easy-to-use computing platform for hobbyists and inventors. The availability of this and similar products has created unprecedented electronics demand from non-technical developers with a little more than a good idea.
“Creating hardware is still difficult,” Merriman added, “and many makers aren’t prepared for all the nuances between a design on a napkin to a product that will reach customers’ hands. That’s where we can help.”
Small customers, big challenges
Historically, distributors of Avnet’s size have not been good at managing small customers. Deploying engineering assets to an account that never matures is costly. Maintaining a wide-and-deep inventory profile is expensive. Online tools and do-it-yourself (DIY) service options help defray some of these costs.
Fulfillment distributors have recognized the value of reaching the engineers that determine the components that go into a product design. Securing, or “winning” that design means long-term and predictable component sales once a product reaches production. But efficiently running catalog and volume businesses under one roof has been challenging for distributors. Small customers don't like being "handed off" to a fulfillment operation once they reach a certain size.
Avnet IoT began straddling both worlds slowly. A few key supplier partners were integrated into Avnet’s internal processes, enabling them to respond to RFQs and seamlessly coordinate with both Avnet and the customer. A single Avnet contact manages the customer's full engagement. “We spent nine months putting things together to prove the concept could work,” said Lutostanski. “Our first project was an end-to-end IoT solution we displayed at CES. Avnet introduced the Edge-to-Enterprise IoT Services, featuring the IoTConnect platform built on Microsoft Azure, and nine scalable and repeatable vertical SaaS applications that run on IoTConnect.”
Avnet IoT customers tend to be startups with funding or well-established business plans. A “triage” system helps determine where customers are in their design-through-production process and the level of support Avnet can provide.
New Business Development has a similar charter – to reach and support up-and-comers—but casts a much wider net than IoT. “We want to help everybody,” said Merriman.
Resources include communities within Avnet: element14, MakerSource.io or Hackster.io; and tools such as the Hardware Studio. These communities go beyond engineering and hardware and provide advice on funding, marketing, accounting and other activities relevant to startups.
“We want to provide an easy way for startups to find resources,” said Merriman. “Element14 is a resource for those looking to collaborate on technical hardware challenges. Hackster.io is a source for inspiration, design introduction and skill refinement. MakerSource.io is a solid resource for creators and startups who need additional resources of any kind. Dragon Innovation specializes in helping companies navigate the difficult journey of going from ‘one to many’, or put another way, the journey from a single prototype to manufacturing at scale,” he explained.
Distribution's other customer
In addition to attracting customers, distributors have to drive sales for their suppliers. Many of the schematics, designs and solutions featured by Avnet showcase its suppliers. At CES, Avnet's IoT solutions were built on technology from Microsoft and NXP.
“Our partners have the opportunity to be in on the ground floor of the next ‘big thing,’” said Merriman. “We also try to be supplier-agnostic—we are looking to solve problems and not push customers in a certain direction. We have access to so many suppliers that customers have a bunch of options to consider.”
Still, distributors can’t afford to deeply engage in every opportuity that comes along. “Our job is to be the gatekeeper for opportunities and evaluate them quickly and identify their customers’ needs,” Merriman said. “We want to help everybody but we need to prioritize opportunities quickly and efficiently before we engage with the larger business within Avnet. In many cases that means identifying customers that can benefit from immediate engagement and for companies that still have a ways to go, we provide them with a game plan and actionable steps.”
The IoT is still a developing market, Lutostanski pointed out, and component suppliers provide only part of a solution. “To some extent it feels like people are waiting for all the money related to IoT to fall from the sky," he said. Not only do the components of a system have to work together, an end-product must have a demonstrable value. "To deliver business results these [startup] organizations have to know how their products will come together and how to solve problems for their customers. Hiring consultants and contractors for that – when there is no established market yet—won’t work. You have to present a business case and most of these companies don’t have one. Among other things, we help our customers take a step back and determine how products can be developed to scale.”
Avnet's generating a lot of interest among startups, but its business units still must execute to drive volume sales. Avnet’s Americas ERP platform is being overhauled and Premier Farnell’s systems updated and integrated. The success of online tools and DIY initiatives depend entirely on the systems that support them. Avnet, which lost almost a week’s worth of transactions when its ERP rollout stalled, can’t afford another such hiccup as its small customers begin to grow.