Last fall, Avnet’s Gerry Fay marked his one-year anniversary as head of the company’s global Electronics Marketing business. Avnet EM is the electronic components side of this multibillion-dollar company, and Fay is charged with building the brand in an increasingly complex global environment. Improving its online presence—particularly the ability for customers to transition easily to the Web for all the services they require—and leveraging the brand’s global footprint and far-reaching technological capabilities are key expansion goals. Avnet EM’s embedded technology business is a key part of the strategy, as customers seek more ready-made solutions and deeper access to software and related services. Speeding time-to-market and streamlining the research and development phase for customers are important parts of that equation. Avnet EM’s Embedded Software Store, a marketplace that connects design engineers and software vendors, is a case in point.
Global Purchasing asked Fay to talk about these and other aspects of Avnet EM’s business as he embarks on his second year at the division’s helm. Here are some excerpts from our conversation.
Global Purchasing: How would you assess your first year as head of Avnet Electronics Marketing Global, and where do you see the business headed in the short term?
EM Global, Avnet
Gerry Fay: My first year was a year of discovery. Even though I had been part of the EM team, in the chief logistics role, this gives you a different view of the business. I am pleased with the strong management team in place at EM; from a tactical execution perspective, I have no concerns.
For me, the issue is: How do we continue to grow in an environment that is stagnant from a growth perspective? Improving our ability to drive our business to the Web [is crucial]. We made some investments this year and we will make more in the years ahead. The goal is to become a world-class digitized business. We want customers to do any type of business that they do with us live online.
The first step is targeted marketing and making [our] website available for self-service, 24/7. Once we’ve done that, it makes it easier for customers to buy [because] we can make recommendations [online] based on the technology that they are purchasing. We also need to move more engineering resources online, because today’s engineers are building much of their designs before they talk to anybody. Getting that information to the design engineers is vital.
As part of the Web we’re building, we’re getting customer feedback regularly. We are planning to launch a new site in Europe this June, and it is something we think customers will embrace.
GP: You have been open about the need to “sell Avnet’s value.” What do you mean by that?
Fay: One of our focused strategies is the Web, but our core, evergreen strategy is [meeting the demands of] the design and supply chain, and we continue to make investments there. There are three technology trends that make us relevant here. First is the proliferation of semiconductors; there are billions more connected devices coming our way, and they will require the products and solutions we provide. Our suppliers don’t have the reach to get to these mass-market customers who are trying to find ways to add sensors, collect data, and so forth. Avnet is key to helping suppliers reach those customers.
Another issue is that the products we sell are becoming more complex. We can help customers reduce complexity [by providing technical assistance and access to the latest products] and also by providing an embedded solution. The goal is to speed time-to-market, and we have the capabilities to help customers determine the “make versus buy” decision.
Software is another issue, and it is becoming more of a solution for customers, as they often look to make this decision first. That’s why we are creating an Embedded Software Store to help make it easier for engineers to find what they need for the designs.
GP: How is the embedded side of the business evolving, and what role will it play going forward?
Fay: On the EM side of the business, we have concentrated on being able to drive finished enterprise equipment to OEM customers through the relationships we have on the component front. We are now moving more to a solutions-based sales approach. Our acquisition of [German distributor] MSC is a good example of this. (Completed in 2014, the acquisition expanded Avnet’s embedded computing and display capabilities, adding a range of products and services in addition to expanded coverage across Europe). We can now take a customer from the edge to the enterprise, offering an “end-to-end” solution. If you think of the Internet of Things, that’s the edge-to-the-enterprise solution. We’re looking at ways to standardize our regional embedded strategy to serve customers around the world.
GP: Speaking of the Internet of Things, what’s your view of how this trend is shaping the electronics supply channel?
Fay: I think it is an extension of what we’ve been doing for years. [Distributors] have gone from being service providers to now selling solutions. When I think of the Internet of Things, I think of how we have evolved to providing a more holistic solution for customers.
For example, historically we would go to an OEM and help him design parts into a set-top box. Over time, we would lose the connection because the OEM would take that to an ODM [original design manufacturer] for refinement. So, we would have to call on different customers to make that [business] happen. With the Internet of Things, we’re creating an ecosystem. We sell you an embedded computer board and around that we build an infrastructure. For instance, we can now take the hardware, software, and technical content and bring that into a school district and act as an IT department to fix and update the system. So, the ability to sell not only a solution, but the IT and support it requires—that is how things are changing. Avnet can go from selling the components and the services to managing their entire IT lifecycle.
GP: What are some of the greatest opportunities for global growth today?
Fay: Everybody consistently looks to China—and that is still a huge market and an engine for growth. Brazil and India continue to be good opportunities as emerging markets, as well.
I also feel very good about Europe right now. The strengthening of the dollar will make European exports more attractive—particularly Germany—although we still have to see what happens with oil [prices]. I think the biggest concern or challenge is that we still seem to be in a mixed-signal macro-economic environment, so all of these factors come into play.
Looking at opportunities in general, I think the globalization of customers as the world becomes smaller is a very important point. Customers want a trusted partner, and there are very few distributors that have the scope and scale of an Avnet. A lot of companies think they are global, but, really, they are just all over the place …. Today, a customer may be building products in North America, but have [an opportunity] in Europe and [they] need someone to move their supply chain so they can capitalize on it.
We have the footprint to be able to do that. Finding ways to leverage that [footprint] is a key strategy.
GP: How does information technology play a role in that strategy?
Fay: We’re looking to optimize the IT platform we have today. Our customers’ expectation is that we’ll service their business globally. To do that, we need the right customer data, supplier data, and item data to execute on their behalf through improved analytics. We think we sit in a unique place in the electronic components marketplace. With the data we have, we can provide trends that can help us reduce supply chain risks for our suppliers and our customers.
