11.16.2011 // Posted by: Lou Lipomi // Posted in: Articles, Connectors

Statements of fact and or opinions expressed in MarketEye by its contributors are the responsibility of the authors alone and do not imply an opinion of the officers or the representatives of TTI, Inc.

Distributors typically fall into one of three categories: Broadline, specialist, or catalog. Broadline distributors, as the name suggests, carry a full range of products, including semiconductors, passive, electro-mechanical and connector components. Some of the biggest names in distribution, including Future, Avnet, and Arrow, fall into this category. Specialists, as the name suggests, focus on only one of the commodities mentioned above. Semiconductor specialists include Nu Horizons, Bell Microproducts (now part of Avnet), and WPG. Connector specialists include Heilind, PEI-Genesis, and Powell. In a somewhat unique category, TTI specializes in both connectors and passive components. The third category of distributor is commonly referred to as a catalog distributor. In today’s market, however, a large percentage of their business is transacted online.

Which distribution model works best for connector customers? Common sense would suggest a “specialist” would be the correct choice. You wouldn’t go to a cafeteria for fine Italian cuisine, would you? (In my family, you would stay home for really good Italian food, but that’s a different story altogether.) All that said, broadline distributors do sell billions of connectors each year, and our customer survey indicates a fairly high level of satisfaction on the part of their customers.

The value proposition of a specialist is focused product knowledge, depth and breadth of inventory, and an understanding of the market for their products. They typically offer better technical assistance for their customers and provide an enhanced level of design-in support for their suppliers. Conversely, broadline distributors offer one-stop shopping for their customers, facilitating more complex supply chain management programs. Catalog distributors have even more extensive line cards than the broadline distributors. Catalog distributors provide easy access to parts, typically in small, pre-production quantities. They also, however, do have the capability to service larger customers using one of several models, ranging from Digi-Key’s volume business division to Mouser’s working relationship with their sister distributor, TTI.

So back to the original question, “Which distribution model do connector customers prefer?” The overall rankings in the Bishop Distribution Survey bear out that the common sense answer is the right answer — they prefer specialists. But the real answer, like the devil, may be in the details.

Five of the 10 highest-rated distributors are specialists. Top-rated Heilind is a connector specialist, as is PEI-Genesis. As mentioned earlier, TTI focuses on both connectors and passive components. Power & Signal specializes in both products and market segment: connectors and transportation. Anixter, which carries a broad range of products, specializes in a market segment broadly generalized as premise wiring. Three of the top 10, Digi-Key, Mouser, and Allied, are catalog distributors. Only two, Avnet and Arrow, ranking eighth and tenth, are broadline distributors.

When you compare these results with an evaluation study recently conducted by EE/Times, you get a significantly different picture.

In this study, four of the top 10 distributors are broadlines, with Arrow and Avnet holding the second- and third- highest ratings, respectively. Catalog distributors once again have a strong showing, holding four of the top 10 spots, including the highest-rated distributor, Digi-Key. WPG is the only specialist in the top 10. They focus almost exclusively on semiconductor and related products. We have not categorized McMaster-Carr, nor did we include it in the Bishop Survey, as they are primarily a supplier of mechanical and utility hardware to the MRO market.

The EE/Times study also asked respondents to rank the distributors based on their service levels for connectors and interconnect products. The results, as indicated below, do not differ dramatically from the overall ranking in their survey. Mouser moved up one place, Future moved up two places. Graybar fell out of the top 10 and was replaced by Premier Farnell. WPG also fell off the list and was replaced by TTI as the one specialist distributor in the top 10. Heilind, which ranked first in the Bishop Survey, came in at number 12 in the EE/Times list of most preferred distributors for interconnect products. (Heilind’s results in the EE/Times study may have suffered from the inclusion of Force as a separate distributor. Heilind had operated under the Force name in the western U.S., but recently rebranded all locations under the Heilind banner. At Heilind’s request, Bishop & Associates removed the Force name from their survey.)

So is our original assumption wrong? Do the results refute the presumed common sense choice of a specialist over a broadline? The answer can be found by considering both the objectives and the results of the surveys.

The demographics of the two surveys are similar, consisting of buyers, engineers, sales, marketing and management personnel at OEMs, CEMs and ODMs from various regions of the world. The largest percentage of responses came from North America in both studies. The only significant difference is in the commodity involvement of the respondents. The majority of those responding to either survey design or purchase products from a multitude of commodity categories. But, as the following chart indicates, a large portion of those responding to the Bishop Survey are dedicated exclusively to connectors.

In the Bishop survey, 92% of all respondents are involved to some degree with interconnect products. A total of 23% fall into TTI’s area of specialization, with responsibility for both connectors and passive components. But a significant number, 17% of all respondents, indicate that interconnect is their only area of concern. So does the breadth of product responsibility impact the process of choosing a type of distributor? Based on the following results, the answer appears to be yes.

When asked to rate distributors based on their service levels in providing connectors, respondents who specialize in connectors tended to rank specialist distributors more highly than responders with broader responsibilities. Conversely, responders with broader commodity responsibility rated broadline distributors more highly than did the responders who focus strictly on connectors. So, after studying the details, the answer seems to be that specialists prefer specialists, based on their value proposition as stated above, and those handling a wider range of commodities prefer broadlines, again, for their proficiency in providing the services outlined in their value proposition. It is important to understand the strengths of each type of distributor and align your expectations accordingly. The most important decision, however, is how an individual distributor meets those expectations for your business.

We’ll continue to review the results of the 2011 survey in upcoming issues of Connector Supplier.

For more information regarding this survey, contact Lou Lipomi or click here.

No part of this article may be used without the permission of Bishop & Associates Inc.