Value Additions by Component Distributors

This article aims to provide holistic understanding about the role distributors play in the semiconductor components market. How different are they from other agencies plying in the business chain and how to engage meaningfully with them. It should help organisation heads and their business strategists to reap some benefits -- Arun Sharma

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Integrated warehouses. Large distributors have several warehouses located to provide optimised logistics and comfort of vicinity to customers.

Business transactions in multi currency. Many distributors offer facility to customers to transact in local currency at their in-country billing stations and also in international currency at their international billing stations.

Transfer opportunities. Sometimes the designs happen in one part of the globe and the project is transferred to another region for manufacturing. Customer’s handshake with distributor remains intact as regional facility of distributor in manufacturing region takes up the charge.

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Strong warehousing and contract review systems. Distributors invest heavily in their core area of warehousing and logistics. State-of-art software and facilities ensure negligible complaints on errors in customer order execution.

Value-added services not limited to SCM
Bringing in vendor support. One big advantage in engaging with a franchised distributor is that the customer automatically comes under the umbrella of principals. He gets entitlement to different facilities and initiatives by semiconductor component manufacturers for enabling the market verticals and build the opportunities.

Customer relationship management (CRM). Distributors invest in CRM software and deploy them to serve their customers better. Using this capability, they capture every touch with the customer in detail, which helps them in drafting effective plans and activities to service.

Technical support. Distributors invest in resources for providing technical support to customers. They have a team of trained technical sales and marketing engineers and field application engineers.

Reference designs. Distributors, their vendors and their ecosystem partners invest in building reference designs as boards, products and system-level solutions. These reference designs are not merely proof of concepts but also a close version of the final product that customers can develop further with very little effort.

Design reviews. Some principals run programmes for evaluation of designs done by customers. Expert teams at vendor’s place conduct the reviews. There can be criteria for selecting the cases for such in-depth support. Distributors help in getting this support.

Sampling and prototyping support. In order to make conducive condition for parts to get designed in and pace up the design process, distributors and their vendors invest in providing samples of parts.

Design tool support. Distributors sell and loan out evaluation kits and development boards to speed up the design by R&D teams of their customers. Customer is saved from capital expenditure and risk of landing up with the tools that could become futile in case the project is suspended or when new designs are taken up.

Trainings. It is part and parcel of the activities by distributors and their vendors to keep on conducting trainings for their current and future customers. These trainings are done both in normal class-room/seminar-type atmosphere and through webinars.

Date code. Distributors have system which ensures that they do not carry old parts in their inventory. An old stock may create quality problems during manufacturing and later in field.

Design partner programme. Distributors provide complete turnkey solutions to their customers for certain targeted segment and end-equipment, which are currently hot and emerging with huge potential in the future.

Conclusion
There are plenty in international market who dump old, fake, remarked, excess or obsolete inventory to innocent buyers by offering low prices and ready stocks. Many such fraudulent sellers self-claim to be authorised distributors. Dealing with such miscreants and fly-by-night operators not only causes heavy loss of money but hardships of shop-floor rejections, troubles in locating the real fault and corrective costs.

Associating with electronics distributors opens up a treasure of value-added services for OEMs. ODMs, design houses, contract manufacturers, etc. A long-term relationship with distributors would ensure an unmatched edge over competitors and sustained profitable growth.


The author is an engineering and management professional who has served as head of business development and FAE team at WPG Electronics, as vice president and SBU head at Kobian Pte Ltd and headed marketing department at industrial electronics division of Crompton Greaves Ltd

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