Here's what 2021 meant to the distribution industry and what lies ahead in the global electronics supply chain.
2021 has been a whirlwind of a year, bringing both new challenges and opportunities to the high service distribution industry. Distributors, suppliers and customers alike have all faced new and sometimes unforeseen obstacles and openings throughout the past year, with unpredictable market conditions upending “business as usual” in many areas.
Here’s a look at what made this year one for the history books, how the industry addressed 2021’s challenges, and what may be around the corner in 2022.
Supply and Demand Upheaval
One of the biggest lessons learned in 2021 is that the market has the potential to be more unpredictable than anyone thought. The year brought nearly every possible type of challenge to the electronic components industry: decreased production due to the COVID-19 pandemic, extended shipping times due to delays at ports, natural disasters, difficulty accessing raw resources and everything in between – all throughout a period of time where customer demand for parts has never been higher.
It’s no secret that this year has been difficult for customers to get their hands on some of the high-demand parts that they need, and in some cases that has led to increased order volume. We applaud the global engineering community for being agile in designing with more flexibility for different component options over the past year than ever before.
While there may still be some challenging times ahead, orders will likely begin to return to more realistic levels in late 2022 as customers find more breathing room.
Even throughout these unpredictable market conditions, distributors like Digi-Key have weathered the ups and downs by continuing to invest in strategic initiatives to expand warehouse capacity, localize the customer experience both digitally and from a support standpoint, scale digital offerings and web services and expand into new markets, in order to continue serving customers around the globe with the best possible purchasing experience.
Rising to the Occasion
Suppliers in every niche of the market deserve a round of applause for their performance over the past year. In 2021, suppliers have gone above and beyond, identifying new, innovative ways to increase their supply and provide customers with the parts they need.
Distributors are proud to work with suppliers who truly understand the importance of their products to the engineers and makers around the world who are creating innovative projects every day. With that in mind, it’s highly likely that there will be an uptick in supply as a result, sooner than expected.
With the cancelation of trade shows, the industry has also had to find new ways to communicate and work more closely with both suppliers and customers, ensuring that their digital experience is seamless.
At Digi-Key, we whole-heartedly believe in a digital-first approach, and that has served us well in 2021. Distributors should constantly be developing new ways to make it easier for our customers to engage digitally from anywhere around the globe, including localizing their experience in markets around the world with local language, currency and support hours, as well as fast shipping times, in order to remove barriers for global customers.
For many companies, and particularly those based in the U.S., it’s tempting to conduct business in a single language, using a single currency. However, as the electronic components industry continues on its global trajectory, distributors must make stronger investments in supporting customers worldwide with a seamless experience. Today, Digi-Key supports 26 local currencies and does business in 21 local languages – something that will continue to grow along with the business.
Although no one has a crystal ball that can accurately predict the future, past experiences from both the previous year and those before it can be useful to seeing what might lie ahead. In many ways, the industry is cyclical – the demand and challenges from this year will likely come back around again in new forms in the future, so the key is to be better prepared with the new building blocks that were put in place over the past year.
Beyond simply investing in inventory, it’s also important for high service distributors to continue finding creative ways to enhance their offerings and services, in order to maintain a high level of customer and supplier satisfaction for years to come.
For example, Digi-Key has increased its capital infrastructure investments in recent years to scale capacity to keep up with skyrocketing demand, and those investments will continue to scale as the business grows. These investments include the new Product Distribution Center expansion in Thief River Falls, Minnesota, more robust and predictive web search functionality, higher inventory levels and increased automation in the Digi-Key warehouse, which all benefit customers by providing an easy and efficient research, shopping and delivery experience.
Digi-Key has also invested in innovations including cut tape printing, providing more products and services within the ecosystem and expanding the Digi-Key Marketplace, providing customers around the world with even more reason to make Digi-Key their first stop in the design process.
These investments have helped Digi-Key, its suppliers and customers weather the storm of 2021, and leaves all parties well positioned for 2022.
Moments like these can either divide or bring people together – although the whole world had a major curve ball thrown at us, we can look back and see how it improved our ability to communicate and deliver on a global scale, pulling the entire industry closer together.
The impact that this last year has had on Digi-Key and the entire industry is an increase in the confidence and trust we have gained in each other and our ability to meet a crisis head-on — ultimately benefitting customers.
Digi-Key is looking forward to the innovation of our customers that will come in 2022, and are excited to enable the world’s ideas.
Dave Doherty is president at Digi-Key Electronics. Digi-Key is both the leader and continuous innovator in the high service distribution of electronic components and automation products worldwide, providing more than 12.6 million components from over 2,000 quality name-brand manufacturers.