Value-added services drive distributor sales
Staff -- Purchasing, 4/15/2004 2:00:00 AM
Distributors are still placing bets that value-added services and new products will drive growth in 2004. About 29.5% or $5.6 billion of the Top 75 electronic distributors' sales were derived from value-added services last year. That's up slightly from 28.2%, or $5.7 billion in 2002.
Though it may appear that sales from value-added services declined slightly in 2003, sales of the Top 75 decreased by $1.4 billion and Avnet didn't report the percentage of its value-added sales this year, which would likely add another $2.5 billion to sales derived from value-added services.
Nearly all of the Top 75 distributors offer value-added services. The survey shows that 19 distributors derive 50% or more of their sales from value-added services. That's up from 13 last year. Sixteen distributors say 20-49% of their sales are derived from value-added services. That matches last year's total. The remaining distributors that responded to the survey question say value-added services account for 19% or less of their sales.
Distributors continue to offer product value-added services, including connector and cable assembly, electromechanical assembly, as well as power supply and motor modifications. Other long-standing services include IC programming and kitting. A few distributors are also focusing on display integration.
On the supply chain side, distributors continue to provide vendor managed inventory programs, bonded and in-plant warehousing, automatic replenishment systems and other integrated supply or logistics programs.
Top distributors by VA sales
| 2003 Rank | Company (Top 75 rank) | VA sales ($ mil.) | % of sales derived from VA services | 2003 Revenue ($ millions) |
| SOURCE: PURCHASING |
||||
| 1 | Arrow Electronics (2) | $3,561.8 | 72% | $4,947.0 |
| 2 | Bell Microproducts (4) | 652.5 | 52% | 1,254.9 |
| 3 | TTI (6) | 220.0 | 40% | 550.0 |
| 4 | All American Semiconductor (9) | 189.0 | 60% | 315.0 |
| 5 | Richardson Electronics, Ltd. (12) | 153.5 | 60% | 255.9 |
| 6 | Nu Horizons Electronics Corp. (11) | 135.0 | 50% | 270.0 |
| 7 | Jaco Electronics (13) | 126.9 | 50% | 253.8 |
| 8 | Newark InOne (7) | 116.3 | 25% | 465.0 |
| 9 | DAC (10) | 109.8 | 40% | 274.4 |
| 10 | PEI-Genesis (22) | 40.3 | 68% | 59.3 |
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