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presented by
Gary Kibblewhite
Chairman: International Distribution of Electronics Association, Milan
Chairman: Association of Franchised Distributors of Electronic Components, UK
Director: Abacus Group UK
Partner: Europartners Consultants, UK
Europartners Distribution Forum-Paris- May 2004
What’s happening in Electronic Component
Distribution
•Around the major markets
•World influences & challenges
•The Major distribution Groups
•The decision process for contracting overseas
Electronic component distribution in May 2004
In 2003 we have seen another decline in most component distribution markets across the Western world…..
(source Europartners distribution report 2004 interim results)
France minus 9.6%
Italy minus 9.8%
UK minus 7.9%
Nordic minus 10.9%
USA minus 13.8%
But Germany no change
The recovery is now underway….just!
France Distribution Sales
I D E A
In calendar 2003 sales dropped 9.6% over 2002
( they dropped 21.3% in 2001 after growing 38% in 2000)
Total Electronic Com ponent Bookings / Billings
0
100
200
300
400
500
Q4-98
Q1-99
Q2-99
Q3-99
Q4-99
Q1-00
Q2-00
Q3-00
Q4-00
Q1-01
Q2-01
Q3-01
Q4-01
Q1-02
Q2-02
Q3-02
Q4-02
Q1-03
Q2-03
Q3-03
Q4-03
Period
M illions €
Bookings
Billings
Italy Distribution Sales
I D E A
In calendar 2003 sales dropped 9.8% over 2002
( they dropped 17.4% in 2001 but increased 41% in 2000)
Total Electronic Com ponent Bookings / Billings
0
100
200
300
400
Period
M illions €
Bookings
Biilings
UK Distribution Sales
I D E A
In calendar 2003 sales dropped 7.9% over 2002
( they declined 14% in 2001 but increased 30% in 2000)
Total Electronic Com ponent Bookings / Billings
0
100
200
300
400
500
Q1-99 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00 Q4-00 Q1-01 Q2-01 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q1-04
P eriod
Mill ions
£'s Bookings
Billings
Germany Distribution Sales
Sales through distribution has shown a similar pattern
to UK, France and Italy except that in 2003 there was a small growth (Est. 2003 revenues at 1.5.04)
Mill Euro
2000: 4170
2001: 3806
2002: 3372
2003: 3376
I D E A
Nordic Distribution Sales
In 2003 sales declined 10.9% over 2002
Total Bookings / Billings
0
50
100
150
200
250
300
Q1-99 Q2-99 Q3-99 Q4-99 Q1-00 Q2-00 Q3-00 Q4-00 Q1-01 Q2-01 Q3-01 Q4-01 Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q1-04
Period
M illions € Bookings
Biilings
USA Distribution
Sales
•US sales through distribution has halved since 2000
Mill Dollar
2000: 28311
2001: 20125 -28.9%
2002: 15172 -24.6%
2003: 13078 -13.8%
2001/2002/2003 DTAM for the top European countries Mill € ( prelim estimates 29.4.04)
3376
1820
1346
936
532504 492444
288 280 276 232 193 150 108 96310
130
0
500
1000
1500
2000
2500
3000
3500
4000
$ M ill
Germ
any UK
Italy
Fran
ce
Swed
en
Bene
lux
Russ
ia
Spai
n &
Portu
gal
Aust
ria
Denm
ark
Switz
erlan
d
Finlan
d
Hung
ary
Norw
ay
Czec
h
Polan
d
Rest
of W
Eur
ope
Rest
of E
Eur
ope
Europe’s top distribution Groups Industrial components sales in 2003
€ million actual year’s conversion ratePreliminary estimates 26.4.04
-
18351645
582 389371 352 320
196157
85
0
500
1000
1500
2000
2500
Arro
w
Avne
t
Abac
us R
utro
nik
Euro
dis
Mem
ec
Futu
re
Elec
tro C
omps
Prem
ier F
arne
ll
Acal
Lage
rcra
nz
2001 2002 2003
The DTAM is more secure than the TAM in Europe
•Clearly China is a threat but Electronics Manufacturing in Europe is far from dead.
•Europe has substantial brain-power, electronics infrastructure, education, skills, experience and above all discerning markets that consume electronics product.
•Companies are now focusing more on the value chain than the supply chain
Electronics manufacturing companies who release their manufacturing to EMS suppliers the other side of the world often just haven’t thought through the process.
In the UK interviews have taken place with companies that have taken the sub-contract route and regretted it!
We must ensure that our customers really understand the risks!
Some of the factors that are considered are:
We should encourage our customers to ask all these questions……
•What Products are the Core Competence of our Company?
•Have we selected a Product that is suitable for Outsourcing?
•What are the business drivers causing us to look at Outsourcing ?
•Are we prepared to allow the outsourcing partner to manage the relationship?
•Have we understood what costs we need to take out of the organization to make outsourcing profitable ?
•Have we evaluated the cost of managing an Outsourcing partner?
•Do we understand how to integrate our own organization with that of the Outsourcing partner so that we can maximise the leverage?
•Do we appreciate that we will now be dealing with external operations so all engineering control functions must be capable of communicating both inside and outside our company.
•Have we a mechanism for evaluating the impact of Legislation on our sourcing decision?
•Can we communicate effectively with Outsourcing partner?
•How do we ensure the security of the IP of the Product/Service?
•Where does technical/design support come from when sources are no longer local?
•Have we ensured that there are sufficient funds available to launch/outsource this product.
•Ensure that the product chosen is not at a critical stage of its Life Cycle?
•Ensure that Outsourcing partner has the skills to manage the Supply Chain associated with the product
•Ensure you understand the dynamics of Supply Chain Governance…who controls the supply chain?
•Ensure that you understand the cost impact of changing the supply chain in particularly the impact on local sourcing and local product knowledge
•Do not choose a Product/Service that relies on a large amount of undocumented local knowledge.
•What is the life-cycle of the product involved? If short is outsourcing viable?
•Ensure that processes and procedures are accurately represented and understandable across cultural divides?
•Ensure that you have a mechanism for measuring the success of the outsourcing
•Have we considered the impact on the WIP of the supply chain? Will the project be able to handle this?
•What sort of Outsourcing
•Have we considered the relative flexibility of Outsourcing vs In-House Production?
•Have we considered the impact of Single Sourcing with one EMS provider?
•Have we considered what size EMS partner is appropriate for my business ie Tier 1 , 2 or 3
•Do we understand the implications of a Standard Outsourcing Agreement?
In Western Europe there are many new technology based changes occurring which our designers and manufacturers will be developing new products around
Eg.
Mem technology
System on a chip
Bio-electronics
Carbon based electronics ( plastic/polymer)
Plus many more…
And then there are the opportunities that will come from end of life management coming out of RoHs, WEEE and the new eco design initiatives.
I believe for Europe there are more opportunities than threats from this legislation, but we must understand it and run with it, not try to fight it!
May I leave you with a plea concerning one of the less
helpful effects of Globalisation. The reduction in technical support.
There is a gradual decline in tech support for everything from materials, components through to capital equipment
The movement of major manufacturing resource overseas has driven this. Within our part of the supply chain, components, I believe that both distributors and
their suppliers must work closely together to ensure that information and support on those new technologies that
we will depend upon in the future will be available.
Thanks you
I am happy to take any questions you may have
References :The Component Distribution Study referenced in this presentation is the :
“Europartners 2004 Electronic Component Distribution Report”
published annually in June with separate reports covering :-
The Americas W.Europe E.Europe
Mexico Austria Poland USA Belgium Russia Denmark Hungary
Finland Czech Republic France Germany Italy Netherlands Israel Norway
Portugal Spain
Sweden Switzerland UK