17 Jan 2013

Next Generation Distribution Model for Electronic Components From Prototype to Production

Mark Larson, President of Digi-Key, describes how today’s global market needs are redefining how electronic components are distributed

From the engineer’s perspective, when it comes to product design and development, availability, timing and service make all the difference. The engineer is used to working quickly and efficiently despite having limited time and resources, sometimes lacking specialized knowledge and/or experience in a given technology. At the same time, when it comes to production, engineers face a new set of complexities including pressures to accelerate time-to-market while staying within tight production budgets.

While there are several sources for accessing components in smaller quantities for prototype and design and several sources for accessing larger quantities for new product introduction runs and, ultimately, production purposes, the customer is typically forced to deal with multiple distributors to take a project from beginning to end.

Wouldn’t it be great if there was a single resource for the engineer, supporting their shifting demands from prototype to production?

The Solution

A new kind of “hybrid” global distribution model for electronic component delivery has emerged. Shaped largely by global business dynamics and online consumer behavior, the new model promises the engineer a new level of efficiency and economy of scale. This is due, in part, to a “consumer-ized” enterprise which comes with an expectation of self-service, high-quality information access and speed.

Inevitably, the customer is responsible for shaping a business and today, it’s the global buyer who plays a key role in changing how we operate. Naturally, the engineer wants easy access to new technology – the latest and greatest products newly released to the market and the broadest selection of components available for immediate, off-the-shelf, delivery. And, they want a total cost of acquisition that is competitive.

In addition, mobile devices and cloud computing enable easy online access - anywhere, anytime. The possibilities are limitless and, at the same time, the customers’ expectations are at an all-time high. They demand options, speed and knowledge at their fingertips. The combination of all these dynamics - technology advancements, customer behaviour and global business - has created both opportunities and challenges in the electronic component distribution business.


However, as a project progresses and the line between engineering and purchasing inevitably blurs, the importance of this new hybrid electronic distribution model couldn’t be more important. Now, thanks largely to changes in consumer-driven behaviour, a next generation electronic component distribution model has emerged. This new model can support and sustain the evolving needs of today’s engineer throughout the entire lifecycle of a product.

Built upon four decades of experience, Digi-Key is the perfect example of a one-time traditional “catalog” company that has successfully and uniquely evolved its business model from a focus on servicing not just individual product design orders, but also a unique proficiency in servicing high-mix, low volume production. To accomplish this, Digi-Key offers three critical business model differentiators. Broad line distributors have been unable to replicate the strengths of Digi-Key’s hybrid distribution model.

Especially today, as manufacturers face increasing global business complexities and mounting pressures to accelerate ROI and time-to market, they are seeking added value from their distribution partners---cost effective solutions that don’t require sacrificing speed, efficiency or flexibility. Organizations that succeed in today’s global business environment clearly recognize that advantages of partnering, with a distributor who can offer the next generation delivery model, supporting their entire product manufacturing process - from prototype to production.

Digi-Key would summarize its three primary distinguishing “Prototype to Production” attributes as follows:

  • Understanding the Engineer

  • A Culture of Service

  • Centralized Global Distribution

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About the author

Mark Larson is President of Digi-Key. He graduated from the University of Minnesota with a Bachelor of Science degree in Business. He joined Digi-Key in 1976 to manage the company for Ron Stordahl, a childhood friend. At this point the business had 14 employees. Since then Larson has taken the business to a point where it has over 2500 employees and a turnover of over $1 billion.

Digi-Key Corporation is a global, full-service provider of both prototype/design and production quantities of electronic components, offering more than three million products from over 650 quality name-brand manufacturers at www.digikey.com. With over 800,000 products in stock, an impressive selection of online resources, and the logistical advantage of more than 800,000 square feet of expandable distribution space, Digi-Key continues to move forward, affirming its commitment to stocking the broadest range of electronic components in the industry and providing the best service possible to its customers.

Digi-Key’s hybrid electronic component distribution model clearly differentiates the company from other distributors. The company offers a unique approach to a high-mix, low volume production business strategy, alleviating inventory risk and carrying costs. Digi-Key’s next generation distribution model supports the entire product manufacturing process – from Prototype to Production®.

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