17 Jan 2013

Next Generation Distribution Model for Electronic Components From Prototype to Production (Page 2 of 2)

A key to the process is having an understanding of the engineer and what he or she wants.

Digi-Key was born out of the engineer’s world. The company’s high-tech culture embraces leading edge methods of interfacing with and serving customers - 21st century processes and solutions that bring a degree of speed and efficiency to the design engineer not typically accessible from traditional distributors. Traditional distributors have grown out of business processes that were developed to serve the market decades ago. They struggle with implementing a model that more effectively serves the customer of today - the “Digi-Key model”, because changing their model would require significant organizational restructuring that would be highly traumatic to both their organization and their customers and possibly threaten their economic viability.

Digi-Key, on the other hand, has effectively scaled its business to support the production needs of the engineer, successfully facing the challenge of optimizing its business model to align with the needs of today’s customers through the entire product cycle of prototype, to NPI, and low to medium volume/high mix production.

Due to its rich history with the engineer, Digi-Key has an innate understanding of the product design process. The company understands the importance of giving the engineer easy access to two things – parts and information. With vast amounts of knowledge and hundreds of thousands of parts, the key is making it easy for the engineer to find useful content and the right part quickly.

As new multi-media, Web 2.0 mobile device formats emerge, engineers expect to have deep and broad technical information at their fingertips, 24/7. New ways of presenting information such as videos and Product Training Modules can help compensate for a lack of experience or specialized knowledge and accelerate the design phase process.

A Culture of Service

Second, is a commitment to never compromise on service. Every single employee, regardless of department, needs to be 100-percent focused on the customer. Thorough training and a culture of caring about the needs of the customer must be pervasive throughout the organization. This needs to be apparent not only in customer service, sales and other customer-facing departments, but company-wide. As a result, customers consistently experience the company’s brand promise, appreciating the holistic commitment to exceptionally high levels of service.


Despite the similarities, not all distributors are created equal. In fact, there are many fundamental differences that cannot easily be compensated for because they are inherent in the distributor’s business model. Many of these differences impact service quality, flexibility, cost and speed of delivery.

Centralized Global Distribution

Third, the Digi-Key model supports an ultra-efficient distribution model – global shipping from a single location, promising delivery in as little as 48 hours. As opposed to more regional models, a centralized approach allows the company to aggregate inventory, offering a broader selection of products. As a result, logistics and service is seamless to all customers regardless of location. The benefit is a single interface into ONE organization – from single prototype orders to mass production orders.

To support continued global growth and expansion, one thing that will remain central to our model is the agility and flexibility to change and adapt to better serve the specialized needs of a worldwide market. As customers demand “off-the-shelf” delivery, the “Digi-Key model” will outperform the others.


When it comes to the availability and delivery of electronic components, everyone in the world, speaks a universal language. As we stated earlier, the key attributes include breadth of product line, consistent availability, readily accessible information, responsive service and fast delivery. Ultimately, a the company will choose the company that is easiest to do business with as its logical business partner.

For the engineer, the key is selecting the right partner early on in the process. The “Digi-Key model” makes it possible for your prototype go-to partner to can be your future ally for volume production orders. By building the foundation it’s possible to form a relationship which can carry through from the design to the production process, avoiding the complexities, inefficiencies and risk inherent in developing multiple relationships.

When the right product has to be delivered at the right time, it’s critical to choose a next generation distributor who understands the needs of the engineer in today’s global market. Choose a partner who and ship both small and high volume orders, one who can cater to both the design engineer and the production business purchasing department.

Digi-Key’s partners appreciate the level of service they receive from Digi-Key throughout the entire process which, in turn, helps speed time to market and improve overall efficiencies. STI, an innovative supplier of military components based in the UK, had this to say about the value of the Protytype to Production model.”

“With Digi-Key, the full traceability back to manufacturer on all shipments is invaluable in allowing STI to meet the fast turn expectations of the UK Mil/Aero market for low volume programs. Combined with that the desire to act as a full cradle-to-grave broad line distributor low volume prototype runs through to high volume production and pricing themselves accordingly, is challenging the status quo of the historically strong UK electronics distributor market.”     -Donald Robertson, STI

With many of our long-term partners, we act as a pre-production resource. As they go through the design process, they are thinking about ways to improve manufacturability. Most organizations must produce functional prototypes that mirror the production environment. Once a design is finalized, it becomes more difficult to find cost savings after the product goes into production. Disparities in the process lead to product launch delays and cost overruns and unnecessary risk.

Ultimately, when a product needs to get to market quickly, engineers rely upon a distribution partner who is reliable and consistent with broad product availability, delivery and service.


In summary, here are five distinguishing characteristics of the new “Prototype to Production” model:

  • Availability - Deep and broad product line, available for immediate delivery

  • Content - Access to design-phase knowledge to support the process

  • Scalability - Ability to ship high-mix/low-volume orders

  • Speed – Able to ship parts for overnight delivery, anywhere in the world

  • Service – First-rate sales and customer service professionals trained to support all types of customers from the engineer enthusiasts along with the production business purchaser

There are a few important reasons that our traditional qualities – wide product selection, stable pricing, fast delivery, etc. – actually translate into an effective volume production model. Since we’ve approached the supply chain challenges from the reverse perspective – from the engineer to the purchaser, the Prototype to Production model is difficult for others to replicate.

Regardless of where they are located in the world, every customer wants to accelerate cycle time and get a product to market faster while reducing costs. Manufacturers facing increasing global business complexities and mounting pressures to accelerate their return on investment are seeking added value from their distribution partners. Digi-Key is focused on reducing the customer’s total cost of acquisition by serving as a “One-Stop” for prototyping and design as well as new product introduction runs and low to medium volume/high mix production quantities.

Organizations that succeed in today’s global business environment will partner with a distributor who can offer the next generation delivery model, supporting the entire product manufacturing process - from prototype to production. Digi-Key Redefining Distribution and on the leading edge of distribution technology, a fact that is being increasingly recognized in the industry and increasingly being leveraged by manufacturers throughout the world.

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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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