Fall 2017 Marketing Group Digest

Marketing Group Digest

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Components

Bob Evans, CPMR
EK Micro
Rolling Meadows, Ill.

Is the ‘A’ word imminent?

At the beginning of this year, an EPSNews article by Bolaji Ojo cited: “Wariness in manufacturers to increase capacity based on a lack of confidence in sales forecasts.” The headline read: “Severe Electronics Components Shortages Possible in 2017.” That was in February.

In the March TTI MarketEYE Resource Center, Dennis Zogbi of Paumanok Publications declared, “Lead Times for Passives Extend into the Twilight Zone.” Zogbi spoke at the ERA-ECIA Breakfast Program at EDS 2017 in May and reiterated some of his concerns.

At that time, I suspect many of us were already hearing grumblings about lead times from customers and distributors alike. In addition, there were warnings from our principals to speak to our distributors about laying in inventory. How many of those warnings were heeded? It seems we are learning that now.

ECSN Chairman Adam Fletcher, in July, said the supply chain is experiencing a “perfect storm” and suggested that lead times could continue to increase. He was credited with the following quote on ElectronicsWeekly.com: “Stronger‑than‑forecast global demand for components has followed an extended period of low capital investment by the companies that make them. Assuming that growth will continue at a similar pace in Asia-Pacific in the second half of 2017, manufacturer lead times are likely to continue to extend.”

And as recently as August, the folks at EPSNews noted, “Strong demand across all sectors, particularly industrial automation and automotive, has led to increased lead times across several component segments.” In its Market Conditions Report Q3 2017, Future Electronics reported “… Increasing lead times on MOSFETs, diodes, transistors, many passives and most memory products with some going to allocation.” There, they said it, that word, the “A” word.

Dictionary.com says that to allocate is “to set apart for a particular purpose,” and to many of us that purpose may not include our particular customers. Common synonyms for allocation are to “allot, apportion, appropriate, designate or earmark.” Again, you may be wondering exactly who is earmarked.

So, buckle up, it seems the ride is just starting. Component lead times are moving out rapidly, and increased capacity is not necessarily on the horizon any time soon.

Electronic Systems Integration

Gary Ponto, CPMR
GP Marketing
Kirkland, Wash.

New solutions are entering the AV market

In the AV industry, “Dante” network communication protocol seems to be sweeping the new IP addressable product connectivity releases from every manufacturer. It is an IP communication protocol that allows direct communication to each devise for control and monitoring. Dante seems to be replacing Cobra Net, which was the first adopted IP control protocol, very quickly. Cobra Net is still holding market share, but the new designs seem to be favoring Dante.

I am not seeing many applications for IP systems asking for either Cobra Net or Dante communication protocols yet. I believe some of this is because it is an expensive solution versus a traditional 70-volt solution, and the integrator would need to have networking knowledge. These systems need to piggyback on an existing network via a “V-Lan” to keep the traffic separate from the standard company network, or the sound contractor would need to establish its own dedicated network. This is really in the structured cabling company’s wheel house. Sound contractors could subcontract this portion of an installation to an IT division of an electrical contractor, or a structured cabling company, but these are the wolfs at their front door they have been fighting off for several years.

The more this technology is adapted, I believe, the more we will see the customer base for AV shift. The larger AV companies will adapt and hire the techs they need to deploy IP-controlled systems. This is not a huge stretch from Crestron / AMX programing companies. But I also think the datacom installers will see this as a new market because it requires a network connection and is not a search for them to install.

This may also change the way factories go to market. Can traditional AV sales reps support IP deployment Dante systems, or will network companies need to be brought in to support these systems?

The security market is growing as well. Higher megapixel cameras are being requested by customers at lower prices, and many are being introduced by manufactures. The new H.265 compression standard is being adopted and is reducing network bandwidth of IP cameras by 50 percent. This is allowing end users to increase the camera resolution and camera count per system without impacting their network bandwidth and recording disk space.

I am also seeing more analytic software being introduced that really works. A few years ago, analytics was the buzz in the industry, but it was not always 100 percent reliable.

I am seeing more of this business run through national distributors for pricing and payment terms. The design and demonstrations, however, are still being done by the local reps or factory direct salespeople, depending on the product line. I think that national distribution accounts are going to gain more of this market than in the past years.

In closing, I know that we all wish the hurricane victims across this great nation our very best.

Materials, Assembly, Production & Supply

Troy Gunnin
Sun Rep
Tampa, Fla.

Emergency preparedness is key for all businesses

As I’m writing this column, we are making preparation for a visit by Hurricane Irma. If the current projected track holds, we will experience the most powerful hurricane ever in the Atlantic basin. By the time you read this column, you will know if we “dodged the bullet” or are in the midst of recovering.

Our friends in Texas just experienced one of the most devastating natural disasters ever to hit the U.S. It will likely be years before they are back to normal. It is entirely possible that we will experience much of the same.

In preparation for what could happen, we make plans and prepare options and try as best as we can, all the while expecting the unexpected.

Events like these make us pause and consider what is important. Material things can be replaced, but not life. While making these plans, the safety of our families and employees is most important; we make sure to put them first and then plan for preserving the essentials, both personal and business.

From a business standpoint, proper planning prevents panic at the last moment. In today’s computerized environment, we operate much of our communication “in the clouds.” All of our records are continually backed up to “hopefully” prevent catastrophic disruption of our day-to-day activities. This is something that every business should consider. It’s much cheaper than having a professional recover data (voice of experience). Operating from the cloud has allowed us to calmly discuss what we need to physically remove from the office because we may need it immediately. That took us no more than five minutes. Then we could focus on securing the building. As I write this column, we are waiting to make the decision to stay or leave.

As I watch the chaos around in preparation, I can’t help but be reminded that in our day-to-day business activities, a good dose of proper planning could prevent many of the problems we encounter. As the good carpenter says, “measure twice, cut once.” We should plan, refine our plan as we move forward, and work our plan to success.

Hopefully our “survival plan” is good, and we see it through to a successful conclusion.

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