The economic slowdown, emerging customer segments such as solid-state lighting and the need for distributors to take a proactive role in assuring quality in the supply chain were some of the topics of discussion at this year's Electronics Distribution Show (EDS) in Las Vegas.

Most distributors at EDS said they were concerned about the general economic slowdown, but it had not yet negatively impacted their businesses. "Our business has been very positive even in the Americas," says Philip Gallagher, senior vice president of Avnet Inc. and president of Avnet electronics marketing, Americas in Phoenix. "We had quarter-on-quarter sequential growth and two quarters of year-on-year growth and the June quarter is looking pretty positive," says Gallagher.

While there is a slowdown in the overall economy, market segments for distributors such as defense and aerospace, medical and communications are looking good. "I tell our team not to read the newspapers," he jokes. "Don't read the headlines. Let's not talk ourselves into a slowdown."

In his keynote address to distributors and component manufacturers at EDS, Arrow Electronics CEO and Chairman Bill Mitchell said electronics distributors have an "enormous role to play in making sure quality is assured in the industry."

He also said buyers have a role to play in assuring quality in the supply chain.

"Buyers need to source from reputable, well-established companies with tight internal controls and conduct comprehensive background checks on suppliers," Mitchell said.

He added distributors must implement on-site inspections of suppliers and conduct ongoing performance reviews of them.

"Distributors should only source from companies that are willing to provide a guarantee for products in writing," said Mitchell.

It's also important for distributors to be cautious and suspicious of unusually low pricing. "If it sounds too good to be true, it probably is," he said.

Electronics distributors need to do business with suppliers who have International Organization for Standardization (ISO) approval.

Distributors need to translate quality into measurable and clearly defined targets, according to Mitchell. He added that distributors must have the "highest standards in everything we do."

"You can have a wonderful reputation for years but it can be blown away because of one quality issue," he said.

Mitchell also spoke about the growing customer segments for distributors. He noted that military, aerospace, transportation and infrastructure will be strong segments for distribution.

"Medical will also be an important sector. This is a graying society," he said.

Healthcare and medical is going to be a rising portion of gross domestic product (GDP). That means more medical equipment will be built and there will be more opportunities for component sales to medical OEMs and their contract manufacturers, according to Mitchell.

He added that solid-state lighting will be a great opportunity for electronics distributors. "This is a perfect market for distribution," said Mitchell. Distributors will supply products but also design services to lighting customers.

Arrow, based in Melville, N.Y., has invested in solid-state lighting, but so have other distributors, including Avnet, Future and Nu Horizons among others.

"We see a lot of growth potential in LED lighting," says Dave Bowers, president, semiconductor distribution division for Nu Horizons also in Melville. Nu Horizons signed Osram about a year ago, a major manufacturer of LEDs.

He says there are two aspects to solid-state lighting. One is the traditional segment of automotive, aircraft and industrial applications. The other is incandescent and fluorescent bulb replacement.

"The traditional market is growing nicely and our focus has been on that," says Bowers. "Nu Horizons is also starting to focus on the incandescent replacement market. "It is in its early stages, but there is going to be explosive growth," he says. However, when the price of LEDs falls to pricing levels of incandescents, it will be a commodity market and become a high-volume, low-margin business.

Specialty solid-state lighting such as architectural lighting could remain a higher margin business for distributors.