From a distributor’s point of view – Farnell
Managing the current imbalance between the supply and demand of components has been difficult across the industry. Having the tools and strategies needed to help mitigate these challenges is ultimately what will allow companies to move passed them.
In this article series, Evertiq has reached out to distributors and sourcing specialists of electronic components to see just how the experts are dealing with the current semiconductor shortage and what tools they have in place to cater to the needs of their clients. This time we're talking to Mathew Thorpe, Regional Sales Director for Northern Europe, Benelux & Baltics at Farnell.
Since the start of the pandemic the situation surrounding the supply of components have only gotten worse. How would you describe the past year in terms of operations?
”Over the past year, the component supply shortage has been very challenging, and we’ve seen simultaneously the demand for these components increasing tremendously. Managing this imbalance between the supply and demand of components has been difficult across the industry,” Mathew Thorpe tells Evertiq.
”Farnell has taken a number of steps to mitigate these challenges, including expanding the global product portfolio, offering alternatives for out-of-stock products, working with customers to schedule orders and investing in e-Commerce capabilities to enable a smoother and quicker digital experience, to name just a few. As a result, Farnell delivered strong sales performance over the past year, despite the supply chain challenges, largely as a result of the steps taken to navigate the current market environment.”
In the past, during periods of component shortages, we’ve seen an increase of counterfeit components hitting the market – what kind of measures does Farnell have in place to catch these?
”The global component shortage is not only extending order fulfillment and lead times but is also having a ripple effect on product design. In a recent survey of design engineers around the world, Avnet revealed that 76% of engineers expect counterfeits to increase as a result of the shortages. Designers are seeking additional routes to source parts, including through spot market brokers – but they have significant concerns about counterfeit control, which could compound design and quality issues. In the same Avnet survey, more than 80% said that working with an authorised distributor lessens the risk of falling foul of counterfeit component,” the sales director says and continues.
”As an authorised distributor, Farnell doesn’t do business with grey market or spot market brokers. Instead, we have long-standing, direct relationships with authorised suppliers, so we can verify that the parts customers buy from us are, in fact, authentic and fully warranted.”
Mr. Thorpe continues to says that when it comes to “catching” counterfeit components, Farnell doesn't play a role since the company is an authorised distributor.
”If customers choose to go to the grey market or unauthorised spot brokers, that’s a risk they are taking on. We strongly encourage design engineers to work with distributors such as ourselves to lessen the chance of mistakenly purchasing those counterfeit parts.”
Which specific product group has been the most affected by the shortage?
”Shortages have impacted all product groups and segments, but semiconductors in particular have been most significantly affected. Traditional semiconductor customers had paused activity during the height of the COVID-19 pandemic and have since returned to the market, causing a spike in demand. Additionally, there was an increase in demand from new customers since the pandemic began, primarily driven by the adoption of technology to support home working and 'at-home' entertainment. The combination of these factors rapidly outstripped the global semiconductor supply and has continued into 2022.”
What are your feelings about the current market situation as we enter 2022?
”The current market situation will remain relatively similar to what we experienced in the second half of 2021. Lead times will remain long and component shortages will continue to be an issue. Market uncertainty from COVID, macroeconomic challenges such as inflation and uncertainty from geopolitical events occurring in Ukraine add to the complexity of the situation,” Mr. Thorpe says.
”However, Farnell is in a strong position to manage these challenges and continue to be a valuable distribution partner for our customers. We have more stock available in our warehouses than ever before, enabling our customers to have better access to products regardless of market conditions. And we are able to fulfil the majority of orders from stock thanks to the ever-expanding breadth and depth of our line card.”
He ass that beyond simply providing inventory, Farnell can also offer customers specific advice and support, ensuring they have the best possible user experience from pre-purchase, through to product selection and purchasing, followed by further support after they receive the parts they need.
For 2022, what plans does Farnell have in store to further deal with the problem at hand?
”We remain fully committed to improving and expanding our product portfolio, which is currently approaching one million SKUs, and will be investing in new products from leading suppliers, expanding existing lines and signing new franchise agreements as we move through 2022. Additionally, we have a state-of-the-art distribution centre in the UK that is now fully operational and servicing customers across Europe, helping reduce waiting times and offering value added services such as date & lot code,” Mr. Thorpe explains.
”Farnell also sees its digital enhancements programme as a key strategic priority for the next year and beyond. To date, we’ve already invested in millions of dollars’ worth of improvements to the online channels and customer web experience, including site speed, self-service options and more. These changes are already paying dividends as we’ve seen a 30% increase in global traffic and a 15% uplift in online orders. Digital platforms are fundamental to the future of distribution and the plan to transform Farnell’s digital offering is central to our investment priorities as we advance through 2022.”