Summer 2024 – ERA XCOM Digest

Pay attention to what you pay attention to

By Ellen Coan, CPMR

“Pay attention to what you pay attention to” – Amy Krouse Rosenthal

In trying to focus and prioritize, we may ask ourselves, where are our thoughts? ERA’s STEP (Sales Training for Electronics Professionals) 2024 is at phase zero (at the time I am writing this.)

A blank piece of paper stares up at me, but many topics are emerging. What do we want to pay attention to as we move from EDS into the second half of 2024 and look at the rebounding sales after our over-inventoried first half of 2024? (Optimism!) Is it the communication between generations? How to have more productive distributor trainings, principal QPS’s (quarterly planning sessions), customer meetings that we can hold face-to-face when confirmed? How to improve productivity with AI or new-to-us digital tools as we analyze the data? Synergistic selling as we wade through the titles of our customers and find the decision maker and look at their product block diagrams and design cycles, asking the right questions and listening to the answers to find the best fit for all? All the while trying to brand ourselves, motivate ourselves, use our energy effectively and develop our careers vertically and horizontally, committed to our mission statement and beyond?

What a long way of saying there is a lot there and where we choose to spend the 525,600 minutes in a year is important. That well-known song from the musical RENT has timeless thoughts on this issue. We will come together Sept. 24-26 (ERA STEP 2024) for nine, 75-minute virtual sessions that are dedicated to these issues and more in our electronics industry. Together we will listen and collaborate (in real time or afterwards in informal discussions) to find best practices as we meet on the rollercoaster and step off for a while and recalibrate.

ERA continues to grow its membership through extraordinary efforts led by Ama Derringer, ERA’s membership coordinator, and share education centered on the needs of our members – rep, distributor and manufacturer. I challenge you to find something outside of your comfort zone to learn next quarter. It may be outside of your job description but still in the electronics industry and ultimately help you with your success – tangible or intangible. It all counts. Together we are better!

Collaborating with ERA’s member service providers

By John Hutson, CPMR

May has turned into June, and if you are like me, you have a high spring in your step coming off of what proved to be an incredible 2024 EDS Summit.

EDS will always be what you make of it, and this year’s event provided all who participated the same opportunities to engage with industry colleagues as past EDS conferences, although I feel that the change in venue super charged this element of the event. I can provide a list of ways that Resort World positively impacted my EDS experience, but right at the top of the list would have to be the level of exposure to my industry colleagues that the venue provided under one roof.

More exposure to leaders in our industry improves our ability to network, and networking provides the opportunity to learn through collaboration. The layout at Resorts World afforded me the opportunity to see more people more often for a longer period of time, thus enhancing my overall collaborative experience. Seeing my fellow reps, distributors and manufacturers under these enhanced conditions was extremely rewarding, but one noticeable difference with this EDS was the amount of engagement that I had with many of ERA’s member service providers.

Spending more time with these people reminded me of how valuable their products and services are, and that they represent yet another example of the value that comes with an ERA membership. Spending more time with these service providers was a rewarding experience because many of them have proven to be invaluable in helping my organization with their products and/or their consultation over the years. As much commonality that exists in general business needs and practices, our industry continues to be unique. This is true for manufacturers’ representatives, distributors and manufacturers alike. How we get our product to market and the terminology that we use can be extremely foreign to those outside of our industry. This has been concerning whenever I have had to look outside of our industry for solutions, whereas I have found ERA’s member service providers’ existing knowledge of what we do and how we do it to be comforting.

ERA’s service providers have products and services that include:

• Legal service

• Education

• Software, CRM & web design

• Operation & personnel management

• Marketing & sales management

• Shipping & car rental discounts

With the exception of a car rental discount, I have utilized every one of these services, and in every instance, it was a rewarding experience that improved either myself and/or my organization. I strongly endorse all of them and encourage you to consider their products and their industry expertise.

I want to thank all of ERA’s service providers for the support that you provide to ERA’s membership. Your understanding of our industry enhances your services in a way that your competitors from outside our industry struggle to comprehend. Special thanks to the folks I spent quality time with at EDS—that is always a rewarding experience. And lastly, for those ERA members who have not considered utilizing one of our service providers, please reach out to them. Their industry experience has them well positioned to offer solutions that may be exactly what you need.

The excessive inventory problem

By Ken Bellero

In 2024, the electronics industry in the U.S. is still dealing with a significant issue — excessive inventory. This problem is still affecting numerous manufacturers and distributors and has multifaceted origins and far-reaching consequences. But a good understanding of the underlying causes, the current impact and potential solutions is crucial for those in our industry to navigate these turbulent times.

Factors

Here are several factors that have converged to create the excessive inventory dilemma in 2024:

– Supply chain disruptions. The global supply chain has faced persistent disruptions due to geopolitical tensions, lingering effects of the COVID-19 pandemic and natural disasters. These disruptions have led to unpredictable supply patterns, causing manufacturers to stockpile components to mitigate potential shortages.

– Forecasting errors. Rapid technological advancements and changing consumer preferences have made accurate demand forecasting more challenging. Many manufacturers overestimated the demand for certain electronic products, leading to overproduction and surplus inventory.

– Economic uncertainty. Economic volatility, influenced by inflationary pressures and fluctuating consumer spending, has added to the complexity. Consumers today are more cautious with their expenditures, leading to slower sales and higher inventory levels for many electronics products.

– Technological obsolescence. The fastpaced nature of the electronics industry means that products can quickly become outdated. Excessive inventory of older models can accumulate as new technologies and products are released, reducing the appeal of older stock.

Consequences

The consequences of excessive inventory are extensive, affecting various facets of the electronics distribution landscape. Some examples are:

– Financial strain. Holding excess inventory ties up significant capital that could otherwise be invested in innovation, marketing or operational improvements. The cost of warehousing and maintaining surplus stock further erodes profit margins.

– Price reductions and discounts. To clear out excess inventory, manufacturers and distributors are often compelled to offer substantial discounts and promotions. While this can help reduce stock levels, it also diminishes profitability and can devalue the brand.

– Operational inefficiencies. Excessive inventory can lead to logistical challenges, including storage limitations and increased handling requirements. This can strain the supply chain and disrupt the smooth flow of goods from manufacturers to consumers.

– Environmental impact. Unsold electronic products contribute to electronic waste (e-waste) if they are eventually discarded. This environmental concern is heightened by the high turnover rate of technology products and the difficulty in recycling complex electronic components.

To address this problem, a diverse approach is required involving strategic planning, technological investment and adaptive management practices. Enhanced demand forecasting, flexible manufacturing practices, collaborative supply chain management, product lifecycle management and sustainable practices are all ways manufacturers and distributors can improve the planning process and address the problem directly.

I feel the excessive inventory problem will remain in the second half of 2024 and present a significant challenge for many electronic distributors and manufacturers. After attending the EDS Summit in May in Las Vegas and meeting with several electronic industry partners, the feeling of many was an expectation that things will improve dramatically in 2025. Many believe production will once again increase demand in key markets like robotics, industrial automation, medical technology and consumer electronics. This will help to ease the excess inventory situation and force manufacturers and distributors to begin the process of restocking, helping to stimulate the recovery expected.

However, by understanding the root causes and implementing strategic solutions, the industry can navigate this issue effectively. Embracing technological advancements, enhancing collaboration and adopting sustainable practices will be essential in overcoming the inventory overload and ensuring a resilient and prosperous future for the electronics industry.

As always if you would like to reach out to me directly to discuss this topic or any others that are pertinent to our industry, please do not hesitate to email me at: ken.bellero@ schaffner.com or give me a call 732-910-1717 anytime!

Using logic & creativity for problem-solving

By Kingsland Coombs, CPMR, CSP

In 1999, R.E.M. released a song titled “The Great Beyond,” featuring a refrain that often comes to mind: “I’m pushing an elephant up the stairs / I’m tossing out punchlines / That were never there / Over my shoulder a piano falls / Crashing to the ground….” Perhaps you can relate?

Just like any other business, being a manufacturers’ representative requires a significant amount of problem-solving. There are myriad ways to approach problems, typically dependent on their type and scale. However, a few general problem-solving concepts have proven helpful in various circumstances.

Problem-solving begins with defining the problem and identifying its root cause. For those with a technical background, like me, this is where logical thinking is particularly advantageous. Years ago, we started importing our commission information into our CRM, ensuring our end customers and CMs were correctly entered for every billing. When solving service problems for customers, we delve into the minutiae of our data—slicing, dicing and drilling down until the history becomes clear.

Identifying the root cause of a problem also requires research and inquiry with stakeholders. I recently encountered the “Five Whys” technique and realized I had been using a similar approach for years. For instance, if your factory is delivering late and customers are getting angry, you reach out to the right person at the plant who says they can’t help you. Why? Because they don’t have parts. Why? Because the parts have been allocated to another program. Why? You get the idea.

In the quest to identify the root cause, it is often crucial to step back and consider the entire system. We tend to react to what is directly in front of us. When considering adding a manufacturer, you need to evaluate your line card synergy, your sales resources and skill sets, the risks, rewards and probabilities of outcomes. Additionally, you should consider both your short-term and long-term goals. This approach might require a Venn diagram or a reflective walk in the woods—whatever helps you fully grasp the larger implications.

I’ve always believed that the best problem solvers are highly creative. Personally, my creativity sometimes needs a boost, so I rely on key people to spark my ideas. Don’t let your ego interfere with effective problem-solving; relying on others to elevate your thinking is not a sign of weakness.

Explain your problem to someone else—an associate, your 12-year-old daughter, a retired friend on the pickleball court or anyone you consider forthright and creative. I often think of the wisdom dispensed by Forrest Gump to whomever sat next to him on the park bench. Sometimes, you just need to articulate the problem out loud and gain a new perspective.

Finally, a brainstorming session with your team can generate solutions and foster buy-in. Are you missing your sales targets with a line? What can be done? Gather your team and compile a list of ideas without judgment, and you’ll be on your way to forming a solution.

There’s an economics concept known as the 80/20 rule or Pareto principle. It states that 80 percent of outcomes result from 20 percent of causes. This principle is used to determine the factors most responsible for success and focus on them to improve results. It’s an important concept to keep in mind when deciding which problems to prioritize.

So, that elephant you’re pushing up the stairs—do you need more people to help you push? Does the elephant really need to go up the stairs? By using logic and creativity, I’m confident you will find your answer.