At a recent media briefing in Singapore, Harriet Green, the Premier Farnell CEO, along with David Shen, senior VP of Global eCommerce and Technical Marketing, presented market trends and their company's focus on the web, including a new community web site called "element14." The company has 29 sales offices in the Asia-Pacific region employing over 500 staff.
In India, the company has nine branch offices, one contact centre and one Bangalore-based global technology centre (GTC). The GTC provides live chat and board level support, which also translates into global support. The company recently set up a call centre in Bangalore to support their multi-channel sales strategy.
Vivek Nanda, executive editor, EE Times India, conducted the following interview with Syed Salman H., president, Premier Farnell Asia Pacific, and Ravi Pagar, managing director, Farnell India.
EE Times India: Please describe Farnell's operations in India.
Ravi Pagar: The market Farnell addresses in India is in line with our global business strategy that we introduced three years ago. This includes:
• Focusing on the electronic design engineering segment;
• Increasing business via the web;
• Internationalizing; and
• Continuing to develop profitable MRO business.
Farnell is aggressively addressing the electronic design engineering (EDE) community, and the maintenance, repair and operations (MRO) marketplace in India. We have taken particular focus on developing the EDE space, providing support, services and relevant products.
In India, we have independent design houses, resellers, R&D centres, educational centres, and government organisations, such as BEL and HAL, among our customers. We are also reaching and doing business in [tier 2] cities like Coimbatore and Ahmedabad.
We recently launched an external online community called element14. [It] is an information portal and community website designed with the needs of global electronic design engineers in mind. [It is] named after silicon, the 14th element of the periodic table and an essential part of any electronics product. This is a new generation website incorporating a wide variety of web 2.0 tools.
How has Farnell in India been affected by the economic situation and what strategic steps are you taking to weather the storm?
Pagar: We have a long term approach. We are focusing on the EDE space, which is growing resiliently globally. As people look at newer technologies, the design times are shortening. Companies are looking at faster turnaround time, and we are focusing on ensuring that we offer latest technologies from leading suppliers to our customers. E-commerce is going to be a key enabler moving forward. Today's engineers are well networked and use the web as the first source of information. We would like to leverage the power of web. Today our website... [offers] more than 4.3 lakh products, with more than 97 per cent of products [supported by] images and datasheets. We provide information about RoHS compliance and enable our customers to have a live chat with our technical team.
In today's economic downturn, we find that companies continue to pick their winners and what they want to invest in. So the level of innovation today tends to intensify and our job as a high-service, multi-channel distributor is to support that. I'm not talking about the hundreds things that people are buying. I'm talking about the thousands and thousands of ideas, starts, innovations that we support every day. Through our portal, element14, we see what engineers are talking about and what they are interested in,... it shows the stream of creativity across languages, geographies and time zones.
Our prime focus is on operational excellence. Recession hasn't affected the market demands. People still want the slimmest phones, etc. So, recession has increased the pressures on the design engineers to design products that are cost effective, business efficient and green.
I understand that you see engineers are working on consumer products in the Asia Pacific. What are the major application areas you see growing rapidly in terms of design starts?
Syed: As Premier Farnell offers a very comprehensive end-to-end customer experience, we are able to get a sense of what the APAC markets are looking for through our electronic and people-based outlets. I am not able to go into specifics for each market with your readers but I can tell you that infrastructural developments, digital consumer developments, telecommunications and automotive industries, as well as "green" developments, such as alternative energy, are among the hot-buttons in this region.
In fact, "green" thinking is becoming more and more pervasive. In infrastructure applications development, for instance, we're seeing the tendency towards creating more energy-efficient lighting like low-powered LEDs in automobiles, consumer electronics and conventional lighting or innovative products using solar panels.
What are the major technology and design trends in India? In which application areas are you seeing design starts growing rapidly? How does this differ from global trends?
Pagar: Convergence is one of the basic trends manifesting other trends. With the semiconductor technology continuously scaling to lower geometries, a single chip is able to house more and more devices and hence functionality. For example, soon we will have a chip able to do both the functions of TV as well as a set-top box. Mobile phone is another great point of convergence example, where numerous applications are coming together.
With increasing complexity and ever shortening time-to-market, the abstraction level of managing numerous components going into the electronics devices needs to be pushed higher as well. Platform solutions, which provide a highly-integrated solution, many times encompassing the associated services as well, are increasingly becoming a trend.
Consumers are already seeing a host of applications in a single device, such as cell phones that also have cameras and Internet access, or PCs with home networking and multimedia capabilities.
Electronic designs thrive on innovation through deploying the latest in technologies to address unique needs of the market. The value chain for addressing the market starts with an idea, followed by design and intellectual property
(IP) protection. The need for IP protection is essential for MNCs to source designs from their captive centres as well as third-party design houses. IP policies and legal systems in India are on par with those in the West. The design communities as well as Indian companies are extremely sensitive to the need for protecting IP of their own and their customers. In the last decade there have been no major IP violations of concern to the global companies. India is seen as a safe haven to source complex and innovative semiconductor and electronic product designs.
How do the number of design starts in the Asia Pacific compare with those elsewhere? How do the number of design starts in India compare with those in China? Do you see a trend in terms of increasing/decreasing share since the economic downturn?
Syed: In the APAC region, we noticed that number of design starts has increased tremendously even during this downturn. We believe that this is due to a number of factors, one of which is that EDEs here are tasked by their companies to continually innovate and create new products to please the mass commercial markets.
Pagar: In APAC region, we deal in nine countries directly and in other countries through our distributors. Each and every market is unique and important for us. Every market has its own set of opportunities, new customers, etc. Australia, New Zealand, Singapore and Malaysia are our strong bases. India and China are critical markets from growth stand point of view. In India, two lakh engineers pass out every year and lots of design houses are opening in India, especially because of the recession. In India, we are giving a local touch to our customers with Indian rupee pricing based on their requirements and doorstep delivery.
As a business, Premier Farnell operates in the engineering design phases from initial design to pre-palette stage. In the Asia Pacific, the number of design starts has increased tremendously. We think it's the cycle time of the products, particularly in consumer products, such as mobile phones and TVs where the cycle time shortens tremendously. And because of that, the company has to continually innovate and come out with new products to please the masses, to enable market penetration.
To what extent is your India business conducted online?
Pagar: Worldwide, we do more than 50 per cent of our business on line. The company is focused on e-commerce and foresees huge revenue doing business via the e-mode. For instance, Google Pay Per Click is a great way to attract new customers. We are in the process of introducing new tools that make it easier for the customers to order.
Premier Farnell has introduced the i-Buy and e-Procurement tools, which integrate with the customer's software besides being linked to Farnell's ERP. Customers are therefore in a position to place orders directly.
Is your push towards the web part of a strategy to reduce service/support costs?
Syed: Let me explain it this way: The electronic design engineering segment globally is conservatively estimated to be growing at between six per cent and eight per cent, and this growth will only accelerate with the increasing demands we, as consumers, place on our designers for products that are smaller, look better and are kinder to the environment. Aesthetics and environmental considerations now play a critical part in design.
Our customer base is quite brilliant in some of the work they are doing, pushing the boundaries of science and technology forward—creating, solving world problems, innovating and demanding more from their electronics suppliers. Whether creating the latest medical equipment, PC or environmental control products our designers need us to be equally brilliant and responsive. It is critical that we listen to their needs and exceed their expectations consistently.
The web is the primary research channel for this community as they continue to transform and shape the world in which we live—so our web strategy must constantly evolve to meet their needs.
Internationally the needs of the EDE [electronic design engineering] market are very similar and expansion is truly global. Every year hundreds of thousands of engineers leave universities around the world, more in China and India than anywhere else, hence our critical focus in these new markets.
Our suppliers recognise our strength in seeding their new technologies to the design community and are keen to partner with us ever more closely on specialist programmes and activities. Having the right suppliers and technology offering remains key to our design engineering community and we've added over 60 new suppliers, all keen to be a part of our market differentiating customer proposition.
For design engineers immediate access to products that enable them to meet their own "time to market" challenges is critical and with our ability to offer next day delivery to most parts of the globe and our extensive range of stocked parts we really do have an industry leading proposition globally.
Our web channel is evolving constantly, requiring significant investment in tools, resources and technology to continue to meet our customer needs as a part of our multi channel customer experience. The levels of sophistication of search, speed and simplicity we have achieved require investment, time and expertise. Then, beyond the web investment, the quality of service to the customer will be based on the established distribution principles of the right products, stock, logistics excellence and next day delivery. The availability of quality data is also critical—every product needs full and accurate technical and environmental parameters.
Momentum from the implementation of our web frontend across the business continues to build, with web sales up [by] 33 per cent in the last financial year. Some countries are already performing well above our target to transact 50 per cent of our business via the web, and a goal of transacting 50-70 per cent of our business via the web now seems more realistic. The levels of activity we're seeing in mainland Europe for example, now equate to us receiving an order via the web every 10 seconds.
Engineers want to be able to place orders at anytime that suits them and our web sites make this very possible. We have also seen a significant increase in organic search, progressive and increasing average order values; and a significant increase in both new customer and repeat visits over the year. The completed integration of sophisticated new customer and web analytics software, supporting the continued enhancements and improvements we are making to our customer experience, underpins much of our recent growth, as we continue to build on the investments made.
Our multi-channel approach will be enhanced by the imminent launch of new catalogues across Europe and Asia offering extended product ranges, carefully selected to meet customer demand. As a group we distribute over a million catalogues in over 50 language, country and price variations, not to mention our extensive direct mail programmes—both electronic and postal. Customers value our multi-channel offering and with our call centres, branch network and trade counters offering extended hours and our sales force continuing to grow we are doing everything we can to ensure our customers can reach us via whichever channel they choose.
This article was first printed in EE Times-Asia.