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What to Look for in a “Value-Added” Electronics Distributor

Oct. 26, 2023
How value-added electronics distributors are helping procurement teams work smarter, better and faster in any business conditions.

The phrase “value-added” gets thrown around a lot in the business world, where it generally refers to a company that goes the extra mile to do more than just sell a product or service. In the distribution environment, a value-added distributor provides additional value to customers beyond just warehousing and shipping products. In most cases, it offers a menu of services that include technical support, training, product demonstrations, systems integration, troubleshooting and post-sales support (to name just a few of the options).

Distributors that take the value-added approach can also help bridge the gap between manufacturers and end-users by helping the latter select, implement and use the right product for the right application. Customers turn to value-added distributors to provide high levels of expertise and convenience, both of which help companies operate more efficiently and effectively.

Here are a few different ways distributors are adding value in the electronics sector: 

  • Helping you select the right electronics products for your needs based on your specific requirements and budget.
  • integrating products from different manufacturers to create a single, complete solution.
  • Offering technical support before, during and after the sale.
  • Helping you save time and money, get the most out of their technology investments and remain competitive in your industry sector.

Value-added electronics distributors also help their customers improve efficiency by streamlining the procurement process. For example, the supplier that offers a one-stop-shop for a wide range of electronics products saves its customers time and money by eliminating the need to deal with multiple different suppliers.

Finding the Right Partner

In the electronics sector, many—but not all—distributors are providing more than just a product to their customers. These companies have pivoted away from strictly providing distribution of components and connectors to including value-added services such as just-in-time (JIT), custom design capabilities, assembly and kitting, as well as engineering services.

Value-added distributors can also help customers work more efficiently in uncertain business environments where cost-cutting and preserving cash have become key priorities for organizations across many industry sectors.

“Identifying and partnering with a value-added distributor is actually commensurate to an emphasis on cost/price,” says Gerard Magnarelli, sales manager, Americas at Fusion Worldwide. “A distributor like Fusion can bolster a company’s flexibility to not only reduce component cost per transaction, but more efficiently manage inventory, thereby reducing carrying costs.”

Tactical, Adaptable and Strategic

Working with value-added distributors also helps companies be more tactical, adaptable and strategic, all of which are necessary to reduce costs. A value-added distributor also brings a partnership that wholly aligns with a company’s goals. By offering customized solutions, a distributor can help generate positive purchase price variance (PPV), or the difference between the standard cost paid for a specific item or service and the actual amount paid to acquire that item or service.

Value-added distributors are also helping procurement teams mitigate excess inventory issues through vendor-managed inventory (VMI) programs. These programs find the manufacturer or supplier taking control of the inventory management decisions for their customers. Finally, value-added distributors can use market intelligence to keep a company informed and prepared for both the near- and long-term supply chain landscape.

“Value-added distributors connect procurement professionals to millions of products, software and solutions every day,” says Mike Slater, VP of global business development at DigiKey, which uses certain criteria and requirements for sellers. That criteria includes factors like product quality, brand authorization, compliance with industry standards, reliability, liability insurance and the ability to meet customer demands.

As a value-added distributor, DigiKey also maintains an “outside-in” mentality whereby it focuses on what will add value and make its customers’ lives easier. By listening to those customers and continuously improving, the distributor is able to adapt to the market’s changing needs. In many cases, that means being able to get products delivered within 24 hours—an expediency that helps buyers, designers, engineers and builders do their jobs more effectively and efficiently. 

Smarter, Better and Faster

When they have a portfolio of value-added services to choose from, procurement professionals can effectively leverage their suppliers’ global footprints and supplier networks to inform their decisions and pursue their goals.

“By extension, a company can benefit from the distributor’s vast network of strategic suppliers, spending power across all major regions and the information we gather about the market through strong, long-standing relationships,” says Magnarelli, referring specifically to Fusion Worldwide’s value-added offerings.

“When companies have access to extensive, real-time market information and distributors that empower them to be lean and achieve cost reductions,” Magnarelli concludes, “they can work smarter, better and faster in any business condition.”

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