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Arrow maintains local focus

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Harriet Green was appointed in 2004 as president of distributor Arrow Asia Pacific after leading the company’s Asia Pacific Strategy Study, and serving as the interim senior VP of OEM sales for Asia Pacific.

In 2000, Green served as president of Arrow Contract Manufacturing Services, Arrow’s largest single business. In early 2002, she was named vice president of global strategy and business development. Then she held the role of vice president of worldwide marketing and head of the global supplier community in 2003 before leading Arrow Asia Pacific.

Green has been with Arrow since 1994 when she joined as vice president of marketing for Europe. In two years she became MD of Arrow’s North European region with responsibility for both Arrow’s components and computer products businesses.

Green recently visited Australia, and Steven Keeping took the opportunity to speak to her.

Electronics News: Whats currently happening in distribution?

Harriet Green: Consolidation is one of the key changes in the distribution industry. Major distributors are now investing, funding and supporting what is a high stakes type of business. It’s still very fragmented though, with hundreds of smaller distributors.

The second change in Asia is the movement of business around the region. There has been a big movement of manufacturing from N America and Europe, not just to China, but to S East Asia in general. And then there has been movement within the region. Along with this there is the need for a distributor or a partner with a global footprint. Gone are the days when a small business in Melbourne, for example, can support the far-reaching needs the customer has when they want to manufacture anywhere in the world.

The third element, which is the piece that’s most incredible about this industry, is the constant development of new products, introduction of new equipment and the compressing of time-to-market. It’s so intense, particularly in Asia. That’s not just in the consumer or telecoms sector, it also happens across the broad base. So you need a partner that’s got the engineering skills and the new product introduction skills and the ability to liaise between the CEM and OEM. That’s our job. That’s why there are fewer of us, and those that are in the game are having to make the investment.

EN: Wheres the investment going?

HG: On all parts from inception through to delivery. This requires a lot of investment and is big business. The critical piece is that it’s no longer about driving components. Whether the customer’s a small company in Beijing coming up with a new foetal monitoring system or an Adelaide company coming up with the latest reference design for a telecoms product, from the very start, it’s the engineering support, the samples, the data, everything that helps the customer with the design. And then you have to provide a service right the way through to the marshalling and supporting of components. Really managing the supply chain.

EN: The margin on components is wafer thin, so where does Arrow look to generate additional revenue?

HG: Yes, it’s no longer a margin for each component. The relationship is one based on a quote including the solutions and the product, and which of course depends on the country we’re dealing with, the final destination and what we’re doing. Customers pay for that support, as well as the components and the solutions. It is different in different countries, but we no longer simply just charge for the component.

Another major piece is the vendor community. We are franchise partners for most of the world’s semiconductor, passive, e-mech and connector people. They want us to be designing in, to be delivering and to be supporting their components. And how we manage that commercial relationship has also evolved.

EN: Australia and NZ are relatively small markets, how high is your level of support here?

HG: We have the capability in Australia and NZ, as with the rest of Asia, of providing the full gamut of engineering support right the way through to all of our value-added services and our collaborative tools. There are initiatives like the “Alert” and “Risk” programs. These are ways that engineers can view and manage the life-cycle of components. In fact, some of the fee-for-service models were pioneered here in Asia. We are absolutely able to support to whatever level a customer wants.

And there are initiatives such as Arrow’s lead-free components database which will enable ANZ engineers to design products that will comply with impending EU legislation.

EN: But Arrow is a global top-tier distributor, surely your focus is on giant CEMs rather than relatively small ANZ companies?

HG: Interestingly, Arrow’s global strength comes bottom up not top down. So every relationship we have with a customer and a supplier is in a place, in a region, in an environment. Also, pretty much all of the tools we have developed have come from a customer need. So it is not “Big Arrow” coming to Australia and NZ saying “thou shalt use these”, it’s exactly the reverse. Of course we do look to get the economies of scale so that ANZ can get the same benefits as Germany or China. But it’s Arrow’s ANZ customers shaping want we do globally.

Each country has different sets of customers from small companies through to large CEMs and we have always segmented our business to provide those customers with the best economic solution and support. The businesses we purchased in ANZ work well for us because of the way we’ve integrated them into the larger business.

Consequently, customers here get the benefits of tools that are the best in the world. They also get the benefit of economies of scale so those tools are appropriately priced. And thirdly the local team has access to billions of dollars of inventory around the world that can be quickly brought into the region.

EN: So the company believes in providing local support as well as global reach?

HG: Arrow was a pioneer in the area of setting up where the manufacturer needed the support. We started three years ago with our global business conversion activity which was a very smart system ensuring that as soon as we knew anywhere in the world that a customer was thinking of moving we identified that centrally.

And it’s not just support for the big guys. We have relationships with thousands of customers. The relationship with the customers allows us to flag what they’re moving and quickly connect that with the recipient. They may be designing in one place and wanting to manufacture in another, or it may be that volumes have reached a level that means the customer wants to start manufacturing in The Philippines, for example.

I don’t actually remember having an interaction with a customer who designs, manufactures and ships from the same site.

EN: So you are in a strong position to support your Australian customers?

HG: There is no obstacle or reason why we can’t meet local customers’ needs. It’s very hard to say that if you are an indigenous ANZ distributor. The stakes in the game have just got too high.

Ed Footnote: Arrows president and CEO, Bill Mitchell endorsed Arrows local operation in a recent interview with Electronic News (US): Were seeing strong growth in Korea, Taiwan, Australia and New Zealand, he noted.

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