April 03,
2007
Your
Distributor May Become Your Design Team
Product
design has changed over the past decade. Before the electronics slump that began
in 2000, in-house design teams produced most products. But those groups were
slashed during the downturn and OEMs were not inclined to hire their engineers
back when demand picked up a couple years later. They wanted a lean overhead.
So, in recent years OEMs have sought design services elsewhere.
In
some product groups, brand owners turned to original design manufacturers
(ODMs); a new form of outsourced manufacturing that began in Taiwan with
laptops and cell phones. Soon ODMs expanded their design work to include a wide
range of consumer electronics. ODMs offer full product design as well as
manufacturing, leaving the brand owners to concentrate entirely on marketing
and distribution. Other brand owners turned to outside design houses that
specialize in product engineering and design. In other cases, OEMs turned to
distributors such as Avnet Inc. in Phoenix and Arrow Electronics Inc. in
Melville, N.Y. to help with product design.
At
first glance, it may seem that distributors would be best positioned to deliver
design services primarily to small- and mid-size manufacturers. Yet even large
OEMs have found distributor-assisted design is superior to building a pricey
in-house design department. “Certainly it’s more prevalent that smaller
operations turn to us for design support,” says Rafael Cruz, VP for design
services at Avnet Inc. “But we’re also working with some tier-one OEMs. They’re
coming to us for expertise because they don’t have it on their staff.”
Distributors
have long offered design support in order to secure the component buy from
customers. But distributors also changed their business practices in response
to the downturn of 2000. Weak demand put pressure on distributor margins.
Components were also being sold like commodities, which meant distributors were
forced to compete primarily on price, eroding margins even further. Some
industry experts questioned whether the electronic distribution business model
was still valid.
In
order to boost margins and avoid competing endlessly on price alone,
distributors like Avnet and Arrow begin to develop value-added services that
could be sold on a for-fee basis. Much of those expanded services involve
design support.
The
range of design services has become very rich at large distributors like Arrow and
Avnet. “We have a plethora of engineering talent, field engineers and
specialists dedicated to design services,” says Cruz. “We can also provide
services for ASIC and FPGA if the solution for the customer requires
programming.”
As
well as offering reference designs and customer platforms, these distributors
offer training. Avnet provides a series of Speedway Seminars to teach the
technology behind the design tools and components. These seminars are provided
on site at Avnet, plus Avnet engineers travel the country presenting Speedway
Seminars. In some cases, the seminars are presented on-site at a customer’s
location.
Field
application engineers (FAEs) also travel widely to support design services for
customers. In many cases, the FAEs literally move in with the customer during
the design process. “The customer gets an engineer who is an expert with the
technology and the expert stays there with the customer,” says Cruz. “The
reference design is delivered to the customer in the field and the FAE stays with
the client through the design process.”
Some
design customers have been using distributor design services as their primary
design team for years. Each new product is designed by distributor engineers.
“Surprisingly, we have some clients that have worked with us for generations of
products,” says Cruz. “These customers have leveraged our engineers to design
each new product and product upgrade.”
For
some manufacturers, there are significant advantages to blending design
services with the component buy. The distributor has deep experience is testing
and validating the entire bill of materials (BOM). “We don’t have to experiment
with the design, since we’re doing our own development with our own boards,”
says Cruz. “When we give you this reference platform, we’ve debugged it and
validated it. So you can just cut and paste. And you know the components work
together.”
Plus,
the distributor has deep knowledge of the product lifecycle status of all the
components in that BOM. “In the past people were amazed how engineers didn’t
take longevity into account,” says Cruz. “We’re able to do the lifecycle
evaluation with a little bit more analysis because we offer a combination of
the design chain and supply chain.”
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