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Strength at the Roots: At the Center of the Technology Value Chain

Feb. 22, 2021
As Avnet enters its second century in business, it’s building on its past.

By Phil Gallagher, CEO

After a year like 2020, the old adage “change is the only constant” has taken on deeper meaning for many of us personally, while every aspect of the electronics industry and technology sector has also experienced change. Whether it has been responding to supply chain disruptions or surges in design activity, these changes may feel reactive. But in reality, they are simply an acceleration of existing trends.

In the midst of this, it’s worth asking, “Can technological transformation be part of a company’s DNA?”

For Avnet, which marks its centennial this year, the answer is simple: Technological transformation is an essential part of our DNA. It’s the heart of our success as a company. It’s why we’re part of the elite 1% of U.S. companies that have celebrated their 100th year. It’s how we continue to offer what our customers and suppliers need—not just now, but next.

Avnet is entering into its second century in business deeply rooted in the same principle that helped us succeed in the first: We stay situated at the center of the technology value chain—constantly adjusting our position as this center morphs and grows with time.

Roots in Disruption

This mission goes back to 1921 when 33-year-old Charles Avnet began buying and selling surplus radio parts on Manhattan’s Radio Row, triggered by the U.S. government lifting its ban on private radio. In his first year of business, he would sell about $85,000 worth of components—worth $1.1 million today—to the public to help them stay connected to this wonderful new information stream.

Even as Avnet seized that opportunity, he turned his attention to helping more customers capitalize on what was coming next. Soon he was selling components and other technology not just to consumers, but to dealers and manufacturers, and eventually the military and the aviation industry.

Fast-forward to 1969 and Avnet was on the New York Stock Exchange, broadening its electronics range into antennas and even guitars. Continuing to innovate, Avnet Inc. would become the first technology distributor to place an order with Intel. Sensing Avnet’s commitment to helping customers accelerate innovation, the processor giant granted it a license to sell software development and demonstration tools to engineers.

Understanding this emerging market, Avnet began serving designers and engineers who demanded board-level and development systems, peripherals, microcomputers, software and networking solutions. By 1975, these innovators were discovering new possibilities in computing by visiting one of 33 Avnet microprocessor demonstration centers around the world.

In the 1980s, the microprocessor’s evolution drove manufacturing of electronic calculators, digital watches and microwaves. The introduction of 8-bit and 16-bit microprocessors brought more powerful PCs, minicomputers and mainframes. And Avnet supported it all, becoming an early distributor of IBM printers and terminals.

Widening Our Reach

Globalization and technology complexity would transform the industry, and Avnet anticipated a growing need for more than product. Customers clearly needed more from their distributors, including solutions focused on value-added resellers (VARs), marketing, training, resources and services in 80 countries. Even so, the company kept growing market share in semiconductor distribution, becoming the only U.S. distributor to offer all five American semiconductor lines.

Then came the big semiconductor disruption of the 1980s, when supply outstripped demand and created an excess of inventory throughout the industry. In response, Avnet centralized and automated its inventory management, a transformation that would prove revolutionary for the industry. In 1984, the company built its first mega-warehouse that came to provide the widest range of value-added services in the industry. These value-added offerings, coupled with Avnet’s longstanding and by now global supply chain expertise, played crucial roles in Avnet’s continued evolution. By the time the company moved its headquarters to Phoenix in 1997, it was firmly established as a leading technology distributor.

The 1990s brought about the distributed computing revolution, in which the mainframe computer gave way to networked PCs, workstations and data warehouses. Many customers were intent on developing a new generation of technology called embedded systems, specializing in displays, modules, storage, peripherals and memory as building blocks for complex products.

Further technology evolution prompted Avnet to overhaul its business model to, once again, offer what customers would need next. Building on its roots in distribution, the company transformed its line card and offerings to deliver comprehensive design, product, marketing and supply chain expertise for customers at every stage of the product lifecycle.

Withstanding Any Storm

In 2020, the company Charles Avnet founded was named one of Ethisphere’s World’s Most Ethical Companies for the seventh consecutive year. Fortune has named Avnet one of the world’s most admired companies 14 times.

Avnet’s foresight, and the ability to effectively execute on it, has put us in the position we’re in today, with a global presence and full engagement in hardware, software, IoT, AI and security across a wide spectrum of industries, efficiently managing global supply chains and cultivating expert communities of innovators.

As a company built through perseverance and driven by transformation, every day we return to our roots. And as always, we have our eye on the future and are constantly adjusting our offerings to ensure we stay well-positioned at the center of the technology value chain for our customers and our suppliers. Our foundation will help us and our customers navigate the complex issues facing our world, from the state of the supply chain post-pandemic to the future of work.

Leading and thriving in the future will require resilience, which is also the key to helping you move from concept through design, product introduction, production, logistics and adaptation as necessary. For the last hundred years, we have helped steer the electronics industry and technology sector through significant industrial disruption and understand what it takes to be successful, no matter the environment. We’ve made it our motto to “reach further together,” which has become core to what we do. That mantra will carry us forward through whatever may lay ahead.

About the Author: 
Phil Gallagher, Chief Executive Officer, Avnet
Phil Gallagher is the chief executive officer of Avnet and a member of its board of directors. As CEO, Gallagher is focused on growing and accelerating the company’s leadership position in the electronic components and technology industry by leveraging Avnet’s global distribution expertise and value-added services from design chain to supply chain.

A 37-year Avnet veteran with a passion for serving customers, Gallagher was named interim CEO of Avnet in August 2020. Previously, he served as global president of Electronic Components, where he was responsible for leading the company’s massive broadline components distribution business worldwide.

Beginning his long and successful career with Avnet in 1982, Gallagher has held key executive leadership positions in sales, marketing and operations. He led two former operating groups for the company, serving as president of Avnet Electronic Marketing Americas from 2004 to 2009, and as global president of Avnet Technology Solutions from 2009 to 2014.
Gallagher is also a past president of the National Electronics Distributors Association (NEDA), now known as the Electronic Components Industry Association. In 2009, he received the Gail S. Carter Award, one of the organization’s highest honors. He currently serves on the advisory board of Women in Electronics.

Gallagher holds a bachelor’s degree from Drexel University.