Basic
ingredients
by Aimee Kalnoskas
For
some passive component manufacturers, serious distribution
strategies came early. Formed in 1982, NIC Components
Corp. (Melville, N.Y.) immediately began to compete head-to-head
with major Japanese passive-component suppliers by turning the
Japanese policy of limited distribution into an opportunity.
Initially, NIC focused on relationships with mostly local,
specialty and regional distributors. "For the first five or
six years of our business history, we were probably doing 70
percent through distribution in the U.S.," said Richard
Schuster, president for NIC. At the same time, NIC assigned its
own in-house sales organization and reps with the task of
getting design-ins at major OEMs.
About five years ago, Schuster
saw the growing impact of contract electronic manufacturers
(CEMs) on the industry, which resulted in the creation of its
Strategic Account Development Unit (SADU) with the goal of
developing business at major CEMs. "We still kept our focus
on distribution because it supports the small, mid-tier
companies. Plus, they are also involved as back-up or special
project suppliers to major CEMs, providing services such as
local inventories and inventory replenishment programs,"
Schuster explained. Distribution now accounts for approximately
40 percent of NIC's business. Some of what used to be
distribution business now flows through direct sales to large OEMs,
but it's more of an evolution than a revolution. "We never
had the philosophy that a distributor couldn't take a large
order or support a large OEM. Our philosophy is that it's the customer's choice," stated
Schuster. With business at NIC nearly doubling this year from last, Schuster feels that NIC's
commitment
to distribution is key in the volatile passive-component
marketplace. He maintains that it is critical to partner with
distributors at all levels now more than ever to ensure complete
attention to the marketplace.
NIC
has a strong mix of global, national, regional, local and
specialty companies, and Schuster sees this as a key advantage.
"In this market, the big boys tend to push their weight
around. And, in a shortage situation, they try
to
buy out whatever they can. If it weren't for the local
distributors getting an
allocation to support the small guys, there would be a real
famine out there for the small and middle-tier companies,"
Schuster said. While it looks like the good life for passive
component manufacturers in the current market dominated
by
rising average selling prices and higher margins, business can
go bad quickly if critical supply issues aren't dealt with in a
timely manner.
Distribution
has become the first course for many of these manufacturers
today. The unpredicted onslaught of passive component demand,
coupled with a decrease in inventory and capital expenditure
that caught so many off-guard a couple
of
years ago, has made the industry aware that a complete, yet
flexible distribution program is necessary in order to survive.
[ Link to: NIC Franchised Distributors:
North America ]
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