Jim Banovich, CEO of Marsh Electronics, and Eric Fieck, Territory Sales Manager, join this episode to discuss the importance of understanding a customer’s needs in today’s supply chain environment. Marsh Electronics has been expanding their service solutions and Jim and Eric speak on the success, and necessity, of meeting evolving customer expectations.
This interview was edited and formatted for clarity.
Tyler Fussner, Managing Editor, Supply Chain Connect
Jim. Eric. Thank you for joining us.
Jim Banovich, CEO, Marsh Electronics
Good morning, Tyler. Thanks for inviting us.
Eric Fieck, Territory Sales Manager, Marsh Electronics
Thanks, Tyler.
Fussner
If you guys could please introduce yourselves to our audience.
Banovich 0:23
I'm Jim Banovich with Marsh Electronics. I'm our CEO and President. We're an electronic components distributor in the Midwest of the United States, focused mostly on electromechanical product solutions, along with some light manufacturing capabilities with our MarVac Assemblies group.
Fieck 0:40
And I'm Eric Fieck. I am a Territory Manager for Marsh. I manage a portion of our outside sales team in the state of Wisconsin, as well as handle a couple accounts from an account management outside sales role as well.
Fussner 0:53
I'm very excited for this conversation today. I'm curious to ask you: How has the role of the distributor transformed as of late? What is different today, say in 2024, for distribution operations?
Banovich 1:05
From an operational standpoint, I would say there's a lot more interest from our customers in passing down things in the quality area; having us, as a distributor, pick up more of that role for them both in the areas of evaluating our suppliers, grading our suppliers, providing feedback in regard to that, in addition to us getting much more involved in the things like PPAPs and CFATs and certifications and regulations and updates on a lot of the different policies that are involved now, coming from not only our country, but elsewhere. So, being updated on all those different regulations, that role is expanded for us, and it's also expanded into our assembly area as well with MarVac Assemblies.
Our feeling is, as a distributor, if you're not investing into your quality department, enhancing your quality department, you're not going to be able to play the game real long, or you're going to lose business because customers are asking us to play a bigger role in that. And I'm sure for our manufacturers that might be providing products direct, the same thing is happening to them. They're just passing on to the need for those services.
I think we're also seeing [customers] looking at us to advance our operational efficiencies. In other words, enhancing our warehouse capabilities. We've done a lot of things to try and start digitizing our warehouse more. We added a vertical lift module which helps us automate some of our processes a little bit better [and to] be able to validate things. The world of our warehouse is increasing, at least for us. I know some of the bigger guys have much more automated systems in place, but you have to do that to be able to stay competitive and also help support your customers better.
I think they're also looking for us to make sure we're up to date technology-wise; that we can interface, communicate, with them technology-wise. Technology stacks, digital transformation of your systems, of your operating system, those are all things, at least for distributors our size (in the mid- to small-size tier) are all investing in, looking to enhance and grow in, to support our customers.
Our customers are looking for much more integrated systems, or integrated solutions from us. Eric can talk a little bit about that, he works directly from the customer standpoint from a sales side.
Fieck 3:25
From my perspective, I see two different aspects here. One, working with our vendors and suppliers. They are looking at the channel partners more than ever, based on what we went through the past couple years with the COVID situation, the inventory, the backlogs… Our manufacturers seem to be partnering up with us a lot closer than ever in trying to rely on their channel partners to manage the finished goods inventory for the end customer versus trying to sell from a direct perspective.
On the flip side, the customers, like Jim stated, are pushing a lot back on us. They are truly looking for that solutions aspect from a supplier. They want to continue to build more and more within that relationship and continue to grow together as kind of a one-stop-solution.
Fussner 4:10
I want to stick with the customer's perspective. It sounds like they are asking for a lot more assistance with the solutions that you can offer as a distributor. Are they coming to you with any new problems today? What are their challenges? Is it not being able to execute on those solutions themselves, or do they have new demands?
Fieck 4:27
We're still trying to weed our way out of this COVID-era situation. We're three, four years later now and we have yet to see the light at the end of the tunnel. Between the customer's perspective of the excess inventory, the distribution side of the process of the excess inventory, we're still trying to weed through that all and get back on the other side and figure out where we all stand. It's just been a crazy couple of years.
Beyond that, just from the COVID perspective, the quality challenges continue to grow. We're seeing all this certification aspect, and we're relying heavily on our manufacturing partners to help us filter through some of that data out there as well.
The industry as a whole continues to become more and more data focused and analytics focused, and it's just [about] continuing to stay on top of things and being smart for your customers at the end of the day.
Banovich 5:20
When we get into the integrated solution opportunities for them, this is where our MarVac Assemblies group comes into play really well. They're looking for us to be able to provide more of a build for them; a pre-assembled unit for them, in some cases, whether it's a wire harness or a little sub assembly panel or a small box build. They are asking us to help and take on more of a role for that. We focus on second- and third-tier type customers. They're not printed circuit board type folks. It's a lot of electromechanical, hands-on type product, and they need to be assembled, sub assembled, have leads on them, and our customers are having a difficult time (same thing) finding people to be able to do that stuff. Their resources are a little bit shorter.
They're also asking us to start getting into that design-assist area with them, and then provide documentation and support to go with that, so that they can get little sub-assemblies, wire harnesses, components prepped that can come in ready, so that they can just take them off the shelf and just insert them in the machine and enhance their manufacturing process and streamline their production process.
We continue to make, as company, investments into our MarVac Assemblies group to be able to handle that, because the capabilities—they keep enhancing and [customers are] looking for us to do more in that area.
Fussner 6:40
Eric, something that you mentioned: People are looking for data-driven solutions. Has Marsh also taken that same approach with offering these new solutions and services to your customers? Are you introducing any advanced technologies? Data-based decision making? Maybe AI or ML to help with your distribution practices or your service solutions?
Fieck 7:01
I'll let Jim handle that from a bigger company perspective, but from an AI aspect, it's an exciting area. I have no idea where it's going to go. We spent a fair amount of time down at ERA learning about it and diving into the conversation and just figuring out what it can do. You can look up competition faster than ever. Who makes a heat sink? Who manufactures heat sinks? Ask ChatGPT those questions these days and it's at your fingertips within a matter of a half a second. Where it's going to go, I have no idea. It's exciting to be on the edge of leading technology here.
The customer, I think, is, quite frankly, just as curious as we are about how it can help there. Maybe supply chain logistics aspects, maybe getting to market faster on the new design. A lot of question marks out there. It's fun to continue to ride along, and hopefully we can continue to lead that conversation, but we're all in it together to try to learn.
Banovich 7:56
AI… You can go so many different directions with this, because it goes so many different directions. For Marsh, it is very new. We're still trying to learn about it. We're still trying to figure out how we'll fit it into our organization, and it will, and we will, and it'll be in all facets of our organization, somehow, some way, and being utilized.
Early on, we are using it more in some of our marketing efforts in a number of different ways, from producing some ads and social posts and such like that, and some graphic-type of stuff. We've also used it for some document creation as well as document editing in review. It has provided some insights for us on how to focus in on that document and go through those documents. It helps us go through contracts, customer agreements, certification stuff from customers. We're utilizing it in that matter.
We've also added in some software pieces that allow us to do some proactive responses within our system. Eric mentioned data earlier. We have the ability to go through every transaction we do and analyze its profitability, and with that, we can go back to customers. It helps us, obviously, but if we can look at reducing transactions or making transactions more profitable and more efficient, the gains we see there are automatic gains for the customer as well. They don't have to handle it as much. It should be less costly on their end from transactions or invoices and purchase orders and things like that. We've started that a little bit ahead of time with that portion of the software we have.
But going forward, we're looking at a new ERP system for our MarVac Assemblies group, which we know will transition into the distribution end. We know there's going to be a lot of AI tools built into that for the operating system. And one of the beauties, I think, that's gone on in the last couple years, at least for distributors our size, (we were number 27 in your global distribution list) but some of that stuff has been a little cost prohibitive for us. Well, in the last five years or so, technology stacks that are out there have gotten a lot more affordable for distributors our size. And so, we can now get those. We can get things to help with inventory optimization, forecasting and planning with our customers and supporting our customers, and get more efficient in some of that stuff.
It really, truly is exciting with where it's going to go. And I think as long as you view it from a standpoint that it's a great tool, and it's got great opportunities for you to get better, to learn, to get more efficient, you're going to have a lot of fun with it. If you go at it where you're scaring the daylights out of yourself and you're uncomfortable with it, you'll struggle. But you have to enhance it. It's where we are and where we're going.
Fussner 10:41
As a distributor, is your company developing any new offerings or skills to help your users and your customers manage their projects?
Banovich 10:51
Yes. We've added a layer into some of our larger account management. We've added in what we call project managers, and they interface and work between our outside sales team and our inside sales team and the customer as well. They have direct relationships with the customer, and what they do is handle some of these larger, integrated, turnkey projects that we work on with our customers because (what we talked about earlier) they're asking us to provide a more integrated solution. That typically is more content, maybe more parts. It's turning into a turnkey solution where our supplier partner is actually going to build a product for our customer, provide engineering support for our customer, working integrally with the customer, direct, and we end up being the project managers for that.
The size of the customers we deal with, it's a big help to them, because they may not have the staff to support it or they're looking for that extra service. So, for us, in the last three years, it's been fun to watch evolve. It worked terrifically for us, and we see it as a great value proposition. Now we can take this to our customers as well as our supplier partners. We have another level to help provide a great customer experience and help our customers move along. We've seen that become an integral part of some of our larger accounts and our project management that we do.
We've also transitioned that to having a project manager in with our MarVac Assemblies group. We're starting to do higher content, more complicated assemblies, or box builds, per se, and when you're dealing with a lot of parts and a lot of differences, you need somebody internally that can help manage that, take that load off, but has those skill sets to be able to manage a project. That's a big help for us.
When you get back into the quality end, having the ability to process PPAPs for our customers and the different levels of PPAPs that there are, and there's definitions for them (but each customer tends to modify those definitions a little bit) but we have a whole group of individuals within our quality group that now also handles PPAPs and processes PPAPs for customers. Great value service for them, because they need it; it has to get done. It's a great value proposition for our suppliers as well, because some of them do them, some of them don't, or they don't want to do them, depending on the account size. It's a level for us that's really, truly brought a value to our customers that are looking for that.
Fussner 13:16
It's always helpful when the people that you work with can lighten the load, right? When they can help guide you. It's always a benefit as a customer to have those customer-centric solutions available.
Banovich 13:28
It's fun to watch from afar, because it really is how our world as distributors is changing. It's very different than it was 10 years ago, 20 years ago. It's amazing.
Fussner 13:40
We had mentioned earlier, many companies are still working through the global disruption that was the COVID pandemic, and today we are seeing recent supply chain disruptions—whether it's the conflict in the Red Sea or the collapse of the Baltimore bridge, or even earthquakes in Taiwan. Have any of these recent disruptions affected Marsh? How does your company handle supply chain disruptions?
Banovich 14:06
In recent instances, it hasn't too much. However, during COVID, with all the delays of ships out in the ports and all that, and then the shortage of trucks, internally once it got in here, the rail systems that were messed up for a while with strikes, and especially in Chicago, there is no doubt it affected us. We have an operations manager that's we've worked with, a logistics source that we've contracted and partnered with for the last 10 years. They've provided a lot of really great global perspective of where things are at and how things are operating, where they may see interruptions and such, and they've communicated that very well for us. That's provided us that insight. I would say they've been pretty forward thinking, too, as a logistics company, in how they can handle these things, pre-planned for us; different avenues to go down. But once again, it's another area for a distributor of our size, we've had to spend time trying to find those types of companies that we can partner with that can provide that, because we don't have a lot of the internal resources to do that.
As a small- or mid-sized company, you wear a lot of hats, but you have to have some really good partners today to help you manage through some of those things. I really feel good with our logistics partner; they've helped us provide that.
Our operations manager has really done a nice job, too, and he sees some things that could be critical, and some areas where we're getting product out from our supplier partners. He'll call meetings with our branch managers and our sales team and our purchasing team and let them know what's happening, and how it may affect us based on our logistics carrier and partners so that we can try and plan a little bit. I feel good for the size we are, where we are with that, but you have to plan for it because you don't know where they're coming from today.
Fussner 15:53
What does that conversation look like with your customers? Do you have any advice that you offer to the people that you work with? How do you prepare your customers for the disruptions that could be coming on the horizon?
Fieck 16:05
I think everybody's a lot more self-conscious in today's supply chain than they were even just three years ago. The conversations, working with engineers as a sole-source component, I don't want to say they're few and far between, but they're a lot less often. You are one of multiple components that are approved with that engineer because of what we just went through the past couple years.
Reshoring is a constant buzz term these days. The geopolitical constraints and concerns with the Asian market versus the North American market, it's on the back of everybody's mind, and maybe for some towards the front of their mind. But what's going to happen there? Is there further concern there or not? India seems to be the new China these days for lower cost production aspects.
It's this constant juggle with the customers of, “What are you really looking for?” A lot of our customers still, to this day, it really comes down to price. But at the same time, too, they understand the cost of being shut down. It's a lot more exposed, and a lot more value added to that conversation than what it once was.
Banovich 17:07
I think you just hit on a great point, Eric. It's a lot more exposed. I think the engineers he works with, the buyers and the purchasing professionals he works with, they know all this going on in today's world. It's almost impossible not to understand this stuff is happening, because it's not just been one area of electronics; it's into steel; it's been into plastics and fuel—you name it. It's broad. So, there's no way they can't hear it. More than likely it's not a surprise to them, or something they don't understand, because between social media, cable news, the internet—you name it, it's out there all over. You'd really have to be disconnected to not hear this stuff. So, while those conversations can be difficult, I think they're less of surprises today than they were 10 or 15 years ago.
Fussner 18:02
It certainly seems that everybody's eyes are completely open ever since going through COVID. It's more so about just having those difficult conversations and making sure that line of communication is open, maybe designing in some flexibility like you mentioned, and just being prepared to be able to pivot.
Banovich 18:19
We always want to have those conversations from a standpoint of being as prepared as we possibly can. Try and do a lot of homework ahead of time, even do some role playing once in a while, just to try and understand where the customer may come from. But bottom line, you come in prepared. You tell the truth. You be up front and honest about it. You also express a strong desire that you're trying to find different ways to help them. If they got some ideas, you're open to hearing them, and vice versa, but you still go in with that open, honest, “This is what's going on. We're not going to hide anything from you, and we're going to do our best to help you.” That's our foundation, and it's typically always worked. You just keep going with that. Recognize it's going to be tough, but we'll make it through.
Eric talked about single sourcing, that's a huge one for us, because we have customers that have old designs and all of a sudden you have a disruption. And—holy cow—that's the only part I have approved! Well, you can't do that anymore today.
Just being upfront and having those conversations, and sometimes even for us, it's saying, “Hey, you might have to utilize another source than us, or another competitive product that we don't carry, but we want to be up front and help you.” We feel obligated to do that, and we don't have a problem doing that.
Fieck 19:36
If anything was learned throughout the last couple of years, in talking with your customer, if you were in depth with your customer and you really listened to them, bad news was better than no news. We all went through a difficult time, but the suppliers that weren't supplying any news and just weren't responding, they were the ones that were losing like crazy. Those that were yes, you had to come in with bad news, and it wasn't easy to share that information, you came out of the pandemic a lot stronger than you were before.
Banovich 20:02
What's the great definition of great customer service? Don't surprise your customer. You do the best you can not to surprise them, good or bad.
Fussner 20:11
Taking a step back, looking at the market as a whole. Do you see any certain industries or verticals that are poised for growth in the next six to 12 months? On the flip side of that, do you see any industries that may be facing some challenges?
Banovich 20:25
For us, we've seen energy… EV… military has definitely continued to be on an upswing. We deal with a lot of off-road vehicle or off-road transportation type stuff that continues to evolve. Some of the industrial segments are kind of a mix, depending on where they're at.
From a downside, I would say anything that's consumer related, at least from our perspective in our business mix, that's definitely down. It's a mixed bag, but we definitely see some markets that have good upside, great potential.
Fieck 21:03
EV and the energy sector side of things is very interesting. We've got some customers that are really embracing it, jumping all in, and we've got other customers that we're all in, and they're jumping completely out. We're still in that in-between sector right now… Are the big guys going to get bigger and the smaller ones are going to go to the side? Are you going to see that many more players continue to come up and try and get into that EV industry and electrification as a whole? It's an uncertainty right now. So that one will be fun to watch.
Fussner 21:32
I saved the hardest question for last. I want you guys to tell me the future. But in all seriousness, what do the electronics market stakeholders need to be prepared for come 2025?
Banovich 21:44
Well, if you talk or listen to a number of different economic pundits, especially as it focuses around our industry, they see growth. Through the remaining part of the 2020s, I think the electronics industry has incredible opportunities that we still haven't even seen. The continued demand for data… to do all that you need electronics. You need semiconductors and all the pieces that go with it. The semiconductor world, the microprocessors, the microcontrollers, the AI-type chips and all that—that's just on the beginning. It's continuing to grow, so that demand is going to be immense, I think.
I think post-COVID, we're seeing manufacturers come to us more about handling pieces of business for them, where in the past they might not have. I think customers are realizing the value of distribution and what it can bring after we went through the supply chain logistic issues with COVID. The world for distribution and in our industry, quite frankly, to me, is incredible and exciting. If you've positioned yourself right and you're putting the right pieces in place, there's no end. And it's fun to be part of it. We really have a great future. It's exciting.
