Executive Briefings

Transforming the Supply Chain at Electrocomponents

Electrocomponents, a distributor of electronic parts and other products, is moving from a traditional, catalog-based, phone-order operation to one that largely depends on e-commerce, says Andrew Lewis, head of global supply chain planning. That has led to some exciting opportunities for demand shaping and demand sensing.

For a company that moves 40,000 parcels a day worldwide from its portfolio of half a million products, it simply wouldn't do to continue to be a catalog-based concern. Yet, Electrocomponents, the holding company comprising Allied Electronics in the United States and RS in Europe and Asia Pacific, did just that until it realized that a complete transformation of its supply chain was necessary.

More often than not, orders were taken over the phone from customers who flicked through the pages of catalogs, Lewis says. Of course, orders were being fulfilled online as well, and when more than half of all orders began to come in electronically, it was decided that the company had to jettison its "old-world model."

Transformation efforts at Electrocomponents began with adoption of the demand-driven value network concept promoted by AMR and now Gartner. "It says the role of product management is to identify opportunities that the company can put in front of customers," Lewis says. "Sales and marketing's role is to provide insights from customers as to what the company might do. And the role of the supply chain is to provide a profitable response to both of those other two. For us that was very important.

"It positions us quite clearly as guardians of risk and of profitable response. Part of that is around demand shaping and demand sensing. A second concept is sales and operations planning. In fact, we have sales, inventory and operations planning. For distributors, inventory is a the heart of what we do. We don't have inventory by accident. We have it because it's our reason to exist in the marketplace, or one of them anyway.

"So we built the transformation around those two concepts."

The capability to do credible forecasting and safety-stock calculation has been key to that effort, Lewis says.

To view video in its entirety, click here

Electrocomponents, a distributor of electronic parts and other products, is moving from a traditional, catalog-based, phone-order operation to one that largely depends on e-commerce, says Andrew Lewis, head of global supply chain planning. That has led to some exciting opportunities for demand shaping and demand sensing.

For a company that moves 40,000 parcels a day worldwide from its portfolio of half a million products, it simply wouldn't do to continue to be a catalog-based concern. Yet, Electrocomponents, the holding company comprising Allied Electronics in the United States and RS in Europe and Asia Pacific, did just that until it realized that a complete transformation of its supply chain was necessary.

More often than not, orders were taken over the phone from customers who flicked through the pages of catalogs, Lewis says. Of course, orders were being fulfilled online as well, and when more than half of all orders began to come in electronically, it was decided that the company had to jettison its "old-world model."

Transformation efforts at Electrocomponents began with adoption of the demand-driven value network concept promoted by AMR and now Gartner. "It says the role of product management is to identify opportunities that the company can put in front of customers," Lewis says. "Sales and marketing's role is to provide insights from customers as to what the company might do. And the role of the supply chain is to provide a profitable response to both of those other two. For us that was very important.

"It positions us quite clearly as guardians of risk and of profitable response. Part of that is around demand shaping and demand sensing. A second concept is sales and operations planning. In fact, we have sales, inventory and operations planning. For distributors, inventory is a the heart of what we do. We don't have inventory by accident. We have it because it's our reason to exist in the marketplace, or one of them anyway.

"So we built the transformation around those two concepts."

The capability to do credible forecasting and safety-stock calculation has been key to that effort, Lewis says.

To view video in its entirety, click here