Mergers & acquisitions create market challenges for distributors
The electronic components marketplace is always a challenging place for distributors
Manufacturers always need their components at the best possible price and exactly when they need them to meet their “Just-In-Time” manufacturing requirements.
Utilising distributors who have close links with the manufacturers enables the manufacturer to gain the price and timing demands. But these are not the only requirements for manufacturers. One key issue is that of long term availability of product. When new designs appear, the last thing an equipment manufacturer needs is to have to redesign the product because a component has become obsolete.
Under normal market conditions the role of the distributor can be a difficult – maintaining a balance between price, lead time and availability. But the recent mergers and acquisitions have placed further uncertainty into the market.
As companies merge or are taken over, there is a distinct possibility that some product lines will disappear. If the product lines overlap between two companies, then it is always possible that one line will go in favour of the other. For manufacturers it is always difficult to predict how the market will develop, and any uncertainty in the market place can make things more difficult for manufacturers and also for distributors.
Commenting on this situation, Jed Pecchioli, President, APAC and EMEA for America II said: “In the current market, the number of recent mergers and acquisitions causes fear, doubt and uncertainty from a distributor and customer standpoint. We are able to position inventory to support that transition time and move it to long term support.”
Fortunately there are many ways of overcoming these problems. Often successful lines will be continued anyway. However if a line is discontinued, then chip manufacturers normally give notice and a last time buy can be made. Distributors are well placed to manage this, as they can hold the stock, and if it is not ultimately required, then they often have the means to move them on, enabling the equipment manufacturers to recoup money on the unused inventory. Also they may be able to source inventory from various sources should the equipment manufacturer use all his stock.