Pete Shopp, Senior Vice President of Business Operations at Mouser Electronics, joins us in this Executive Perspectives episode to discuss the company’s massive warehouse expansion project. Shopp also covers Mouser’s global operations and provides insight into the electronics industry’s growth potential.
This interview has been edited and formatted for clarity.
Tyler Fussner, Managing Editor, Supply Chain Connect
Pete, thank you for joining us today.
Pete Shopp, Senior Vice President of Business Operations, Mouser Electronics
Thanks for having me.
Fussner 0:23
If you wouldn't mind introducing yourself to the audience.
Shopp
My name is Pete Shopp. I am Senior Vice President of Business Operations with Mouser electronics. My primary responsibility is the warehousing, logistics, trade compliance, a lot of those things, to make sure that we're able to get parts to our customers.
Fussner 0:43
And speaking of warehousing, I understand that Mouser is undergoing a huge expansion with your warehousing. Can you tell me a little bit about that?
Shopp 0:50
Yes, this is our largest ever. It's 413,000 square feet, but we will be able to go three stories high. So, it's really the equivalent of one million square feet. We're going to have a lot of automation. Eventually, we'll have 300 VLMs; we're looking at some automated pallet rack storage systems. We're going to move receiving over there, and we'll be able to move half of our inventory over there to basically divide everything up. And we'll have a fully operational warehouse, including the shipping department. So, we're building resiliency with this warehouse.
Fussner 1:29
That’s very exciting. Very exciting. So, Pete, I wanted to ask you a little bit about the changes the industry has faced over the past few years. And from Mausers perspective, have you been able to implement any changes that have helped untangle the supply chain backlog that's been faced by many.
Shopp 1:49
A lot of the supply chain backlog that we've been dealing with has really been solved with a lot of communication with our suppliers. Basically, our supplier marketing team has spent the last two years working with our supplier partners, who have supported us very well in giving us inventory, so that we can keep the design pipeline open. We also made some other changes to protect our inventory to make sure that we kept the inventory for the design engineers. We purposely prevented some of the large people from just coming in and buying out all our inventory.
Fussner 2:31
Yeah. And that communication is so valuable to everyone involved, and to have that conversation be able to take place and get some transparency and insight into where they stand.
Shopp 2:44
Yeah. They spend a lot of time; of course, they had to do it on Zoom calls, not so much in person. But now they're traveling all the time. It's in a way, though, that relationship started long before COVID. That's what our product team does. They're having those relationships with the suppliers and working together so that it's good for both teams – our Mouser team and the supplier – so that they can both be successful, grow the business, get the parts to design engineers so that new designs are happening, new designs are being created, that will eventually go into production.
Fussner 3:30
And I'm sure a lot of those relationships have come out of the turmoil even stronger than before.
Shopp
Definitely.
Fussner
Pete, I also wanted to ask you a little bit about technology. As Mouser and many others have been facing these years of turmoil and change, have you been able to implement anything like AI or ML and found anything that was particularly successful in helping address any supply chain challenges?
Shopp 3:56
We are using some; we are trying to figure out how to use more. Certainly, we have a lot of AI that goes into our purchasing program to figure out which parts to buy, which ones to put on the shelf. That's probably our biggest use of it.
Fussner 4:16
After coming out of this shift, or cycle, so to speak, and speaking of the customers, what are their pain points today? What are you hearing from their perspective today as they're looking at Mouser, what are they asking you?
Shopp 4:32
So, some of them are still in desperate need of certain parts. And they're convinced that we can get them for them. And there's just certain parts that aren't out there. They're just not available. We don't know when they're going to be out there. So, we have worked with them on either, “Do you want a different part? Can we help you figure out a different part that will work for your build or whatever you're building? Or is there something else that we can have?” Because, obviously, there's a lot of other parts. We have a lot of parts in stock; maybe not the one you want, but we have over a million parts on our shelf today. And yes, we still have some that are on backorder, about 30,000 of them from some of the key semiconductor suppliers, but we have 250,000 other semiconductor parts on the shelf.
Fussner 5:25
And I think goes back to what you raised earlier that communication is key. Right? And it doesn't matter what part of the process they come in and ask these questions, but as long as they're able to have someone answer those questions, it's important.
Shopp 5:37
That is correct. We're still taking those phone calls. And again, that's another way where our supplier management team, working with our suppliers, can understand, “Hey, what are the options available? Maybe you can't get me this part. What's your other part that you can provide for us?”
Fussner 5:57
And sticking with the customer perspective, it seems that maybe the purchasers are more adept at using ecommerce and looking through web-based purchasing practices. Have you found this to be true and has Mouser addressed the more adept and more readily-to-use ecommerce-type of purchaser?
Shopp 6:23
Well, if you look at the online catalog providers, whatever you want to call us (and certainly we have a competitor up north), the two of us have embraced ecommerce more than the other distributors and we've also grown more than the other distributors. And we've been doing that for a long time.
I think there's no doubt that our model is definitely the most successful model that's happening right now. Many of the other distributors, and even some of the manufacturers, are trying to take advantage of ecommerce, but some of the things that we're doing is ahead of them and continues to drive more customers, more traffic to mouser.com, where they're able to find the parts they want, find solutions to what they're trying to build.
We provide the data sheets, so many tools that we provide for them – whether it's [unknown] tools, informational tools, application notes – that can really help them build their design. And we continue to build on those capabilities; we continue to add more information to the website. For example, some of it is just a green leaf so that people in Europe know this part's okay for them to sell. Those are the types of things that we've been adding to our website over many, many years. Just really what the customer needs and wants.
Fussner 8:03
And understanding those customer needs, I think, is so important in an ecommerce space for a buyer to be able to go into an environment where, as questions arise, they're able to answer them on their own. And they want to be able to go and navigate that process on their own as much as possible. It sounds like you set up the tools and steps to make that available to them.
Shopp 8:25
We have. And we hear a lot of comments from our customers. The tools that we've added have basically been things they have asked for. Some of them we came up with on our own, but a lot of it is trying to really listen to the customer. What are they wanting? What are they doing? How are they searching? And then continue to add additional tools for their use to make their life easier, make the life of the design engineer and the small buyer, make their life easier. How do you find parts? How do you understand the parts so they'll fit your solution?
Fussner 9:06
And, again, it sounds like it all circles back to that communication. A very key element to have in the Mouser model.
Shopp 9:17
You learn a lot by listening. I guess now it's not so much listening as it is reading a blog or reading a comment that they make on the website. Because we get so many comments from our customers through the website. Of course, we still have customer service representatives, so we're talking to customers also. We're visiting some of the biggest customers – we're doing that more and more. We're getting a lot of input from our customers, trying to understand what they want, what they need. Whether it's data on the website or information on the website. But they're also telling us other things that they want and need, like new services that we're talking about.
Fussner 10:06
I think it's a powerful stance to take. And it really can gain a lot of insight when you open your ear and listen. So, Pete, can you tell me a little bit about what makes Mouser different as a global distributor, and the ability to service customers around the world?
Shopp 10:24
I think some of the differentiators that we have: being global but appearing local. We have customer service offices around the world so that customers, if they have a question, can actually reach out to someone locally, in their time zone, in their local language, and provide the customer service. They can answer questions; they can solve problems for them. Maybe there's a mistake; the customer ordered the wrong thing – how do they get an RMA? They don't have to do that on the website; they can actually talk to a person and get the service they need.
In addition to that, over the many years of us doing business, we have multiple websites, multiple languages, many different currencies, even certain local credit cards that are very local to their individual country. So, we've worked for many years to make these kinds of additional features on our website so that we appear very local.
Because of that, you can take all that combined, and it really is a unique experience for the customer. And they can work with us locally on a website in their language, in their currency. But they can also deal with a customer service person that will also speak their language and be able to handle their local needs.
Fussner 11:52
The ease of access and accessibility for an end user has to be a breath of fresh air.
Shopp 12:00
Well, and I like to say to other people, a lot of people do like websites and the anonymity of it but at the same time, a lot of times, people just want to talk to someone. And they really like to do it during normal hours in their local language.
Fussner
Certainly, it makes things easier.
Shopp
Yep. And the design engineers that we're working with, most of them do understand and speak English, but it doesn't mean that's what they want to do. They would much rather deal in their local language, in their local currency, whether it's on the website or with a customer service person.
Fussner 12:39
So, Pete, I know, there's no way to tell the future, but I'm going to ask you to do that for me. Can you tell me: How are the distributors going to evolve in the near future?
Shopp 12:51
I think there's going to be continued automation. Certainly, it's getting more and more difficult to hire people and retain people. So, some of that automation [will make it] so [that] people can work smarter and better. I think that's going to continue to happen.
There's going to be more technology in warehouses, more automation in warehouses, so that you can process orders quicker, faster, more accurately, more efficiently. Certainly, that's going to happen. I think there's going to start being more robotics on the distribution floor, in the building, doing more and more so that, again, you can make the people processing orders more efficient.
That's one of the big things about our new warehouse. We've made a lot of changes to our existing warehouse over the last few years [as well] to increase the efficiency, increase the accuracy, and make it easier for the worker to do their job.
Fussner 13:54
And it's gotta be so exciting having a brand-new facility coming in; you’ve got to feel like a kid in a sandbox ready to integrate these new technologies?
Shopp 14:02
Absolutely. It is. We have a team of several people, and we're working with system integrators to start with the blank chalkboard and figure out what would really make things the most efficient; what would you do if you were starting from ground zero. Of course, when we started from ground zero, we didn't have the same kind of resources that we do now to be able to start from ground zero. So, that's exciting.
And we've had a lot of support from our executive team, including Glenn Smith, our president and CEO, working closely with Mike Morton, the CEO of the TTI family of specialists, which ultimately leads to getting the support from Berkshire Hathaway. We have a lot of resources available to us and they're allowing us to operate so that we can grow and make these long-term decisions because we're not worried about a quarterly decision; we're able to make them for the long term, make the long-term investments.
Fussner 15:12
So, Pete, I would love to hear your perspective on the immediate future. What does the business look like in the next six months? And going beyond that, what do the next 18 months look like?
Shopp 15:24
Well, certainly I think the rest of this year, I think the best word is ‘choppy.’ Seeing in our business, we'll have a couple of great days and bookings and we [will] think things are turning around. And then we'll have a couple of “Ehhh” kind of “Meh” days. Certainly, we've come down from the crazy bookings of last year, which everybody knew they would not be sustainable.
I think the next six months are going to be rough; like I said, choppy. But when you look long term at the things that are happening in the electronics industry – the only option is for it to go up. When you look at the things happening on some of these infrastructure bills around EV. You look at the IoT. Literally, my wife bought a toothbrush that has Bluetooth attached to it that measures how well she's brushing. It's kind of crazy, but that is going to continue to happen. And then where does VR and the metaverse and all that take us? It's going to take us somewhere. It's going to take a lot of computing power, a lot of machines, that are going to make it happen.
So, when you look at the overall electronics industry, it's going to keep going better. It's going to go better than the GDP, consistently. It's growing two times faster than the rest of the U.S. economy. So, it's exciting to be a part of the electronics industry and know we have that kind of growth potential that's long term and sustainable.
