Now, it’s personal!
06 April 2010
Paul Wolfe recently met Bill Walker and Chris Shipway of Avnet Memec to find out about the company’s new business strategy, which relies on meeting the needs of the individual.
Paul Wolfe: Firstly, please can you tell me a little about Avnec Memec?
Bill Walker (Regional Vice President of Sales in Northern Europe): Avnet Memec is a relatively young organisation formed in 2005 and came about because of the purchase that Avnet made of the Memec organisation, and I was at Memec. Avnet bought Memec and merged Memec with WBC, but before that merger, some of the significant lines of WBC were transferred into other Memec companies. Avnet has a speedboat policy; separate organisations in Europe supported by a common backbone. The philosophy with the Avnet Memec organisation was to try to build a demand creation organisation to give Avnet Memec a speedboat that focused on high technology emerging semiconductor lines, but with a focus on demand creation.
In 2007 we were quite small and didn’t have the critical mass to be a serious player in the demand creation business. We had a choice of trying to grow organically, which would probably have been long and painful, or to take a shortcut and try to make a reasonable acquisition of a company that had a policy similar to ours. We bought Chris’ company in 2008, a company called Azzurri, and they had a long record of being a top class demand creation company, and that brought us critical mass because we could acquire good sales people, good field application engineers, and good marketing people. We did that in May 2008. That was a highly successful acquisition because we held on to all the lines and all of the people and the working partnership we achieved has achieved tremendous stability, tremedous buy-in, and grown the market share from 2.5% to 7% in the UK in two years.
PW: So what’s happening now?
Chris Shipway (UK and Ireland Director): The acquisition of Azzurri and embedding them into Avnet Memec took 18 months, and just before Christmas we purchased Spector and embedded them into the team as well, so now the revenues are very positive and should finish on sales of €35 million.
We’re in a good position, have a really good team of people, and we’ve been looking at ways of operating and found that a number of our highly qualified, highly skilled people were being swamped by administration functions. What we wanted to do was find a way of putting these people in front of the customers, and that’s what is driving all of this. It’s a positive message and is doing a really good job in certain specific key markets. The military sector is particularly strong for us and accounts for about 30% of our revenue, then there’s storage such as raid storage, and consumer, too. There’s a lot of design-in done in the UK market but there were other segments we thought we weren’t strong in and could be, such as medical.
We identified a number of market areas where we felt we could be stronger and decided to change our traditional approach where we had individual product line managers responsible for one or two product lines, and we took a vertical market approach. We identified 15 different market segments and associated individuals with those markets, matching people with their skill set – which will breed further specialisation – and they will be selling all of our product lines. We realised that in order to grow the business, we needed to be a bit smarter about things, so we took some time out, decided what we were going to do, and came up with this approach.
For example, we may have an individual that specialises in fire and security – one of our vertical markets – and it means that if a new semiconductor company comes along with a particular product, we have immediate knowledge of who the customers are, who the contacts are, who the engineering people are, and the key decision makers. We can target the product towards the system architects to try to develop our customers’ products, and also take in more of our own products, which will result in more revenue and more design-in.
PW: So ultimately, this means more choice for product designers?
CS: Correct. At the end of the day, this whole change is about getting more sales. What we’re trying to do is get people away from admin and in front of customers. I’m responsible for a team of 27 people in the UK, and 20 people, including myself, are all customer-facing. We go to visit customers, we knock on doors, we visit system architects, we talk to technical directors, and we talk to managing directors of companies.
PW: Do you think that your customers are seeing the benefits of this personalised approach?
CS: Yes, very much so. Our amount of time with engineers is very limited, they’re very busy people, their time is limited, and time to market is crucial. Some suppliers might look at it and think that they’re losing their individual that was responsible for the franchise, but what they’re getting is five individuals responsible for a number of different product lines that are all going out.
We’re growing market revenue, market share, profits, and doing very well in the UK. We’d rather make changes whilst we’re in a position of strength and it’s sensible to look at the way you do things. You can always improve things if you take the blinkers off and open up your mind to seeing where else you can improve on going to market and how you talk to customers. This is going to enable that to happen.
We’re improving our efficiencies and everyone needs to do that. Even though production revenues may have shifted from the UK to the far East and eastern Europe, demand creation is very much alive in the UK, and there are a large number of customers running technical design-in within the UK. Production may be in Malaysia, Singapore, or Romania, but one of the benefits of an organisation like Avnet is that they are global, which means that we have a team of business migration people. If we’ve done a design, we know who it’s going to go to, we can give the team the details, the part numbers, the project, the pricing, where it’s going, and they can follow it, book it, and the profit gets put back into my territory. The profit comes back into the organisation that is doing the demand creation.
Read the rest of this interview in a future issue of Electronic Product Design.
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