Thursday, April 17, 2008
Tuesday, April 15, 2008
The Self-Service Revolution
By Diane Trommer
As service providers, electronic component distributors’ value proposition is typically defined by their ability to not just meet, but also exceed customer expectations. Sales representatives or field application engineers who are willing to go the extra mile are rewarded with both business and customer loyalty. In today’s fast food, have-it-your-way world, however, distributors are finding that a best-in-class, customer service experience is not just a byproduct of physical efforts on behalf of the customer. These days, superior customer service is also defined by a distributor’s ability to help customers help themselves with Web-based tools and services.
This is a somewhat revolutionary approach for broadline distributors, said Beth Ely, senior vice president and director of new channel development for Avnet Electronics Marketing Americas, Phoenix. As middlemen in the supply chain, distributors are understandably wary of anything that might distance them from their customers. At first glance, both the Web and the concept of customer self-service seem to represent potential threats to the distributor’s share of the supply chain pie. Yet, as the pressure to shrink development costs and lead times mounts, customers are increasingly turning to distributor partners for easy access to do-it-yourself online tools and information. “Our experience has shown that tools which enable customers to perform certain tasks at their own convenience without the need for outside intervention actually strengthen the bond between Avnet and our customers,” said Ely.
Though the Web has hardly been an overnight sensation that many predicted it would become in terms of pure e-commerce, the impact of its slow but steady infiltration of the electronic supply chain should not be underestimated, according to Robin Gray, executive vice president of the National Electronics Distributors Association, Alpharetta, Ga. “It has taken time for the distribution sector as a whole to find the best ways to use the Internet. But as they continue to refine the functionality, there is increasing benefit and value out there for the design engineering community.”
Distributors that reap this benefit are able to translate the value that defines the company offline into the online experience. “Any site can take you to a part, but what is most important is assuring that the part is the optimal choice, that it can be supported through the development and production of the customer’s end product,” Ely said. “My goal is to harness the richness of information that differentiates Avnet and bring that online.”
Avnet offers a range of online resources to customers including component user guides, schematics and test files, as well as on-demand Web seminars and e-newsletters featuring the latest products and services available. Avnet also recently updated its PartBuilder parametric search tool to provide detailed product data for nearly two million parts that are now accessible through the distributor’s Web site. PartBuilder enables users to search the Avnet database using a part description versus a specific part number. When a search is performed, the data returned includes the technical specifications and other relevant information like whether the part is stocked and if it is a top seller.
Going forward, Ely plans to further refine the search capability to enable even more intelligence in the search results. This will include more informational offerings on parts and services related to the original search topic. If a customer searches for a particular FPGA, the results will include links to information such as evaluation boards for the device and related seminars. “This will allow online customers to benefit from the same kind of value add recommendations that they would receive offline from our technical specialists,” said Ely.
For catalog distributors, the self-service concept has long been a part of the business model. The Web now enables these distributors to go beyond pure product selection and offer a greater scope of value add services. For example, Digi-Key Inc. of Thief River Falls, Minn., has established a library of on-demand product training modules. The modules offer engineers around-the-clock access to in-depth training on some of the industry’s latest and most innovative products, according to Digi-Key President Mark Larson.
Digi-Key has also updated its static online catalog with a new interactive version that features clickable part numbers, as well as links to detailed product data sheets and photos. “For our customers, the e-commerce model is very convenient because real-time pricing, availability and product comparisons are just a few clicks away,” Larson said. “This allows users to not only research components, but also purchase them from anywhere at anytime of the day or night.”
While component sales are the ultimate goal for all distributors, the full scope of the impact and value the Web has had on the electronics supply chain is difficult to quantify. “A lot of people use distributors’ sites for a wide range of tactical and value added information, but not all (customers) buy online,” said Ely. “If we continue to measure strictly by percentage of revenue, we will miss the fact of how revolutionary the change in the way customers conduct business has been.”
By Diane Trommer
As service providers, electronic component distributors’ value proposition is typically defined by their ability to not just meet, but also exceed customer expectations. Sales representatives or field application engineers who are willing to go the extra mile are rewarded with both business and customer loyalty. In today’s fast food, have-it-your-way world, however, distributors are finding that a best-in-class, customer service experience is not just a byproduct of physical efforts on behalf of the customer. These days, superior customer service is also defined by a distributor’s ability to help customers help themselves with Web-based tools and services.
This is a somewhat revolutionary approach for broadline distributors, said Beth Ely, senior vice president and director of new channel development for Avnet Electronics Marketing Americas, Phoenix. As middlemen in the supply chain, distributors are understandably wary of anything that might distance them from their customers. At first glance, both the Web and the concept of customer self-service seem to represent potential threats to the distributor’s share of the supply chain pie. Yet, as the pressure to shrink development costs and lead times mounts, customers are increasingly turning to distributor partners for easy access to do-it-yourself online tools and information. “Our experience has shown that tools which enable customers to perform certain tasks at their own convenience without the need for outside intervention actually strengthen the bond between Avnet and our customers,” said Ely.
Though the Web has hardly been an overnight sensation that many predicted it would become in terms of pure e-commerce, the impact of its slow but steady infiltration of the electronic supply chain should not be underestimated, according to Robin Gray, executive vice president of the National Electronics Distributors Association, Alpharetta, Ga. “It has taken time for the distribution sector as a whole to find the best ways to use the Internet. But as they continue to refine the functionality, there is increasing benefit and value out there for the design engineering community.”
Distributors that reap this benefit are able to translate the value that defines the company offline into the online experience. “Any site can take you to a part, but what is most important is assuring that the part is the optimal choice, that it can be supported through the development and production of the customer’s end product,” Ely said. “My goal is to harness the richness of information that differentiates Avnet and bring that online.”
Avnet offers a range of online resources to customers including component user guides, schematics and test files, as well as on-demand Web seminars and e-newsletters featuring the latest products and services available. Avnet also recently updated its PartBuilder parametric search tool to provide detailed product data for nearly two million parts that are now accessible through the distributor’s Web site. PartBuilder enables users to search the Avnet database using a part description versus a specific part number. When a search is performed, the data returned includes the technical specifications and other relevant information like whether the part is stocked and if it is a top seller.
Going forward, Ely plans to further refine the search capability to enable even more intelligence in the search results. This will include more informational offerings on parts and services related to the original search topic. If a customer searches for a particular FPGA, the results will include links to information such as evaluation boards for the device and related seminars. “This will allow online customers to benefit from the same kind of value add recommendations that they would receive offline from our technical specialists,” said Ely.
For catalog distributors, the self-service concept has long been a part of the business model. The Web now enables these distributors to go beyond pure product selection and offer a greater scope of value add services. For example, Digi-Key Inc. of Thief River Falls, Minn., has established a library of on-demand product training modules. The modules offer engineers around-the-clock access to in-depth training on some of the industry’s latest and most innovative products, according to Digi-Key President Mark Larson.
Digi-Key has also updated its static online catalog with a new interactive version that features clickable part numbers, as well as links to detailed product data sheets and photos. “For our customers, the e-commerce model is very convenient because real-time pricing, availability and product comparisons are just a few clicks away,” Larson said. “This allows users to not only research components, but also purchase them from anywhere at anytime of the day or night.”
While component sales are the ultimate goal for all distributors, the full scope of the impact and value the Web has had on the electronics supply chain is difficult to quantify. “A lot of people use distributors’ sites for a wide range of tactical and value added information, but not all (customers) buy online,” said Ely. “If we continue to measure strictly by percentage of revenue, we will miss the fact of how revolutionary the change in the way customers conduct business has been.”
Monday, April 14, 2008
Gartner's 10 predictions for 2008 are:
1. By 2010, end users' preferences will decide as much as half of all IT-buying decisions, including hardware, software and services.
2. By 2012, 50 per cent of mobile workers will leave their notebooks at home in favour of other devices.
3. By 2012, at least one-third of spending on business software will go toward subscription-based services instead of a product licence.
4. By 2011, early technology adopters will forgo capital expenditures and purchase 40 per cent of their IT infrastructure as a service.
5. By 2012, 80 per cent or more of all commercial software will include elements of open-source technology.
6. By 2010, 75 per cent of organisations will use full life-cycle energy and carbon footprint as mandatory PC hardware-buying criteria.
7. By 2009, more than one-third of IT organisations will have one or more environmental criteria in their top six buying criteria for IT-related goods and services.
8. By 2011, suppliers to large global enterprises will need to prove their green credentials via an audited process to retain preferred-supplier status.
9. Until 2011, the number of 3D printers in homes and businesses will grow 100-fold over 2006 levels.
10. By 2011, Apple will double its US and Western Europe unit market share.
1. By 2010, end users' preferences will decide as much as half of all IT-buying decisions, including hardware, software and services.
2. By 2012, 50 per cent of mobile workers will leave their notebooks at home in favour of other devices.
3. By 2012, at least one-third of spending on business software will go toward subscription-based services instead of a product licence.
4. By 2011, early technology adopters will forgo capital expenditures and purchase 40 per cent of their IT infrastructure as a service.
5. By 2012, 80 per cent or more of all commercial software will include elements of open-source technology.
6. By 2010, 75 per cent of organisations will use full life-cycle energy and carbon footprint as mandatory PC hardware-buying criteria.
7. By 2009, more than one-third of IT organisations will have one or more environmental criteria in their top six buying criteria for IT-related goods and services.
8. By 2011, suppliers to large global enterprises will need to prove their green credentials via an audited process to retain preferred-supplier status.
9. Until 2011, the number of 3D printers in homes and businesses will grow 100-fold over 2006 levels.
10. By 2011, Apple will double its US and Western Europe unit market share.
Monday, April 14, 2008
In-house vs Outsourcing for your IT Support?
As technology becomes more standardised, reliable and simpler to maintain, mid-tier electronic component companies should re-examine their IT support costs. It has been customary for many to have in-house technical staff for rapid response when needed, but now with low cost redundancy servers and advancements in hardware and software, the blue screen and network downtime are finally becoming a thing of the past (or at least should be if you have the right IT team). This means firms can realistically expect to outsource IT without worrying about being seriously inconvenienced should mishaps occur.
Studies show that there is an increasing trend to outsource, and law firms are leading the trend. So does outsourcing IT mean you are compromising? Far from it! Actually outsourcing allows law firms to concentrate on what they do best whilst your IT partners do what they do best. Below are some common areas where outsourcing your IT makes perfect sense.
Cost Savings
As you only pay for time used, outsourcing results in significant savings. Also, setting fixed costs for projects allows better budget control.
Better service quality
As IT is now handled on a client/service provider basis, service tends to be better than that provided by in-house staff.
Keeping up to date
Technology changes rapidly, and outsourcing providers will have greater appreciation of developments in other industries and be able to determine which emerging technologies can be beneficial to your firm.
Better Risk Management
Risks are reduced as the IT partner will have prior knowledge and experience on projects and only offer proven working solutions. Not only will they have far more real-world experience in many industries they will also be better at mitigating the risks involved in handling delicate tasks like upgrades and security management.
Hiring and Training services
For projects that must be handled in-house, top professional IT outsourcing companies can assist in hiring and training staff to ensure they have the appropriate skills. This training can be conducted on the job, with IT outsourcers providing secondment arrangements where their staff can work at your location.
Economies of scale
Most small firms simply can not afford to match the in-house support services that larger firms have, limiting what can be done, and when. A good outsourcing firm will have the resources to start immediately. Outsourcing also helps small firms act "big" by giving them the economies of scale, efficiency, and expertise that large firms enjoy. Sometimes far better solutions due to less internal bureaucracy...
Local outsourcing partner
When outsourcing is mentioned one often thinks of working with staff in developing countries like India. However effective outsourcing can be done locally so you have a familiar faces in the office, it's also good to know who you are working with. Choosing the right partner is the key to success. Never forget to consider the following questions:
* How good is the company's infrastructure?
* What is the quality of its workforce? How qualified and experienced are the employees you will be relying upon?
* How successful has the firm been in handling projects in the past?
* Who are they currently working with and for how long?
* How confidentially or discreetly will the company be able to carry on your work and what are their security policies?
Once you have satisfied yourself on these counts your firm can unhesitatingly go ahead, outsource and benefit from it...
In-house vs Outsourcing for your IT Support?
As technology becomes more standardised, reliable and simpler to maintain, mid-tier electronic component companies should re-examine their IT support costs. It has been customary for many to have in-house technical staff for rapid response when needed, but now with low cost redundancy servers and advancements in hardware and software, the blue screen and network downtime are finally becoming a thing of the past (or at least should be if you have the right IT team). This means firms can realistically expect to outsource IT without worrying about being seriously inconvenienced should mishaps occur.
Studies show that there is an increasing trend to outsource, and law firms are leading the trend. So does outsourcing IT mean you are compromising? Far from it! Actually outsourcing allows law firms to concentrate on what they do best whilst your IT partners do what they do best. Below are some common areas where outsourcing your IT makes perfect sense.
Cost Savings
As you only pay for time used, outsourcing results in significant savings. Also, setting fixed costs for projects allows better budget control.
Better service quality
As IT is now handled on a client/service provider basis, service tends to be better than that provided by in-house staff.
Keeping up to date
Technology changes rapidly, and outsourcing providers will have greater appreciation of developments in other industries and be able to determine which emerging technologies can be beneficial to your firm.
Better Risk Management
Risks are reduced as the IT partner will have prior knowledge and experience on projects and only offer proven working solutions. Not only will they have far more real-world experience in many industries they will also be better at mitigating the risks involved in handling delicate tasks like upgrades and security management.
Hiring and Training services
For projects that must be handled in-house, top professional IT outsourcing companies can assist in hiring and training staff to ensure they have the appropriate skills. This training can be conducted on the job, with IT outsourcers providing secondment arrangements where their staff can work at your location.
Economies of scale
Most small firms simply can not afford to match the in-house support services that larger firms have, limiting what can be done, and when. A good outsourcing firm will have the resources to start immediately. Outsourcing also helps small firms act "big" by giving them the economies of scale, efficiency, and expertise that large firms enjoy. Sometimes far better solutions due to less internal bureaucracy...
Local outsourcing partner
When outsourcing is mentioned one often thinks of working with staff in developing countries like India. However effective outsourcing can be done locally so you have a familiar faces in the office, it's also good to know who you are working with. Choosing the right partner is the key to success. Never forget to consider the following questions:
* How good is the company's infrastructure?
* What is the quality of its workforce? How qualified and experienced are the employees you will be relying upon?
* How successful has the firm been in handling projects in the past?
* Who are they currently working with and for how long?
* How confidentially or discreetly will the company be able to carry on your work and what are their security policies?
Once you have satisfied yourself on these counts your firm can unhesitatingly go ahead, outsource and benefit from it...
Saturday, April 12, 2008
e-Sourcing Opportunity
e-Sourcing Opportunity
According to the Aberdeen Group, e-Sourcing applications could save US businesses more than $690 billion per year. For example, consider a hypothetical electronic manufacturing company with $300 million in revenue, materials and sourcing costs that equal 50% of its revenue, and Earnings before Interest and Taxes (EBIT) of 40 million. With all other factors held constant---and assuming a 33% corporate tax rate—if e-Sourcing can reduce the company’s materials and sourcing costs by 5% (a conservative estimate), then that can translate into a $5 million increase in earnings. Making a further assumption of a 20-1 price to earnings (P/E) ratio, savings associated with e-Sourcing can increase shareholder value by $100 million.
Example Figures Assumptions & Calculations
Revenue $300,000,000
Materials & sourcing costs revenues $150,000,000 50% of Revenues
e-Sourcing Costs Reductions Savings $7,500,000 5% estimated
EBIT Improvement reductions $7,500,000 1:1 with cost reductions
Earnings Improvement rate $5,000,000 33% Tax
Increase in Shareholders Value $100,000,000 20:1 P/E ratio
In a wide variety of business environment’s e-Sourcing applications also:
• Promote component best practices
o E-Sourcing applications create and maintain a well-documented set of sourcing processes in the form of software templates.
• Extend collaboration on sourcing activities
o Web-based sourcing applications can be made accessible to all appropriate individuals across departments, business units, and company and geographic boundaries.
• Increase the efficiency of sourcing process
o Automating the sourcing process speeds up the individual tasks, reduces error rates and rework, eliminates the need of data entry, and improves process flows.
• Improve sourcing decisions
o The quality of a sourcing decision often depends on the completeness, accuracy and analysis of acquiring source information.
According to the Aberdeen Group, e-Sourcing applications could save US businesses more than $690 billion per year. For example, consider a hypothetical electronic manufacturing company with $300 million in revenue, materials and sourcing costs that equal 50% of its revenue, and Earnings before Interest and Taxes (EBIT) of 40 million. With all other factors held constant---and assuming a 33% corporate tax rate—if e-Sourcing can reduce the company’s materials and sourcing costs by 5% (a conservative estimate), then that can translate into a $5 million increase in earnings. Making a further assumption of a 20-1 price to earnings (P/E) ratio, savings associated with e-Sourcing can increase shareholder value by $100 million.
Example Figures Assumptions & Calculations
Revenue $300,000,000
Materials & sourcing costs revenues $150,000,000 50% of Revenues
e-Sourcing Costs Reductions Savings $7,500,000 5% estimated
EBIT Improvement reductions $7,500,000 1:1 with cost reductions
Earnings Improvement rate $5,000,000 33% Tax
Increase in Shareholders Value $100,000,000 20:1 P/E ratio
In a wide variety of business environment’s e-Sourcing applications also:
• Promote component best practices
o E-Sourcing applications create and maintain a well-documented set of sourcing processes in the form of software templates.
• Extend collaboration on sourcing activities
o Web-based sourcing applications can be made accessible to all appropriate individuals across departments, business units, and company and geographic boundaries.
• Increase the efficiency of sourcing process
o Automating the sourcing process speeds up the individual tasks, reduces error rates and rework, eliminates the need of data entry, and improves process flows.
• Improve sourcing decisions
o The quality of a sourcing decision often depends on the completeness, accuracy and analysis of acquiring source information.
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