Electronics Distribution: Design services aren't just for new products
By James Carbone -- Purchasing, 3/13/2008 6:00:00 AM
When buyers decide which full-service distributors to use, they often review the design services the distributors have to offer.
In the past, buyers would closely look at the design services that center on new product introduction (NPI). However, distributors say there is greater interest in design services that focus on the value engineering of existing or mature products. That's because most companies are running lean and may have their design engineers working primarily on NPI. At the same time, there is a need to take out cost of existing products.
"We hold customer council meetings twice a year," says Marc Gsand, vice president of marketing for Avnet Electronics Marketing Americas. "One of the loudest things that came out of those meetings was the need for value engineering (VE)," he says.
With VE, an OEM looks at the design of one of its existing products and tries to find ways to change the design to lower the cost, perhaps by using a different part or by fewer parts.
While NPI work may be flashier because the margins are higher, Gsand says "in times like this driving cost out of existing products is critical for customers." He adds that there are often fewer resources for engineers working on mature products at an OEM which is why OEMs need distributor support.
"Our customers are looking for us to come in and meet their maturing engineering group and figure out ways to design-in new components that will have a longer lifecycle and a better cost point," Gsand adds. He says working on older products is an opportunity for Avnet "to get new registrations and treat it like a brand new design."
Gsand says Avnet's component engineers work with engineers and buyers to find ways to reduce cost for existing products. "We are hiring more component engineers that are supporting customers from a centralized perspective," he says. The component engineers can be contacted 24 hours a day via phone or the Web.
He adds Avnet is also investing a lot of time and money into its Web search engines. Avnet, based in Phoenix, has contracted with firms like Endeca to do both part number search and subject content search so Avnet engineers can get to reference design and board level information and download schematics, says Gsand.
There is also growing demand for design services around NPI because design organizations are leaner. "There is a cost issue and headcount issue. They are leveraging our design expertise rather than going out and hiring," he says.
He adds that OEMs want distributors to handle a larger part of the design workload. "Customers are leaning on us more. They are outsourcing full portions of a design. It is not just an ASIC (application specific integrated circuit) on a board. They want us to design an entire power supply of a board," he says.
He adds that suppliers rely on distributors to provide design services to tier-two and tier-three customers. "They have large part of their investment supporting their tier one customers," says Gsand.
However, if the electronics industry has a downturn, distributors may have to support some tier-one customers as well because suppliers may not have the resources to support all of them.
While large distributors such as Arrow, Avnet and Future provide design services focused on semiconductors and printed circuit boards, some small distributors offer services centered on non-chip niche products. Case in point: House of Batteries in Fountain Valley, Calif. As its name implies, the company sells batteries and packs to OEMs and often has to design the packs as well.
"A customer may come to us with only an idea on how long the battery should last in an application," says Don West, president of the company. "From there we find out if the customer wants low-cost manufacturers or very high quality and what chemistry they require."
Rechargeable lithium is widely used now, but it is not always the best solution because it is expensive and there are safety issues. "There can be NRE fees with that chemistry, but with other chemistries there are not," West says.
There are safety issues as lithium cells have caused fires in equipment. "We have to design a safety circuit with lithium and that's where a lot of the design work comes in," he says.
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