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Harvard Business Press, October 2008 (Updated and Expanded)
ISBN-13: 978-1422126967
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« So, You Want to Be an Engineer… (Part I) | Main | The Procurement Paradox »


May 17, 2005

Distributors Beef Up Value-Added Services

By Katrina C. Arabe

The key to driving growth this year? According to a recent survey, distributors believe it's value-added services coupled with new products:

Purchasing Magazine rounded up the Top 75 Electronics Distributors in its April 21 edition and discovered that they're putting a lot of emphasis on providing value-added services to their customers in all industries. In fact, the Top 75 attributed about 48% or $10.7 billion of their sales last year to such services, according to this article. That's a huge jump from 29.5% or $5.6 billion in 2003.

And this year, most (40 of the top 75) expect VA services to drive a lot of growth.

Almost all of the Top 75 distributors provide value-added services, which include connector and cable assemblies, electromechanical assemblies, as well as power supply and motor modifications along with IC programming and kitting services. Several distributors also report deriving a lot of growth from display integration. Another hot area: design service, with 33 distributors saying they count it as an offering.

Thirteen distributors report providing purely physical value-added services, as opposed to supply chain management services such as vendor managed inventory programs and automatic replenishment systems.

The Purchasing survey also found that 25 of the Top 75 distributors credit value-added services for 50% or more of their sales, a modest increase from 19 last year.

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