In our latest Electronic Specifier Insights podcast we turned to Mark Burr-Lonnon, Senior Vice President, EMEA, Asia and Global Service from Mouser Electronics for a view on pandemic-bashed 2020 and how 2021 may turn out
Electronic Specifier Insights speaks to Mark Burr-Lonnon, Senior Vice President, EMEA, Asia and Global Service from Mouser Electronics
Electronic Specifier Hello, and welcome to this podcast from electronic specifier insights. Our guest today is Mark Berliner, Senior Vice President global service EMEA and Asia Pacific business at distributor Mouser. Electronics. We will discuss the global components distribution market, and mousers role in that market and its investments to support global customers and its suppliers. So, a very warm welcome mark to you, Mike, always good to speak to you. Excellent. Good to speak to you too. Perfect to start with what what mouse's been up to during this very strange year. Now, home base in Texas, I believe you've made some investments in both a new customer service centre and some warehouse automation technology. So can you just talk us through why these investments have been made, and what will be the benefits both to Mouser and its customers? Yeah, the big drive from US Mexico, so for many years is is making sure we have inventory on the shelf. And you know, we push very much for having the the widest inventory. So to do that, obviously, you need a bigger warehouse as you continue to grow. So So we've continued to make expansions in the warehouse and early part of next year, it's been been put back a little bit of COVID, due to the building of the warehouse and some of the things we've had to do so but by beginning of next year, we'll be we'll be on stream with with some of that new facility. And at the same time, we got an automated fully automated warehouse, would you come on stream later in the year, that's that, again, that's taken more time, just purely due to COVID. Getting people in the in the warehouse to build, making sure we social distance and do everything to keep them safe. So but yeah, it's a really big thing for us to make sure that we have an extension of capacity there, because demand is going through the roof. And we need to make sure that from our single global warehouse in Texas, we continue to supply the world from that. And then we also moved into a new customer service centre in Texas on our campus here in Mansfield. And that's really just to give us more space in our main building for other things. So we removed a large number of customer service people over the road is probably the best way to put it so that we could increase the marketing people and the IT people and the products, people in our current office. So it's all built around expansion more than anything else. Because for us, it's been a another record year. And I'm sure we'll go into some details on that later. But that's really the main thrust as to why we need to do all this building.
Okay, I can I can see, obviously, bigger warehouse, more inventory. Also, what will that mean, new warehouse, especially in terms of automation, in terms of getting the product out to customers? Why everything we do goes out same day. So it's still gonna go out same day, it just means it's a slicker service internally within the building, and having that more inventory available. But in terms of the logistics, that doesn't really change that it doesn't change a lot from where we are now. I mean, an order goes through our warehouse now in 15 minutes, which is almost too quick sometimes because you know, we do have people phone out and try and change an order or add to an order. And then we tell them Sorry, it's already shipped. And they don't always believe in us because they think, Oh, it's not gone through in 15 minutes. But it's such a slick system, it does so but really the the automated warehouse is the thing that leads us to, to the next level of automation, where the you know, the robots come down and pick the pick the parts. So that's that's going to be interesting when we have that TTI our parent company does have one in Munich already. And it works really well. So we're looking forward to having that on track working next year. Okay, so it's maybe not so much. You know, as you said, you get customer orders, and everything's processed in 15 minutes. This is more about the volume of demand that you anticipate and being able to handle that demand.
Yeah, I mean, we've seen a huge increase in demand this year already. So I mean, we've seen the number of buyers is up 6%, the number of customers is up 10%. And overall, our business is going to be up over 8% this year, in really what the markets not it's not been a great year. So we shouldn't be doing well in a bad market. We just had spotted spawning periods. I mean, it's been
q1 was really tough in Asia, but q1 was really good in the Americas and Europe. And then it really slowed down globally for for a few months in certainly in the Americas and Europe. But that's the point when China and Asia started going crazy. So so what we found is that Asia sort of got on this track of the, I guess you should say after COVID because there really is our COVID. So he has gone crazy and we kept thinking that was going to slow down and it's not slowed down.
So that's, that's been really good. And just looking at the numbers for the last month, again, another huge record month in Asia. But what we saw is a slowdown in the Americas in Europe. But at the same time, that's now come back, and it's come back really strong. And it's now hitting record months in both of those. So I record every single month in April in both those two regions. So overall, for the year, yeah, we're gonna be off over 8%. And we're really pleased about that. But it's not all only about the dollars for us, it's really about the number of customers and the number of buyers because you know, most of our supplier partners, si, si, males are the guy who takes the new products to market. And the thing that they're more interested in is their new products getting to the customer. And they're interested in that we're growing the customer base to get to new customers, so So if the if the customers are up 10% buyers or up 6% whatever our number is, our suppliers are typically pretty happy about that. So, so we think we've had a good year, we've had a good, good year for our supplier partners, and we expect next year will be better. Okay, yeah. So Stan, where is it right now that new product introductions are quite a big percentage of your total inventory. Yeah, of the inventory. So between about 23% now of our overall inventory is, is in MPI products. And we continue to focus on that to make sure that we've always got the latest parts, because, you know, when when the whole policy is based around stocking it, why don't so much deep on most of the items, then you end up having a very wide inventory, just through the bringing on the new parts on all the lines, which we do. So it's a big focus for us to do that. And and that remains, it has been our focus for probably over 10 years now. Okay, and just looking at, you've mentioned how, you know, the business is now going very well, in all the global regions, what of the kind of trends there in terms of both the type of customer and the sort of products maybe that you're, you're, you're selling to these customers? and any other trends? In 2020? Yeah, it's been an interesting year may come in, you're like everybody, I think, you know, we saw an uptick in the the medical industry, which has always been a good industry for us. But I wouldn't say it's been spectacular.
This year, you'd have to say, it's been pretty spectacular for the wrong reasons. Of course, that started off that we were supplying, and lots of people making ventilators good, we could help out. But we continue to do that as the situation continues to have that need. But I think also the real the big digital revolution in terms of design, and really looking into people doing things remotely, not only working remotely, but you know, doctors working remotely on systems. And so lots of industries now, I think are probably left forward this year, because they've had to I mean, I think most of these types of things are being worked on for a number of, you know, years anyway. But it really needs a kick up the backside to say, right, you now have to do it. And so I think there's lots of designs now, which are starting to get to, you know, move into production as we go into into next year from the design activity, which has happened this year. And as we've seen, the design activity has been been absolutely huge this year. So is that design activity spread across the end user market or specific areas? Yeah, that's right across everything. I mean, we know we got over 150,000 customers globally. And so So for us, it really it, we're seeing it everywhere. I mean, there's IoT sector, 5g, obviously, there's lots of things happening there. And, you know, anything to do with sensors is, is really right now, too. So those types of areas. Now, of course, we've seen a lot less design activity, probably in the automotive industry. But I think that's going to bounce back next year, for sure. But now we're seeing it everywhere. You know, we're also seeing a lot of extra activity in the EMF sector. So you know, that that tends to go through peaks and troughs, but a minute that's going very strong as some people are putting more work out there. But interestingly, a funny funny statistic also is that actually are, and this could be people working at home is that hobbyists and students that their numbers in terms of customers, this is up 26% of us. So that's the that's the biggest area of growth we've got in terms of percentage. So that's it. There's a lot that there's either lots of people who are normally logging in with their their business address, but now they're working at home. So maybe it's been captured by us as a as a hobbyist. Either that or there's just people going home doing lots of designs or just moving into that hobbyist type of activity. So that's actually funnily enough, we keep being our biggest
factor of growth as so we don't know what designs are going to come out from that. Because, you know, it's unlikely that although people are hobbyists and students, I think it's, it is going to come and given flurry of activity from the business sector. Okay, and how you read more and more designers, as you say, working from home? And how are you coping with supporting some of those customers? if they need any technical advice or any other engineering support? Yeah, I mean, we have technical teams, obviously, right across the globe, me. So all our customers, wherever they are, have a local phone number to speak to people.
You know, so whether it's the UK, whether it's Munich, whether it's France, you know, every every location has a tech team involved. And they're really the web is just such a powerful tool. Now, I think if we go back years, you know, people were keen to see people and receive data books and, and talk to manufacturers and distributors changed a lot. Now, most, most engineers are really happy just to go on the web, as long as they can get pointed sometimes in the right direction, to find what they need. But the huge amount of content that we're putting on the web Now make sure that engineers can, can find what they want, and easily look at the types of areas that they're interested in, and then drill it down to a product. But you know, we're selling products on the web, which many manufacturers said we would never sell on the web, you know, big design type parts, FPGAs, and things that typically, in the old days, they'd always be, you know, design engineers involved from suppliers or manufacturers. Now, we're finding that, you know, once people get down a road with a certain FPGA, they know the family, they know what the product does, they can quite easily just go on on a website, see the extra information they need to see, and then move into the next and the next product series. So So yes, it's quite surprising. But so So two things I said, really takes online to talk to always good to talk to people. And, you know, we we may be a leader in digital distribution, but also a leader in customer service. And part of that is, is having frontline technical people actually talk to people, a lot of people do these days, but
I still don't talk to people. Okay. And just while we're on that topic, terms of e commerce, I guess, is already you know, a big a big part of your business. Have you seen an uptick in in people buying online? Yeah, yeah, we have make, I mean, really seen it, we've been saying it for years, I mean, but still, interestingly, it's about it's 53% of the dollars.
But it's over 85% of the customers. So in terms of the number of customers is absolutely huge. But there's still some extra dollars, of course, which some people choose to like to talk to somebody on, but that activity continues to grow, and it will continue to grow. People, people are really very comfortable now dealing with the web, like all of us. I mean, you know, we're now buying our dog food, we're buying up shirts, we bought our shoes online. And five years ago, we probably said we'd never do that we'd still go shopping. And I feel sorry for the high street. I mean, when it comes to most things, but in our industry, at least there is no High Street. So we're not putting in a business but but certainly the you know, the the web offering and the way that people are now buying plays into our hands. And I think if you look at the industry in the last few years in a mouse is leading the way when it comes to you know, online ordering. Okay, right. So we're on the cusp of 2021 What have you see that year shaping up? I realise it's difficult with a pandemic still still raging around us, but any any specific trends you might see in in next year? I think like like everybody, I think we're all waiting to see all the impact of 5g has I mean for sure, you know, that's going to have a big impact on the market when it when it truly happens in into production. In Australia, Apple rolled out 5g phone brands until all the rest of its they're making it making it work then the volume of components going into that takes a little bit of time to catch up. So
but but I expect next year that's going to have a big impact and it's going to have a big impact on the market that it will lead to probably some allocation in some areas. Again, I think that's going to drive some of that.
IoT again, everything. Everything in that world is is being driven by technology of course. And if we if we think of some of the products and sensors will continue to go crazy again next year. Automotive
bounce back in the automotive sector at a bad bad year. Although it's tough when you when you think of automotive, because whatever happens in automotive for our industry is good.
Not just the numbers going up, but the numbers don't need to go up to where they were before would be good for the electronics business because so much more of the the content of the car is now electronic. It even if it doesn't go back to anywhere near the numbers, it was at the pre electronic levels in cars, the content from from our sector is going to continue to grow year on year. But I do expect that to really bounce back slowly next year. Okay. I mean, there are what about what, you know, we might call your traditional industrial base as well, there's obviously lots going on there in terms of industrial automation security, the whole you know, that, that, if you like some of the heartland and the distribution market. Yeah, I mean, the whole industrial base continues, continues to grow nicely. I mean, you know, we it's, if we look at our typical OEM business, which would mainly be sort of industrial, I mean, we've seen a 5% growth in that this year, that excludes us taking out the emfs. companies, they tend to grow by more, I mean, we've got some of the MSX companies up over 20% this year.
But over the general OEM base of industrial taking those out probably about 5%.
I'd expect that to grow more next year than this year. So
we see it, we do see it everywhere, make it very difficult to be specific on it just purely because there's not really a sector, there's not really a customer, there's not really a type of person now, who doesn't buy from Mouser with the number of the number of customers that we have. So so we see it from everywhere. I mean, even you know, we're even up 4% this year on MRO, which is spares and repairs, which is interesting. I mean, it's never been a big focus for us. But when you when you have $150 million worth of inventory, some of that fits very nicely into MRO so. So when the inventory is there, people people find it on the web, and they come and buy it. Okay. And so just on that MRO, because it's kind of interesting, you know, I think it's becoming, if you like, obviously, there are other competitors in there. Is it something you might put more resources into? Or you are you thinking, you know, we are about electronic components?
Yeah, we're always looking at areas to to grow and make and you know, that it's so with a reasonable number on it already. And certainly we
you know, we will, we will look at that areas and areas of growth, just like we will many other areas. But so yeah, I can't commit. So that's a, that's a huge focus for us next year, but certainly is one of the areas which we're continuing to grow from that we haven't. Okay, and I guess the other thing is, you know, throughout this year, I haven't kept count, I'll be honest, but you sign the number of new suppliers. And that's a trend that will carry on into 2021. What are your kind of parameters for looking at new suppliers? Yeah, it's all about technology and filling holes, to be honest, is probably the simplest technical answer for you.
Okay, we, you know, we got over 1100 brands now we have most of the leading brands is very few that we don't have. So now taken on the big brands gets tough.
I guess one that we don't have actually is AMD. So that's, that's an interesting one would be the potential outward links. We do have Xilinx Of course. So um, you know, one, one thing has been interesting over the last few years that there's been lots of mergers and acquisitions when it comes to suppliers. And, you know, for us, that's, that's never ever been a risk. It's always been a great upside, because we've always had every single supplier. So we've had the acquire and inquiry. So we would hope that with the Xilinx name detail that at some point, we could grow that one, which is one of the last few big lines and an awesome, a few other lines out there. Less big in general distribution, but big names. So obviously, we're talking to some of those can't say who.
And then we're really continuing to fill those holes. So lots of lots of smaller companies with new technology. We like to bring those to market every day, we have probably 20 suppliers who, who would come back to us to say, Hey, we have the latest and greatest new product. And sometimes they are I mean, it's, and it's sort of an easy investment to make. Because if you're not taking, you know, a line where there's, you know, 50,000 items and you're taking on a new technology, and it's got five, five product lines, it's pretty easy to stop some of that and put it live on the web and see what happens doors.
You know, when you take on a line with 10s of 1000s, you know, it's probably going to be okay. Because it's, it's a, it's a well known brand, there's a, there's a small risk that you can take on these four lines, and they can do absolutely nothing. But we owe it to our, we owe it to the engineers that we, you know, we bring that technology to them. So I've taken a small risk on a few lines on a few parts and putting them on the web is really a good thing for us to do. And typically we get it right. I mean, there's very few Well, we take it on, and we have to scan it anytime within the next year or two. So okay. I mean, looking amid all this surging business, has there been any issues and component availability and lead time shuttling around a bit?
I mean, not so much this is this has been pretty good, actually. I mean, we've seen a little bit but I mean, it's almost been surprising that it's been so, so good. I think there were there was a concern. And probably in March, April time, as the market really went crazy with
Europe and Asia,
buying past because they knew COVID was coming. You also had China coming back in Asia coming back. So that's that end of q1 type of volume really look like if that it continued, I think we would have had a lot more shortages, to be honest. But then we saw up on Asia contracts a little bit. And that's not if we as the market. And that really probably stopped a lot of that happening. But there's an under swell of a feel and talking to manufacturers right now is that next year, we're gonna go back into that world, and it's gonna be the normal suspects, I mean, we're gonna see, we will see high cap, again, being a problem, we see some resistance be a problem, I see some memory being a problem. So, you know, we're gonna, we're gonna move back into that point. And then I saw the price of wafers was all going up this week. So it's, the signs are all there. I mean, it's, I think, talking to suppliers and looking at other distributor numbers.
Q fours looking like a pretty good quarter.
We're hoping that obviously, on the back of COVID, that things will continue to improve for the market next year. I think everyone's been very resilient. I mean, if we look at it,
manufacturers have continued to make things through this. There's been times where, you know, there's been shutdowns in certain areas, but even when it's been a shutdown, typically, a lot of governments have allowed the manufacturing to continue. So it's the it's the, you know, the white collar workers who are, who are sitting in their bedrooms and kitchens and front rooms working. But most of the frontline workers who are building stuff are actually still building stuff. And it's good that certainly from our standpoint, you know, we have those white collar I shouldn't say white collar, no, I wear the white shirt in Texas,
in the Polo working
away from the the T shirt workers. So certainly from that standpoint, you know, we made a company decision that we had to keep our warehouse people safe. The easiest way to keep them safe is to stop them interacting with too many people. So that was the big driver for us to move a lot of our office workforce to working from home where it's been pretty successful. I mean, there's some areas where you'd say it's more successful than working in an office. And there's some where you do miss the collaboration. And I think that there's still some issues in some areas, but overall, it's been pretty good. But the big drive really, for us is to keep the warehouse people safe because they run enough risks, you know, at the weekends, seeing people seeing family and doing things and for us, it's to try to reduce that risk. Okay, just just going back on the the inventory. I mean, as you said there could be shortages I mean the other thing I've been hearing about is maybe some microcontroller product lead times are going out so how how does males handle that in terms of making sure it has sufficient inventory to meet customer requirements now we can we continue to add to the add the orders we put in the system for other suppliers I mean
so so if it's on an extended lead time is less than a worry as long as it comes into that extended list when we when we buy it? Yeah, we continue to invest in that inventory. We're up over 150 million now. So so that's free inventory available to all customers that's not that's not a stock that's not held by anybody that's available to every customer wants to come on and buy one part but yeah, I mean there are activity when it comes to purchasing has has gone up. We have a we have a lot of products on water with suppliers. But we're not we're not seeing huge issues yet. I think
Coming me be honest. I mean, I think it's coming.
But we're not seeing too many bad issues right now. Okay. All right. And just in terms of, through COVID,
there been any logistics issues for you that might be difficult, obviously, you know, there's fewer flights, getting products in and out into the warehouse, and maybe then getting it out of the warehouse to customers. Bearing in mind that, you know, you do operate from one warehouse location, which brings many benefits clearly, but maybe could be an issue when when we're in the middle of a pandemic, with transport options being a bit limited.
Yeah, it's been, it's been pretty good actually, for us. I mean, everyone warehouse, as you say, does have its benefits. And certainly we have seen the benefits on it. But we've not had any day when our warehouse has been close to the whole of COVID, which is great. You know, we use three tremendous partners in FedEx, UPS, and DHL. And to be honest, they're getting products into parts of the world, even even when countries were closed down. I mean, the the best example was India, where there was a total lockdown of any parts going into the airport. But DHL was able to get medical parts still through the airport, even in that time. So there have been some local lockdowns, which have caused a few problems. But it's been very few. I mean, we had a, you know, a few postcodes in Lombardy and Italy early on. But in in general, most of the logistics of getting the product to the customer being good, is quite weird. In the US. I mean, your read how bad the situation is the COVID and the number of people.
That's really because people just kept doing what they normally do right or wrong. Yeah.
Certainly industries kept kept going without a blink in many in many places. And logistics really hasn't been a problem. I mean, we, you know, the flights out of DFW no issues, the flights, you know, we're talking about, you know, FedEx, you know, our product goes from DFW up to Memphis and then goes out to the, to the rest of the world from there typically. And again, nope, no problems in any of those places. Now, I'm sure there's been some COVID cases which make warehouses tough. But, you know, certainly we've seen no real issues into into the customer base, which is good. Okay.
I mean, one of the other casualties of the pandemic has been exhibitions. And I know Mouser, you know, is keen, and indeed important to attend the mission. So they've all gone. I mean, one, maybe get your view on virtual exhibitions, and then to what has Mouser done to fill that void? If you like, where, you know, exhibitions are apart from any other things a good place to meet new customers?
Yeah, I mean, of course, the I miss exhibitions back I mean, I think
I missed anybody right now, to be honest. But today.
But certainly, exhibitions are good. I mean,
so So we certainly missed that. Yes, it is a great place to
some to meet new customers and have new customers find Mouser. But in general, we're a marketing machine anyway. So I mean, you know, with everything else that we do with regards to search engine marketing, or marketing, automation, or, or marketing in the media, really just continues as it always has. So for us, we haven't had to change what we do that. So so that's good. I mean, the and actually, I think what we found is there's a, there's a lot of people with more time to look at marketing. So it's been weird, because you almost think that were people working at home, they, they're maybe, you know, not look at anything, but what we're finding is there's actually more people looking at marketing, looking at articles, and they have a half done while they've been spending some time working from home. And that's, and that's really good. When it comes to virtual exhibitions, you haven't really found one that works as, as I'd say, tremendously successful yet make I mean, we've, we've, we've tried lots of them all over the world. And we will continue to do it because I think
there's going to become more and more of them, and someone's eventually going to get it right and nearly said more, right. But
it's going to it's going to improve and we've seen some improvements in it. But the success that we've had from them so far has not been that high. We look forward to the face to face exhibitions coming back. I think again, they've probably changed a little bit format. As they start to come back to the back end the COVID but I'm pretty sure they will come back. I'm also sure that virtual exhibitions will continue and those books and exhibitions will get better, but
everyone's looking for
Silver Bullet, we've not found silver bullet on the books.
Okay, but I mean, one of the other things you have been doing is some sponsorships, both in terms I think some of the suppliers, you know, in the absence of exhibitions, suppliers have been holding events, if you like for their customers, and I think you've been involved in one or two of those. And also, on the broader sponsorship issue, I guess he's a way of keeping the name in engineers and customers eyes. Yeah, the supplier, the supplier events, probably most more successful than the big general events, to be honest to me, I think what you find is when when those things are more specific, they work pretty well. So we've seen a lot of interest in in a lot more webinars to be honest. And you know, when they're specific to an end market specific to a product, those have been very successful. So we've worked on a number of those which have been good. I think where it does fall down a hole is when when someone's trying to recreate an an exhibition and make it like an exhibition. And I think probably the full process is trying to think of it too much from a how do we recreate what we had before but do it virtually, rather than standing back and looking at a white piece of paper and say, how should we do a virtual exhibition and I but I think the mindset, people are probably not quite there on that. So you're finding these things or, you know, the trip, you're trying to recreate something that you're walking into, and you're doing things and maybe they're just another way to do it. And I'm not saying I'm I know what that way is, but I just know that the success rate promo has been less for the ones as you say specific to the manufacturers and products. Those those are very good. And we we were doing lots of those anyway, again, a lot of the marketing that we've been doing this year is the same as we've been doing every year for the last 1015 years, but the one that has disappeared as the face to face one. Okay, right. Okay. My Rolando from nazre electronics. Thank you very much for your time. Thanks, Mike.
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