theimpact technology theimpactoftechnology advancement...

A S P E C I A L O N L I N E - O N L Y S U P P L E M E N T

The Impact of TechnologyAdvancement on the Channel

Including:THE TOP 25 ELECTRONICS DISTRIBUTORS LIST

Top 25 ElectronicsDistributors,Page S6

Distributors TargetTechnology Page S9

Technology Developmentsto Watch,Page S14

Technology andCompliance CompanyProfiles,Page S21

Harnessing TechnologyIn the Channel,Page S25

The Impact of TechnologyAdvancement on the Channel

Including:THE TOP 25 ELECTRONICS DISTRIBUTORS LIST

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02256_FSPEC_us_EDN.indd 1 3/6/08 5:49:16 PM

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Fully Integrated MiniatureMotion Sensor DetectsHuman Infrared Radiation

All necessary components arecombined into a package thatis less than 10 mm in diameter

The NaPiOn motion sensor from Panasonic Electric Works (formerly Aromat) is a passive infrared (PIR) type sensor specially designed to detect human body infrared radiation. Environmentally safe and energy efficient, the NaPiOn motion sensor offers these outstanding features:

• Fully integrated assembly• Built-in amplifier and multi-surface lens construction• Miniature size: 9.5 mm in diameter and 14.5 mm in height• Excellent noise withstanding capability• Digital and analog output available• Dual lens colors (black and white) for design flexibility• Low power consumption available operating on a 3V power supply

NaPiOn is perfect for today’s safety and energy saving applications in lighting control, HVAC control and security systems, as well as home appliances, office equipment and medical devices.

• Turning on and off lighting applications• Turning on and off high energy drain applications• Customer detection applications• Vending applications

The NaPiOn comes in 4 different types: Standard, Slight Motion Detection, Spot, and 10m Detection

Panasonic Electric WorksCorporation of America

http://www.futureelectronics.com/sensors

S6 D I S T R I B U TO R S TA R G E T T E C H N O LO G Y Apr i l 2008

NorthAmerican Total Total 5-yearRevenue Revenue Change Annual Public/ Authorized/ North

Rank* Company Name ($ millions) ($ millions) 06-07 Growth Private Independent America Europe China

1 Arrow Electronics 8,586.0 15,900.0 17% 86.0% P A 54.0% 31.0% 15%(A)

2 Avnet 8,496.7 16,993.4 15% 2.2% P A 50.0% 31%(M) 19%(AJ)

3 Future Electronics1 3,662.8 5,232.5 15% N/A PR A 70.0% N/A N/A

4 Bell Microproducts 1,701.0 4,050.0 19% 14.0% P A 42.0% 44.0% 0.0%

5 Digi-Key Corporation 771.7 941.1 14% 21.0% PR A 82.0% 8.0% 1.0%

6 TTI, Inc. 735.0 1,152.0 12% 10.0% P A 70.0% 24.0% 6%(A)

7 Newark3 615.0 627.5 3% N/A P A 98.0% 0.0% 0.0%

8 Nu Horizons 525.3 789.9 9% 18.5% P A 66.5% 8.5% 17.5%

9 DAC 480.5 485.4 2% 19.0% PR A 99.0% 0.0% 1.0%

10 Converge1 462.0 462.0 3% N/A PR I 100.0% 0.0% 0.0%

11 Carlton-Bates2,4 374.0 374.0 10% N/A P A 100.0% 0.0% 0.0%

12 Sager Electronics1 326.1 329.4 11% N/A PR A 99.0% 1.0% 0.0%

13 Allied Electronics2,5 321.8 325.0 15% N/A P A 99.0% 0.0% 0.0%

14 N. F. Smith & Associates 301.0 301.0 -26% N/A PR I 100.0% 0.0% 0.0%

15 Richardson Electronics 227.4 554.6 -8% N/A P A 41.0% 26.0% 30%(A)

16 Mouser Electronics 208.8 229.4 18% 33.3% P A 91.0% 4.5% 1.5%

17 America II Electronics 188.4 277.0 0% N/A PR I 68.0% 16.0% 8.0%

18 Fusion6 170.0 200.0 6% N/A PR I 85.0% N/A N/A

19 A.E. Petsche Co. 168.0 195.3 19% 20.0% PR A 86.0% 10.0% 1.0%

20 Dependable Component Supply1 157.0 257.3 5% N/A PR I/A 61.0% 10.0% 23%(A)

21 JACO Electronics 132.0 203.0 -23% 4.0% P A 62.0% 10.0% 2.0%

22 PEI-Genesis 124.1 146.0 28% 23.0% PR A 85.0% 14.0% 0.0%

23 Advanced MP Technology2 105.7 302.1 14% 18.5% PR I 35.0% 25.0% 25.0%

24 Master Distributors 103.8 112.8 11% N/A PR A 92.0% 2.0% 2.0%

25 Classic Components Corp. 99.6 249.0 1% 2.0% PR I 40.0% 27.0% 31.0%

NEDA MEMBER

1 Revenue figures and percentages are Reed Business Information estimates.2 Revenue figures are Reed Business Information estimates.3 Newark is parent company Premier Farnell's (West Yorkshire, England) main North American presence in electronic component distribution.4 Carlton-Bates is a subsidiary of WESCO Distribution.5 Allied is a subsidiary of Electrocomponents plc.6 North America revenue percentages are Reed Business Information estimates

% OF REVENUE 2007CALENDAR YEAR 2007

Top 25 North American Electronic

S P E C I A L O N L I N E - O N L Y S U P P L E M E N T

Apr i l 2008 D I S T R I B U TO R S TA R G E T T E C H N O LO G Y S7

Revenue % Revenue Passive ComputerRest of the Total per Employee From VA Active Electromech. Products/ Contract

India Japan World Employees ($ thousands) Services Components Interconnect Systems Manufacturing Services Other Web Address

N/A N/A 0.0% 12,600 1,261.9 70% 70%(A&P) N/A 30% 0% 0% 0% www.arrow.com

N/A N/A 0.0% 12,350 1,376.0 N/A 36.0% 8.0% 56.0% 0% N/A 0% www.avnet.com

N/A N/A N/A 5,000 1,046.5 N/A N/A N/A N/A N/A N/A N/A www.futureelectronics.com

0.0% 0.0% 14.0% 2,200 1,840.9 54% 20% 0% 75% 0% 5% 0% www.bellmicro.com

1.0% 2.0% 6.0% 1,876 501.7 10% 39% 55% 0% 0% 0% 6% www.digikey.com

0.0% 0.0% 0.0% 2,010 527.0 65% 0% 100% 0% 0% 0% 0% www.ttiinc.com

0.0% 0.0% 2.0% 1,400 448.2 18.7% 13.7% 49.8% 9.7% 0% 0% 26.8% www.newark.com

0.8% 0.0% 6.7% 809 976.4 75% 84% 8% 8% 0% 0% 0% www.nuhorizons.com

0.0% 0.0% 0.0% 760 638.7 40% 0% 100% 0% 0% 0% 0% www.heilind.com

0.0% 0.0% 0.0% 341 1,354.8 8% 80% 5% 15% 0% 0% 0% www.converge.com

0.0% 0.0% 0.0% 532 703.0 N/A 0% 100% 0% 0% 0% 0% www.carlton-bates.com

0.0% 0.0% 0.0% N/A N/A N/A N/A N/A N/A N/A N/A N/A www.sager.com

0.0% 0.0% 1.0% 650 500.0 N/A 4.4% 54.2% 0% 0% 0% 41.4% www.alliedelec.com

0.0% 0.0% 0.0% 318 946.5 0% 70% 24% 6% 0% 0% 0% www.smithweb.com

N/A N/A 3.0% 1,268 437.4 N/A N/A N/A N/A N/A N/A N/A www.rell.com

1.0% 1.0% 1.0% 601 381.7 0% 33% 59% 0% 0% 0% 8% www.mouser.com

2.0% 5.0% 1.0% 580 477.6 5% 72% 21% 2% 0% 5% 0% www.americaii.com

N/A N/A N/A 70 2,857.1 N/A 80% 10% 10% 0% 0% 0% www.fusiontrade.com

0.0% 1.0% 2.0% 313 624.0 9% 0% 100% 0% 0% 0% 0% www.aepetsche.com

N/A N/A 1.0% N/A N/A 18% 63% 35% 2% 0% 0% 0% www.dependonus.com

2.0% 0.0% 24.0% 205 990.2 N/A 54% 21% 0% 0% 0% 25% www.jacoelectronics.com

0.0% 0.0% 1.0% 438 333.3 70% 0% 100% 0% 0% 0% 0% www.peigenesis.com

0.0% 5.0% 10.0% 215 1,405.1 10% 60% 30% 5% 0% 5% 0% www.advancedmp.com

1.0% 1.0% 2.0% 169 667.5 14.0% 8% 73.0% 1.0% 18% 0% 0% www.onlinecomponents.com

0.0% 0.0% 2.0% 300 830.0 3.0% 62% 34.0% 1.0% 0% 3% 0% www.class-ic.com

% OF REVENUE 2007

Component Distributors

*Distributors are ranked by calendar year 2007 North American revenue. N/A = Not availableRevenue figures are gathered from financial filings, company provided information, and Reed Business Information estimates.

(A) IN ASIA PACIFIC(M) INCLUDING MIDDLE EAST AND AFRICA(AJ) IN ASIA INCLUDING JAPAN(A&P) ACTIVE AND PASSIVE


NOTE: Due to revised revenue reporting, this chart has been modified since its delivery onApril 17. Only companies ranked 6-8 were affected by the changes.



In the late 1990s, technology was poised to "disintermediate" distributors from the rest of the supplychain. Internet technology would allow customers to order products directly from suppliers and enablesuppliers to seamlessly fulfill these orders at no or little cost. If you are reading this article, you know thishasn't happened.Distribution still manages relationships among hundreds of suppliers and thousands ofcustomers.True, consolidation means there are fewer distributors in the mix, but those that are on our2008 list have survived the worst market downturn to date and have harnessed the Internet as a tool toactually improve customer relationships.One of the key functions distributors play in the supply chain isthe delivery of new technologies from suppliers to customers.Distributors' salespeople and field applica-tions engineers undergo extensive training sponsored by suppliers and by their own company. Per theTop 25 Electronics Distributors listing, No. 2 distributor Avnet, for example, builds reference designs thatprovide hands-on training for its engineers. No. 6 Newark and its parent Premier Farnell sponsors anannual design challenge called Live EDGE (Electronic Design for the Global Environment).

Energy efficiency represents one of the top opportunities for distributors going forward. Europeanregulations are requiring energy-savings from products that use a wide range of electronics.Many prod-ucts will require redesign in order to achieve these savings, so distributors have added to their sales forceand realigned their applications engineers to assist designers. Distributors also target new channels forsuppliers' products: light-emitting diodes (LEDs) are finding their way into the retail and building supplychannels.The automotive market—traditionally limited to Tier 1 vendors and their suppliers—is alsoopening up for the channel.More electronics—and a wider array of devices—are going into automotiveapplications, so Tier 2 and Tier 3 vendors, heavy users of distribution, are making inroads in the automo-tive supply chain.These trends bode well for the channel, even in the current economic environment.Distributors aren't recession-proof, but spending on industrial electronics is less volatile than, say, con-sumer spending. And distributors have used technology to their advantage—tight profit margins haveled to investments targeted at improving efficiency. As long as the channel remains a cost-effectivemeans to reach thousands of customers, it will remain a vital link.�

Freelance writer Barbara Jorgensen has been covering the electronics distribution industry for nearly 20 years,most recently as a Senior Editor at Electronic Business magazine.

Reed Business Information225Wyman Street,Waltham,MA 02451

Phone: (781) 734-8000www.edn.com

EDN WorldwideRuss Pratt, EDN Group Publisher

Phone: 781-734-8417 Fax: [email protected]

Judy Hayes, Associate [email protected]

Cindy Fitzpatrick, DirectorEDN Custom Programs & [email protected]

Regina Twiss, CPS [email protected]

Special Issue Editor: Barbara Jorgensen

SPONSORING ADVERTISERSAllied Electronics . . . . . . . . . . . . . . . . . . . . . . . . . S15Avnet Electronics Marketing (EM) . . . . . . . . . . S8Carlton-Bates Company . . . . . . . . . . . . . . . . . . S18Digi-Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S3Future Electronics . . . . . . . . . . . . . . . . . . . . . . . . . S4Infineon . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S2Mouser Electronics . . . . . . . . . . . . . . . . . . . . . . . S11NEDA .. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S13, S17Newark . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S20TTI, Inc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . S19USI Electronics. . . . . . . . . . . . . . . . . . . . . . . . . . . . . S5

The Lifeblood of the ChannelA L E T T E R F R OM T H E E D I T O R

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7701_AVNET_EM_EDN FULL 3.14.indd1 1 3/14/08 1:45:29 PM

http://www.em.avnet.com


ithout technology, thedistribution channel aswe know it todaywouldn’t exist. Electrical

and radio technology paved theway for resellers in the early days;later, it was the microprocessor thatdrove the channel’s growth. Astechnology continues to evolve atan ever-increasing pace, distribu-tors embrace these advances toserve both suppliers and cus-tomers equally.

“Every aspect of our lives issignificantly influenced by elec-tronics,” says Craig Conrad, seniorvice president at TTI Inc., FortWorth, TX (www.ttiinc.com). “Theelectronic content in everythingfrom consumer products to whitegoods to military and aerospacecontinues to grow.”

In particular, distributors andsuppliers say, the evolving tech-nologies most influencing theirend markets today include energy-saving/green products; mobiletechnology/high-speed communi-cations; medical/biotech equip-ment; and automotive electronics.These technologies are drivingsuppliers to develop new productsand opening doors for distributorsin both new and existing markets.

For example, Avnet Inc.,Phoenix, AZ (www.avnet.com) isbeginning to support retail busi-nesses such as Home Depot andStaples. Light-emitting diodes(LEDs)—which have been aroundin the industrial channel for a longtime—are targeting applicationsranging from signs to high-endequipment. LEDs are not onlyenergy efficient, but have a longerlifespan than traditional products.“Various market surveys have

established LED market opportu-nities have been growing rapidlyin the areas of architectural, sig-nage and illumination lighting,”according to Andy Wong, seniordirector, segment marketing anddesign services, Avnet EM Asia.“With recently rising energy costsand the immediate call for a greenerenvironment globally, solar panelsand low-power LED lighting idealfor emerging markets.”

LEDs, however, aren’t main-stream for the consumer market,so industrial distributors have anopportunity to step in and sharetheir expertise. “Some of ouraccounts are completely new cus-tomers,” says Marc Gsand, vicepresident, marketing, AvnetElectronics Marketing Americas.

“We have a separate salesforceand experts called ‘illumineers’ tosupport the LED market,” saysGsand.

GO ING FOR THE GREENEnergy efficiency is being man-dated by the European Unionso many electronics productsmay need to be redesigned inorder to be compliant. The EU’sEnergy Using Products (EUP)mandate aims to improve theenvironmental per formance ofproducts through lower powerconsumption. This is raising theprofile of new energy technolo-gies such as switch-mode powerconversion, integrated ICs, effi-cient transistors such as MOSFETs,resonant switching and synchro-nous power rectification.

Design engineers haven’ttypically been focused on issuessuch as energy-savings and recy-clable products, says GaryNevison, director of legislationand environmental affairs for cata-log distributor Newark. (www.newark.com) Distributors can cap-italize on this trend by providingup-to-date information on man-dates, new products and by aidingdesign engineers in their productchoices. “Engineers are looking forreliable sources of information,”says DeWight Wallace, president ofNewark. “It’s also important to thedesign engineer that product beimmediately available. They need afew devices and they need themright away. You have to be compet-itive by price, but also offer a solidvalue proposition.”

Advances in the telecommu-nications industry are drivinginvestment in both infrastructure


W

Distributors Target TechnologyWhat do the latest advances mean to the channel?

and end-products. Speed and effi-ciency are key to supportingdemand for both wired and wire-less communications. “Today thereare many developments that usehigh-speed interconnect fromembedded systems to externalinterfaces,” says Avnet’s Wong.“These are RapidIO, XAUI, USB,HDMI, etc, just to name a few.High-speed serial interconnect isthe technological milestone thatmarks the shift away from paralleldata buses. High-speed serialinterconnect is the answer to ease

the signal congestion issues thatdesigners are facing. This changeis driven by the industry to meetsystem cost and systems scalability.With the advancement of silicontechnology and shrinking of sili-con geometry, it has enabled easeof adoption for high-speed serialinterconnect at multi-gigabit rateto replace traditional parallelarchitecture.”

Demand continues toincrease for mobile technologiesthat deliver voice, video and textto both personal and automobile-based devices. Customers arelooking for data delivery at speedsfaster than conventional 3Gmobile service and carriers arelooking for services that arecheaper to implement usingnewer, more efficient technology.Customers want the ability to

make phone calls, send an instantmessage, get travel information oraccess the Web—all by voice. Withmore advanced speech recogni-tion, foldable screens and e-paperdisplays will replace traditionalkeyboards and monitors.

The U.S. will be one growtharea for this technology, marketwatchers say. “After being eclipsedby Japan, South Korea and Europein terms of advanced mobilehandset features in recent years,U.S. consumers finally are embrac-ing more sophisticated phones,”

said Greg Sheppard, chief develop-ment officer at market researcheriSuppli Corp. “This is having amajor impact on the global com-petitive landscape of the wirelessbusiness.”

THE AMAZING SHRINKINGEQUIPMENTAs component footprints becomesmaller and smaller, end products areshrinking as well. Big items, such asmedical equipment and instrumen-tation fall into this category. “High-end medical equipment and securityequipment—traditionally expensiveand big—is becoming portable andhandheld,” says Avnet’s Gsand. Inaddition to consuming more andsmaller components, this type ofproduct hits another sweet spot fordistributors and suppliers, says EricSussman, director of distribution,

Americas, for Molex Inc., Lisle, IL(www.molex.com) “We are seeing alot of opportunity in medical equip-ment—custom products for businessthat will stay in North America.”

Displays are also getting inte-grated into this kind of equipmentand finding other new applica-tions. Screens are getting smallerand are improving in quality.“High-end graphics are availableon small form factors so devicesthat previously had no displayscan now use them,” says Gsand.“The silicon driving the displays isalso better; even in low-end LCDsthe brightness of the light and theview of the display is incredible.Refresh times are getting better,so this has enabled displays to beintegrated into lots of additionalproducts.”

The small/medium displaymarket posted a great year in 2007,reports iSuppli. For the first time inmany years, the pricing situationimproved for displays with diago-nal dimensions 10-inches or less insize due to healthy demand fromapplications that use such screens,including mobile handsets.

“Beyond just prices stabiliz-ing in 2007, some prices actuallyincreased and many companiesenjoyed healthy quarterly resultsin the fourth quarter,” said VinitaJakhanwal, iSuppli’s principal ana-lyst for mobile displays.

TECHNOLOGY TAKESTO THE ROADMany of these innovations—smaller components, mobile tech-nology, better displays—are allconverging into automobiles.Although the auto industryremains a demanding customer,auto companies need electronicsexperts for a variety of reasons. Bysome accounts, the automotivemarket is becoming more accessi-ble to electronics distributors. “Itused to be in automotive: unless



Application of Technology In The ChannelThe National Association of Wholesaler-Distributors (NAW) polled distributors,manufacturers and customers on dynamics aecting the future. The NAW asked:

By 2006, will the biggest impact of technology be on the automationof wholesaler-distributors internal operations?

PERCENTAGE OF RESPONDENTSUnlikely Not sure Likely

Manufacturers 9% 12% 79%Wholesaler/Distributors 6% 7% 87%Customers 6% 14% 80%SOURCE: NAW/Pembroke Consulting

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you sold to the big Tier 1 suppliersyou didn’t play in that market,”says Avnet’s Gsand.“But with all thesensing and control functions thatare being integrated [into autos], alot of the car is being controlledand driven by Tier 2 and Tier 3guys. What we are selling are com-plex and expensive solutions.”

Suppliers already are lookingat adjacent markets for growth.“We need to widen our salesopportunities to non-traditionalmarkets beyond auto,” saysMolex’s Sussman. Distribution, headds, will play a leading role inMolex’s growth plans.

“We have developed oppor-tunity tracking documents witheach of our five core distributors tomonitor our success with cus-tomers in [Molex’s targeted] areas.Distribution already has ap-proached these account bases orhas associated sales with non-com-petitive lines that we can develop asynergistic sell, “Sussman says.

TECHNOLOGY IN-HOUSEOne of the channel’s biggest rolesin the market is acting as a con-duit of information between sup-pliers and customers. The channelhas adopted the Internet as amajor means of communication.“We have designed our Website sothat engineers can find productseasily, and with technical datasheets that supplement the sup-plier’s data and provides technicalsupport,” says Newark’s Wallace.“We’ve been ramping up so that wenow have technical support offer-ings for second and third-tier cus-tomers as well.” Newark also holdsquarterly technology-focused sem-inars in product areas such aswireless and industrial.

Many distributors are re-aligning their sales forces andtechnical support by technologyrather than by vendor. For exam-ple, instead of having an FAE thatsupports Texas Instruments or

Analog Devices, FAEs are now DSPexperts. This eliminates redundan-cies and makes better use of exist-ing resources, says Avnet’s Gsand.

Avnet is also reaching out tocustomers by building boards thatfocus on a particular function orsolution. Avnet draws upon itswide vendor-base to mix andmatch components that providethe best solution, rather thandesigning a board around a spe-cific vendor’s product. Avnet alsoprovides seminars on these de-signs, giving customers a “real-world” situation rather than refer-ring to schematics.

The channel has also adopt-ed technology to better serve cus-tomers and increase efficiencies.Distributors long ago began tack-ling the problem of tracking com-ponent designs and sales bydeveloping proprietary softwareand computer systems. Since dis-tributors derive most of their rev-enue from volume sales, it’s imper-ative that they be able to capturethat sale even if the design is donein the U.S. but product is manufac-tured in the Far East.

Wireless communicationshas also been adopted in thechannel; distributors’ salespeopleuse laptops, PDAs and otherdevices to keep abreast of cus-tomer developments in real-time.For example, if a distributor sales-person calls on a customer, he orshe can access that customer’saccount; find what they have pur-chased in the past; where theiraccount currently stands; andother relevant information. Thiskind of preparation not onlysaves both the distributor andcustomer time, but helps pin-point up-and-coming productsthat the customer may want touse in future projects.

Technology is also aiding thechannel in increasing efficienciesin-house. “Facing the Forces ofChange,” a study conducted by the

National Association of WholesalerDistributors, reports that thebiggest impact technology will beon the automation of wholesaler-distributor internal operations (seechart).

THE BOTTOM LINESo what are the implications for thechannel going forward? Althoughthe U.S. economy is expected to bechallenging in the short-term, tech-nology will continue to evolve. Theelectronics content in consumeritems, white goods such as refriger-ators, washers and dryers; automo-biles; military and aerospace equip-ment; medical and test instrumentsand even in gasoline kiosks willcontinue to increase. Although dol-lar sales may not increase, distribu-tors report unit sales and ship-ments are healthy.

Distributors’ use of technologyhas made the channel healthiersince the last industry downturn. Inthe middle of the first quarter of cal-endar 2008, inventory levels in thechannel were in good shape, distrib-utors and their suppliers report. Thiswill help the channel avoid the typeof inventory glut that happened inthe 2001-2002 timeframe.

Nevertheless, 2008 will be achallenge. “The economy doeshave an impact on our business,especially as more of our busi-ness is driven off of consumerspending,” says Jeff Newell,director, Americas Business oper-ations for Dallas-based TI(www.ti.com). “Historically ourindustry has been more tied to ITspending and telecom infrastruc-ture, but over the last few yearswe have seen a bigger piece ofour business tied into consumerproducts. Should consumer spend-ing wane, or more of our financialbellwethers go into a bad place, wecould see a recession this year. Myguess is that we will skirt theedges and come out of our eco-nomic funk in early 2009.” �


Visit the National Electronic Distributors Association online @ www.nedassoc.org.

““TThhee VVooiiccee OOff AAuutthhoorriizzeedd DDiissttrr iibbuutt iioonn””

“NEDA promotes the interests of authorized distribution better than anyone could on their own.”NEDA members tackle major issues together such as environmental compliance, packaging and labeling,counterfeiting and specialty metals legislation. NEDA speaks with authority on matters that really affectyour business. It pays to be part of the voice. JJooiinn NNEEDDAA ttooddaayy..

NEDA 0068-01 Voice_EDN 3/27/07 4:42 PM Page 1

http://www.nedassoc.org

he distribution channelhas the unique distinc-tion of bridging the gapbetween supplier prod-

ucts and end-market demand. Assuch, the electronics channel mustexhibit in-depth knowledge of sup-plier products; demonstrate thatknowledge to customers; and tar-get end-market applications thatrepresent the best opportunitiesfor both suppliers and distributors.

Technology evolution notonly drives the development ofnew markets for electronics; itstrives to make products better,faster and more cost-effective.External trends also influence thedirection technology takes.Currently, directives such as theEuropean Union’s Energy UsingProducts Directive (EuP), whichmandates energy conservationmeasures in electronics products;pressure for better safety featuresin automobiles; and demand forengineering support and servicepresent challenges and opportu-nities for the entire electronicssupply chain.

ENERGY - SAV INGS /ENV I RONMENTProducts targeting energy conser-vation and environmental-friend-liness top the “up and comingtechnologies” list. The EuropeanCommission, says Gary Nevison,director of legislation & environ-mental affairs for catalog distribu-tors Newark and Farnell, will belooking for energy savings fromthe following list of products:

• Public street lighting; officelighting and domestic lighting

• Battery chargers and externalpower supplies

• Personal computers (desktops& laptops) and monitors

• Consumer electronics:televisions

• Domestic refrigerators andfreezers

• Domestic dishwashers andwashing machines

• Boilers and combi-boilers(gas/oil/electric)

• Water heaters (gas/oil/electric)

• Imaging equipment: copiers,faxes, printers, scanners,multifunctional devices

• Commercial refrigerators andfreezers: chillers, displaycabinets and vending machines

• Residential air conditioningand ventilation appliances

• Electric motors, water pumps(in commercial buildings,drinking water, food, agricul-ture) circulators in buildingsand ventilation fans(non-residential).

In order to achieve energy conser-vation, many products will have tobe redesigned, Nevison says. Thiswill not only require new breedsof components, but a higher levelof support for design engineers.Engineers, says Nevison, are accus-tomed to designing products forperformance, but not necessarilyfor recycling. Distributors are step-ping up their efforts to not onlysupply product data but the kindof information that helps designers

make informed product choices,says DeWight Wallace, president ofNewark.

Some of the solutions theindustry has to offer are familiar.Light-emitting diodes (LEDs) aresmaller, longer-lasting and moreenergy efficient than fluorescentand other kinds of lights. LEDshave been used in industrial appli-cations for many years but arenow being used for signs and inbuildings. In some cases, thismeans calling on non-traditionalcustomers such as retail stores orconstruction suppliers and con-tractors. The industrial channel’sfamiliarity with these productsshould be an advantage in thesemarkets.

Batteries are another ubiq-uitous product playing a role inenergy savings. “There is a lot ofprogress being made in batterylife and power,” says TTI Inc.’sMichael Knight, vice president,corporate product managementand supplier marketing. “Theseimprovements expand the needfor many [existing] passive prod-ucts, as well as drive the need formany new passive products.Examples include current senseresistors, power inductors, circuitprotection and current and volt-age regulation components, andhigh capacity/small form factorcapacitors.”

Also in this category are bat-tery substitutes such as the newultra capacitors that have similarcycling and discharge capabilities,Knight adds.



Up and Coming TechnologyDevelopments to WatchEnergy conservation efforts will drive distribution opportunities

T

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Other new technologies thatsupport energy savings, saysNevison, are switch-mode powerconversion; integrated ICs; effi-cient transistors such as MOSFETs;resonant switching and synchro-nous power rectification.

TTI’s Knight points out thatmarket opportunities don’t endwith products designed specifical-ly to save energy. The componentsthat support these technologieson a circuit board are also indemand. “Regulations that man-date things like greatly reducedpower draw when an electronic orelectrical devices is hibernating orturned off, also increase the num-ber of caps, resistors, filters, andinductors used in the power cir-cuits within a stand-alone powersupply, or on the power supplyportion of a printed circuit card,”he says. “In addition, theserequirements are fueling thegrowth of an integrated solutionfrom companies such as PowerIntegrations, On Semi, and STMicro who are doing in siliconwhat a greater number of the dis-crete caps/resistors/inductors arebeing used for today. “

TRANSPORTAT IONAND AUTOMOT I V EDistributors say the automotivemarket is beginning to open upfor Tier 2 and Tier 3 suppliers—thekinds of customers distributorshave been calling on for a longtime. “As vehicles of all kinds [carsto tractors] acquire an evergreater electronic content, andthe companies who make themcome under ever greater globaleconomic and competitive pres-sures, manufacturing outsourcingis accelerating and fragmentinginto different, specialized levels,”says Knight. As the supply chainsstretch and the number of con-tract manufacturers involved

expand, the supply chain servicesof distribution all of a suddenbecome much more relevant anduseful to this market segment, heexplains.

“TTI is seeing an increasinglevel of interest from customersand electronic component suppli-ers in this space who would nothave given us the time of day afew short years ago,” says Knight.“We’ve built a team of subjectmatter experts who come fromthese industries and work acrossour local branch structures to pro-vide tech support and training toour sales teams who have thesecustomers in their territories. Thisgroup speaks the language,understands the applications, andknows how to match our suppliersofferings to these customers'needs.”

Products that are findingwider use in the automotive mar-ket include sensors; microcon-trollers; batteries; flash memory;MEMS; and networking devices.

MI L I TARY AND COM -MERC I A L AEROSPACEMore and more componentsdeveloped for the commercialmarketplace are finding their wayinto military and aerospace appli-cations. “Although we do not man-ufacture military products, com-mercial off-the-shelf parts are nowwidely used in military bills ofmaterial,” says Eric Sussman, direc-tor of distribution, Americas, forMolex Inc. Distributors are lookingto harness the technologyadvancements they’ve made ininventory management, supplychain and value-added services.

“These are important marketsegments to distribution,” saysTTI’s Knight. “The electronic con-tent continues to increase in com-plexity and deployment, even inthings like tanks. Outsourcing,

complex supply chains, and strongdemand have made these seg-ments very dependent on elec-tronic component distribution. “

TTI is responding by hiringprogram managers who know themarket drivers and players andcan help the distributor translatethat information into inventorystocking plans and supply chainsales plans, he says. These man-agers also provide information tosuppliers which help them todecide where to invest in capacityexpansion. “Our military /aero-space business in North Americacould reach 30% of the total whenall of the product we sell into theEMS sector, for mil/aero applica-tions, is considered,” says Knight.“On the connector side, the inven-tories and assembly services thatdistribution is maintaining in milcirculars is providing a criticalbuffer between the customers anda group of suppliers that basicallyrun as job shops.”

Finally, one of the moreunusual developments distribu-tors will be keeping an eye on isthe role of software. Increasingly,says Marc Gsand, vice president ofmarketing, Avnet ElectronicsMarketing, Americas, “software isa big issue. Traditionally, mostdesigns were done by hardwareengineers and topped off by soft-ware. Today, maximizing the per-formance of a chip requires soft-ware.” It’s unlikely distributorswill be called upon to write soft-ware code, but customers are con-sulting Avnet about software, hesays. “Customers are buying thesame chip, but those that canmanipulate the chip the best arelooking to talk with softwareimplementers at Avnet.” Increas-ingly, he says, customers are look-ing for solutions that mix andmatch the best of hardware—andsoftware.�



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his special report will take a look at the global view of environmental compliance and how it isaffecting the electronics industry.

How are global regulations and their enforcement impacting the electronics supply chain anddistribution market? The report will include a chart of key resources and related articles designed

to help explain what these regulations will cause to the design process and the short or long term effectson how quickly products come to market.

If you’re company is a NEDA member, and interested in participating in this special issue,contact your EDN Regional Sales Manager for details. Ad Close: July 18, 2008

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he channel and its cus-tomers are facing acomplex—and rapidlychanging-- array of reg-

ulations that require a massiveamount of data-sharing amongsuppliers, distributors and cus-tomers. Sarbanes-Oxley, RoHS andWEEE require the kind of informa-tion distributors are in a goodposition to provide. How are dis-tributors helping their customersstay on top of all the requirements?They are the vital link to gather,

collect and dispatch the informa-tion on these mandates; educatetheir customers; and demonstrateadherence to new standards. Buthow do distributors differentiatetheir offerings? If you are looking fora partner, how can you gauge theirlevel of compliance? This con-tributed section provides profilesfeaturing electronic componentcompanies’/distributors’ latest offer-ings, services and experience.

These featured profiles high-light expertise and many industry

solutions to help existing cus-tomers with: demonstrating glob-al compliance; leading designand supply chain services; stream-lined efficiencies and dedicatedOEM facilities with outsourcedmanufacturing; technical compe-tencies; knowledgeable salesteams and outstanding customerservice; expansive and real-timeinventory options; daily updatesto company sites with user-friendly tools for easy access andpurchase; and live chats.

T

Review the following contributed position statements and search distributor and supplierWebsites to learn more about their products and technical proficiencies in meeting andmanaging U.S. and global regulations.

Allied Electronics is a small order, high service level distrib-

utor of electronic components and electromechanical

products with 55 sales branches across the United States

and in Canada.

America’s Distributor of ChoiceOriginally established as a radio parts distribution arm,

Allied Electronics has built an enviable reputation as a dis-

tributor of electronic components. Now, as a subsidiary of

Electrocomponents plc (LSE: ECM), Allied has added a

global presence to its customer orientation. Excellent

service combined with 99.9% order and shipping accuracy

delivers a very powerful supply chain solution to meet

customer demands.

Customers can expect a high level of service when

they contact an account manager at one of our 55 local

sales branches. With more than 1,000,000 parts online and

more than 130,000 products featured in the Allied catalog,

engineers and purchasers often look to Allied for prototyp-

ing due to its broad range of product solutions from over

300 world-class suppliers. Our relationships with our sup-

pliers are a key strength in allowing us to maintain the

high standards of product availability and supply for our

customers. The breadth of our product means that we sup-

ply to a wide range of customers from all areas of industry

and commerce.

Technology and ComplianceC O M P A N Y P R O F I L E S

w w w . a l l i e d e l e c . c o m

C O M P A N Y P R O F I L E

Avnet Electronics Marketing is one of the world's largest

technology, marketing, distribution and services compa-

nies, offering leading design chain services combined with

world-class supply chain services in support of the elec-

tronics industry. Avnet Electronics Marketing is focused on

exceeding our customers’ needs and expectations. From

design to delivery, we are a company that is dedicated to

support across the board.

w w w . e m . a v n e t . c o m


http://www.alliedelec.comhttp://www.em.avnet.com



For more than 50 years, Carlton-Bates Company (CBC) has

serviced the Industrial OEM market with specialized services

and solutions and is a leading distributor of automation

controls and advanced electronic/electromechanical solu-

tions. A member of the WESCO family of companies, CBC

serves customers in all 50 states and Mexico. In every aspect

of our business, we strive to meet the changing needs of our

customers by providing next-generation solutions.

CBC can help you streamline your supply chain. With

dedicated OEM assembly facilities in the US and Mexico,

we provide outsourced manufacturing for our partnered

OEMs, saving them time, money and resources.

In addition to local consultative support, CBC offers a

vast inventory of product solutions from over 360 author-

ized manufacturers. We service a broad spectrum of end

markets with an array of products such as sensors, switches,

relays, circuit breakers, contactors, wire/cable management,

power supplies, terminal blocks and connectors.

With our unique combination of products and services,

CBC is equipped to meet and exceed your needs.

w w w . c a r l t o n b a t e s . c o m


Since before the adoption of the European RoHS initiative

and subsequent enactments, Digi-Key Corporation has

worked diligently with its supplier partners to provide cus-

tomers with information that will enable them to meet the

challenges associated with environmental compliance.

Tools on Digi-Key’s Website include its parts search,

which easily allows the customer to filter RoHS compliant

and/or lead-free components. From there, one can navigate

to a selected part’s detail screen that provides technical

information about the product, including PDF catalog

pages, drawings, datasheets, application notes, and more.

Also on Digi-Key’s Website is its RoHS Verification tool,

which provides RoHS and/or lead-free compliance status

on a bill of materials or a single product. Additionally, cus-

tomers may request a RoHS Purchase History Report, based

on purchase history, for a specific customer record.

A special symbol identifies RoHS compliant product

in Digi-Key’s catalogs. Also keeping customers informed is

an e-mail notification system, which, based on order histo-

ries, alerts customers of product obsolescence or compli-

ance transition issues.

Digi-Key is committed to the continual monitoring

of global environmental issues, initiatives, and legislation

as they pertain to its customers with every effort made

to keep customers informed with timely and accurate

information.


w w w . d i g i k e y . c o m

Founded in 1968, Future Electronics is a worldwide leader in

electronic components distribution, and is recognized as one

of the most respected and innovative companies in the indus-

try today. Headquartered in Montreal, Canada and operating

in 39 countries around the world, Future Electronics has

earned an impressive reputation for providing outstanding

service and developing efficient, comprehensive global sup-

ply chain solutions.

The company’s success is largely built upon its commit-

ment to maintain close business partnerships with suppliers

and customers, coupled with the strength of its commercial

and technical competencies through all stages of the design-

production cycle.

Future Electronics is globally integrated, supported by

one worldwide IT infrastructure which provides real time

inventory availability and access, while enabling full integra-

tion of operations, sales and marketing worldwide.

Future Electronics has the most knowledgeable sales

team and provides the most advanced engineering/design

capabilities and technical solutions, award-winning customer

service, best in class global trade compliance program, and the

largest available-to-sell inventory in the world.

Offering the industry’s highest level of overall service,

including customer-specific programs and processes, and

worldwide e-commerce support, the company’s mission is

always to Delight the Customer.

For more information, career opportunities, or to access

the Component SuperStore, visit www.FutureElectronics.com.

w w w . f u t u r e e l e c t r o n i c s . c o m


http://www.futureelectronics.comhttp://www.digikey.comhttp://www.carltonbates.com



Infineon Technologies offers semiconductor and system

solutions addressing three central challenges to modern

society: energy efficiency, communications, and security. In

fiscal year 2007, the company reported sales of Euro 4 bil-

lion. The company has approximately 30,000 employees

worldwide.With a global presence, Infineon operates

through its subsidiaries in the U.S. from Milpitas, CA, in the

Asia-Pacific region from Singapore, and in Japan from Tokyo.

Automotive, Industrial and MultimarketInfineon has been firmly committed to the automotive

industry for over 35 years and has established a proven

track record. Offering one of the broadest product portfo-

lios in the business, Infineon is the second largest supplier

worldwide. Infineon’s leadership in power semiconductors

extends across every step of the energy supply chain, from

production and transmission of electricity to the power

supplies and motor drives used in factories, electronics

gear, home appliances and transportation.

Communication SolutionsInfineon’s Communication Solutions business group develops,

manufactures and markets end-to-end leading edge semicon-

ductor products and solutions for cellular, wireless and wired

communications enabling smooth transmission of voice and

high speed data from the backbone of the telecommunica-

tion network infrastructure to the end user’s equipment.

For more information on Infineon and its products,

go to www.infineon.com.

w w w . i n f i n e o n . c o m


Customer-Focused DistributionMouser Electronics is dedicated to supplying design engineers

with the newest products, leading-edge technologies, and the

best customer service available. Known for its rapid new prod-

uct introduction, Mouser is the only major distributor to pub-

lish a NEW 2,100+ page print catalog every 90 days with the

newest products added from over 335 premiere suppliers.

Updated daily with the newest products, Mouser’s

Website makes it easy for customers to browse and buy

online with access to over 925,000 products, more than

677,000 downloadable data sheets, and over 1.5 million

cross-referenced parts. The constant refinement to the site

includes the addition of numerous user-friendly tools, such

as automatic order confirmations, Project Manager with

automatic reorder, Bill of Materials import tools, and live chat.

Mouser believes in providing the very best possible

customer service – regardless of the size of the customer or

the size of the order. Mouser’s streamlined shipping opera-

tions allow for fast delivery with same-day shipping on most

orders received by 8:00 p.m. Central Standard Time.

Additionally, Mouser’s excellent technical personnel and

well-seasoned sales staff are available to serve customer

calls from 7am to 8pm CST.

Customer-focused distribution makes it easy to do

business with Mouser!


w w w . m o u s e r . c o m

The National Electronic Distributors Association (NEDA) was

founded 70 years ago to support and promote supplier

authorized electronic distribution. NEDA is a not-for-profit

trade association representing supplier authorized distribu-

tors of electronic components and their manufacturer part-

ners. Dedicated to enhancing the distributor/ manufacturer

relationship, NEDA represents companies involved in the

distribution of electronic components, computer and com-

puter peripheral components and test, measurement and

control equipment parts.

NEDA members represent companies of every size –

from as small as 6 employees to those with more than

11,000. Our diverse membership mix enhances networking

opportunities for members while it empowers NEDA to

speak convincingly for the entire authorized supply chain.

Through our programs, information services and lively

forums, we promote the interests of authorized distribu-

tion better than any single company could on its own.

The trade association link is important for a variety of rea-

sons, but access may be the most valuable. NEDA mem-

bers have access to leaders in the industry through con-

ferences and roundtables where they collaborate on issues

affecting all aspects of the business. Our members also

have access to the best research, the best tools, the estab-

lished best practices and the best educational opportuni-

ties. We’re NEDA, the Voice of Authorized Distribution.


w w w . n e d a s s o c . o r g

http://www.nedassoc.orghttp://www.mouser.comhttp://www.infineon.com



USI Electronics is a world leader in military / high-reliability elec-

tronic components. Founded in 1982, the company is a privately

held, registered small business delivering products to small,

medium and large OEM business partners throughout the

world. USI Electronics differentiates itself by having the flexibility

to provide same day shipping, same day tape and reeling, and

personalized service while offering the technological solutions

necessary to compete as a world class global distributor. From

its modest beginnings, USI Electronics has steadily grown to be

ranked in the Top 10 for growth in the Top 75 North American

Distributors. Headquartered in Fort Lauderdale, Florida, USI

Electronics is acknowledged as a world leader in the high-

reliability military aerospace markets based on the

philosophical dedication to a strong inventory position.


w w w . u s i e l e c t r o n i c s . c o m

TTI, Inc. is a group of distribution companies dedicated to

providing the best-in-class electronic components and value-

added services to commercial, industrial, and military/aero-

space manufacturers around the world. These manufacturers

produce a wide variety of end-user products that are in exis-

tence today. TTI does business is more than 50 countries, and

in 2007 TTI’s revenues were $1.4 billion.

TTI, Inc. is a part of the Berkshire Hathaway Group. For

more than 35 years, these companies have been leaders in

the electronic component industry. Headquartered in Fort

Worth, Texas, the TTI, Inc. family of businesses includes TTI

North America, TTI Europe, TTI Asia, and Mouser Electronics,

the catalog division headquartered in Mansfield, Texas.

TTI, Inc. is the world’s leading authorized distributor

specialist of passive, connector, electromechanical and dis-

crete semiconductor electronic components. From its begin-

ning in 1971 as a distributor of passive electronic products to

a military/aerospace customer base, TTI expanded to provide

passive components to commercial customers. The company

has grown to become one of the leading electronic compo-

nent distributors in the world, and its product line has

expanded to include resistors, capacitors, connectors, discrete

semiconductors, potentiometers, trimmers, magnetic and cir-

cuit protection components, wire and cable, wire manage-

ment, identification products, application tools, and electro-

mechanical devices. These products are distributed from more

than 40 manufacturers.


w w w . t t i i n c . c o m

Newark is committed to providing design engineers with

the newest technologies, along with critical information

and expert technical support. Each quarter it takes an in-

depth look into a new and emerging trend, such as energy

efficiency. At www.newark.com/energy designers will find

detailed technical information (datasheets, application

notes, articles) on 2,500 new technology products from

such leading innovators as Texas Instruments, Maxim,

International, Rectifier, National Semiconductor and

Analog Devices. Designers can also sign up to receive an

informative monthly technical eJournal, Technology First,

at www.newark.com/info and register for New Product

eAlerts in the categories of most interest to them.

They also enjoy easy access to Newark’s technical

support team of engineers online through Live Chat, or

via a Newark representative at 1.800.463.9275.

With the realities of the new global marketplace, it

is also important for designers to keep up with global

environmental legislation. Newark has been the leader in

helping design engineers comply with RoHS, and design-

ers can continue to find a wealth of current information

on RoHS, EuP and REACH at www.newark.com/legislation

Designers can also count on Newark to automatically

notify them when any product they purchased within the

last 12 months becomes obsolete, including the number

still in stock and appropriate substitutes.


w w w . n e w a r k . c o m

http://www.tti.comhttp://www.newark.comhttp://www.usielectronics.com

echnology isn’t just anend-product for elec-tronics distributors—it’salso a way to remain

competitive in a global market. Fordecades, distributors have har-nessed the advancements of theelectronics industry to better man-age inventory, business processesand, more recently, compliancewith regulations that have beenimposed by both U.S. and foreigngovernments.

In the U.S., the Sarbanes-OxleyAct (SOX) was passed to make busi-nesses more transparent—andaccountable—to regulators andshareholders. Although SOX mustbe followed by publicly traded com-panies, it’s not mandated in the pri-vate sector. Nevertheless, many pri-vate companies have adopted SOXas a “best practice”or in anticipationof going public someday.

In the global market, envi-ronmental regulations requireanother kind of transparency.Companies that build and sellelectronics to the EuropeanUnion must demonstrate thattheir products are free of lead,mercury and several other harm-ful substances. The Restriction ofHazardous Substances (RoHS) isalso being adopted in variousforms in other major electronicsmarket and is expected tobecome a global standard atsome point in the future.

These mandates have taxedthe resources of companies around

the world. For distributors, some ofthese regulations are particularlyonerous because of the staggeringnumber of parts they ship everyday. Identifying, collecting andmanaging materials informationon the thousands of components

they sell is a monumental task fordistributors. But over the years, dis-tributors have become adept atmanaging massive amounts ofdata using everything from simplebarcodes to sophisticated IT sys-tems and, of course, the Internet.

I N FORMAT ION I S KEY“Most of the environmental regula-tions (RoHS, China RoHS, WEEE,etc.) have as their essential elementthe tracking and dissemination ofinformation regarding the compo-sition of the goods, the identity ofthe parties through the supplychain, etc.,” says Wayne Brody, vice

president and chief complianceofficer at Arrow Electronics Inc.“ Weuse our global network to collectthat information from more than600 suppliers of hundreds of mil-lions of different components andmake it available as an integral part

of the sourcing or purchasingprocess to 140,000 customers. “

Much of the technologybehind these efforts has been“home grown”—developed by dis-tributors themselves. This haslargely been out of necessity: a keycompensation plan for the chan-nel—known as “demand cre-ation”—requires distributors verifya component sale has taken place,no matter where the sale is bookedor how many other channels thecomponents pass though first.Traditionally, distributors have hadto establish that demand for aproduct has resulted in a fulfilled



Harnessing TechnologyIn the ChannelPrior experience makes compliance a little easier

T

Technology systems increase in importanceIn its report, “Facing the Forces of Change,” the National Association of Wholesalers (NAW)asked distribution customers whether technology services will become more importantto them in the future. The results:

Will increase Will remain equal Won’t increase

(PERCENTAGE OF RESPONDENTS)Modern technology systems 63% 33% 4%Value-added services 33% 51% 6%Best price 20% 46% 34%After-sales service 16% 62% 22%Service quality 9% 62% 23%Product quality 9% 69% 22%Personal service 6% 43% 51%

SOURCE: NAW/Pembroke Consulting

order or they don’t get paid. Globaloutsourcing programs have madethis task difficult—a productdesigned in Texas, for example, ismanufactured in China. The manu-facturer of this end product israrely the same company thatdesigned it.

This has led to distributorsdeveloping massive componentdatabases and sophisticated prod-uct-tracking programs that aren’tavailable off the shelf.

Now, that experience is help-ing distributors demonstrate com-pliance with various regulations. Forexample, when suppliers beganmanufacturing RoHS-compliantdevices, many didn’t change thebase part number that identifies thecomponent; they added a symbolthat indicated the part was “green.”Many of the systems distributorsuse to inventory, track and shipproducts couldn’t accommodate asymbol, so in the system, two differ-ent parts looked exactly the same.

To avoid mingling compliantand non-compliant parts, distributorsdeveloped programs in-house thatregistered incoming parts, changedRoHS-compliant part numbers for in-house use; and then changed themback again when parts were shipped.This process was necessary becausethe EU’s RoHS requires proof that anelectronics product is RoHS-compli-ant, and the best way to demonstratethat is tracing a component from themanufacturer’s factory through theproduct’s final assembly. Since thematerial content of a componentoriginates with the supplier, thatinformation has to stay “attached” tothe component no matter how manychannels it passes through.The com-ponent’s part number is the key tothat information.

Another compliance focus inthe channel addresses U.S., EU and

other government concerns re-garding worldwide technologytransfer and tariff regimes, accord-ing to Arrow’s Brody. “Here again,our massive technical capacity anddedicated compliance teams makeit possible for suppliers and cus-tomers to insure that the parts theyneed move around the world are incompliance with U.S., EU and otherregulatory schemes, ensuring con-tinuity of supply and the ability ofour customers to sell their prod-ucts down the line.”

Arrow collects or gener-ates compliance data for all theproducts it sells, secures licenseswhere necessary, and makes surethat customers are duly authorizedto receive the product in question.Arrow utilizes its worldwide inte-grated systems in this process,Brody says.

SECUR I T Y PRACT I CESBecause distributors conduct busi-ness with competing suppliers andcompeting customers, informationsecurity has been a priority for along time. For example, beforeinformation was managed by com-puter, distributors physically sepa-rated an order going to ComputerMaker X from and an order goingto Computer Maker Y. Firewalls andvirtual private networks have sincereplaced physical barriers with vir-tual barriers and orders are elec-tronically transmitted and fulfilled.

However, information is stillguarded very carefully. Dist-ributors, for example, don’t sharepoint-of-sales (POS) data with oneanother. This data, which includessales and customer information, isshared between distributors andsuppliers. Some industry partici-pants believe POS data should becompiled and used to identify dis-tribution market sizes by locale,

region or even nation. The industryremains divided over POS becausedistributors don’t want to share theidentities of their customers andnumerical solutions—such asassigning customers an ID num-ber—aren’t standardized.

Automation has helped thechannel increase efficiencies andcollects the kind of informationregulators seek. Warehouses usemachines and conveyor belts tostock and move inventory; bar-codes and scanners eliminate theneed for manual input of part num-bers; and stacks of paper havebeen replaced by electronic forms.“The process of retrieving contentbased on a regulatory or legalinformation request requires thatcompanies know what they have,what they don’t have, and where tofind it quickly and exhaustively,”according to a compliance whitepaper by Deloitte DevelopmentLLP and Sun Microsystems. “Theability to control and automateinformation retention and archiv-ing can help companies mitigaterisk and improve compliance behelping to maintain all pertinentrecords.”

Inventory information is justthe tip of the iceberg for the chan-nel. Supplier and customer data isused a million ways by distribu-tors—sales forecasts, purchasinghistories, component substitu-tions and materials content areonly a few. Compliance may be aby-product of the technologiesdistributors have adopted overthe years. But some industry-watchers note that the implemen-tation of the EU’s RoHS in 2005was not as disruptive to the sup-ply chain as many thought itwould be. And the channel doesn’tseem to be sweating the nextwave of regulations.�



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