While staff occasionally move between the component distribution and manufacturing sectors, it is more unusual for those moves to happen at management level. When things do happen further up the food chain, some interesting comparisons can arise.
Andrew Plaistow joined Slough-based Sterling Components as sales director six months ago, after nearly three years as UK MD of BC Components, the spin-out of Philips Components' passive components division. Sterling is a privately-owned specialist dealing in passive and electromechanical (e-mech) components with several exclusive agency agreements, most notably with Samsung for e-mech parts.
Plaistow has chosen an interesting time to move. Business is hard, and some delicate balances within distribution are changing as a result.
Most component manufacturers have been pushing more sales through distribution so they can concentrate on matching design and output to longer-term market trends. But Plaistow says the downturn has seen many major OEMs cut back on purchases while some consumer manufacturing has moved out of Europe. In this context, Plaistow believes that his experience of manufacturing will be useful in his role at Sterling.
Adapt the approach
“Perhaps we can approach the market in a different manner, target different customers knowing that some manufacturers still hold accounts that should have moved to distribution,” he said. “I also think that I can help to adapt the approach of the sales team. The traditional perception of distribution sales engineers is that they visit buyers, leave catalogues, service the business and take orders, and do four or five visits a day.
“We might have to cut down the number of visits but spend more time on design-in. While passives and e-mech might not be as sexy as semiconductors, there are still opportunities for companies like ours to spend more time in front of design engineers.”
Going further, Plaistow also believes distributors need to dig further into their client companies.
“We must realise that the relationships need to extend right through the organisation,” he said. “As well as having relationships with the buyers, we have to have links with purchasing managers and directors and even general managers. We need to match this with relationships right through the engineering channel from director level to the design engineer.”
He suggests that it is not just a case of learning more about the products, but more about the customers: “We have to look to extend the number of our franchises that are designed into products.”
Sterling has an advantage in being an independent operation, according to Plaistow. It has enjoyed a very stable environment with little turnover of staff, and thereby developed the level of product knowledge needed to support a more design-led strategy. There are five product managers handling the five core technology areas of passives, e-mech, quartz crystals and filter, ferrites and inductive products. These interface with more than 30 franchises, of which a dozen provide the sales core.
One area where Plaistow says his manufacturing experience will encourage changes is the amount of information that is fed up and down the company and through its partners: “I know we can get a lot more out of our suppliers to help us develop the business. We have good relationships between the product managers and the suppliers, but we need to extend this to provide a closer relationship between the salesforce and the principals. We have to communicate better.”
He is actively encouraging the salesforce to expand the qualification of enquiries from customers: “The manufacturers want as much information as they can get and not just about the product specifications. They need to know when the OEMs are going into production with products, when the orders are likely to be placed.
“If it is a design-in and the order won't come in for 10 months, the manufacturer has to know that as they will start chasing us for the order otherwise.”
It is also important for the component manufacturer to know who the distributor is talking to so that they do not compete for the same business.
“We must also work more with the manufacturer's salesforce,” said Plaistow. “As we have moved from allocation to over-supply, this becomes easier because during shortages the manufacturers were happy to service just existing customers. It also shows our principals that we are committed to the line and want to use their resources. It will make our job easier and give us access to more technical sales resources.”
Manufacturers can also play their part, he says. They must increasingly pass on their strategy, direction and activity to distributors. Key areas are the technology underlying new lines, their target markets and any possible spin-offs that the manufacturer might want to develop. Plaistow says there is not much that surprises him about working in distribution. He was already used to talking to major OEMs one day about multi-million pound deals and then visiting a small design operation the next.
“But I didn't have a real appreciation about the number of the enquiries that distributors receive, especially their diversity. What is difficult for a distributor — and I don't think suppliers appreciate this — is the level of information that customers are able or willing to supply,” he said.
But he is adamant that qualifying an enquiry is still the most important operation: “Because the market is down, a lot of people are just benchmarking by getting competitive quotes for business. We have to be smart at not wasting the manufacturers' time by getting them to do a lot of work on quotes which are not for live business.”
According to Plaistow, a lot of people say it is easier to go from a distribution company to a component manufacturer. He disagrees, particularly for a sales role, where the emphasis changes from getting orders to working on much longer-term design-in: “At the management level, it is even harder as you have to take account of the complexities of the company and internal politics. Coming the other way has been easier for me as I have a good grounding in distribution and we are much more customer and market-focused.”
But he is careful not to rock the boat: “We have a very successful model at Sterling that has been profitable for a long time; all I am looking to do is fine-tune it.”