It's easy to look back and review all that went wrong last year due to the global economic recession, equally it is easy to accept that losses would be the norm given overall market declines. But a look at the electronic component distributor rankings for 2009 offers some clues as to how survival and even growth in a down market can be achieved through focused, agile business models.
Among the electronics distributors, there is a divide between how franchised and independents fared in terms of sales for the year-over-year 2009 period.
Of the top 50 franchised distributors by sales, based on the recent ranking by Electronic Advocate here and here, only seven showed an increase in sales last year and only one, Online Compenents (ranked 35th in top sales) saw double digit increases; the remaining 43 companies averaged double digit decreases, including Avnet, who ranked as number one in sales (eight of the 43 were single digits declines in sales year-over-year, though still not enough to offset the high average decrease in sales levels). Conversely, if one averages the top 10 independent distributors, according to Electronics Advocate, there was an overall 6% increase in sales for 2009. However, delving farther into these independents, it is not that they all were in year-over-year sales increase territory. Rather, half of the top 10 independent distributors, ranked by sales, showed an average 22% increase and half showed an average of -15% decrease.
The leading independent distributor in sales for 2009 was Smith & Associates, with a 41% increase in sales over the previous year. The leading franchised distributor was Avnet with a -11% decrease in sales for the same period.
So why such a notable difference in performance? Why did independent distributors in general, and Smith & Associates in particular, fare so much better than franchised distributors? One important reason is the ability of independents to quickly adapt to market conditions and thereby to quickly respond to new customer demands and expectations. For Smith, 2009 was a year of greater support for longstanding OEM customers and a year of new opportunities as some manufacturers turned to the open market for the first time in order to manage tough economic conditions. Smith’s focus on the open market and agile, flexible supply chain strategies demonstrably underscores the success of these responsive market approaches by realizing positive results in a challenging, negative market.
So, for 2010, the green shoots continue to flourish. The well strategized supply chain management and customer/market plans of the leading companies have come to fruition – now the trail to follow is how and where these companies will engage the 2010 market. At Smith we're not only observing the broader market, we're proudly leading in our sector.