Avnet Electronics Marketing's Executive Vice President, Supply Chain Services, Worldwide, Greg Frazier, takes on the task of making the global high-tech supply chain more accessible for customers.
[From Supply & Demand Chain Executive, August/September 2004] As a major player in the electronic components distribution business, Avnet Electronics Marketing has been well positioned over the past few years to observe, and participate in, the increasing globalization of the high-tech supply chain. And within Avnet, Greg Frazier now finds himself well positioned to help both his own company and its customers and suppliers to meet the challenges of the global supply chain.
Avnet recently named Frazier, a 27-year veteran of the company, to the position of executive vice president, supply chain services, worldwide. In his new post, Frazier's charge, in part, is to work with Avnet's suppliers and customers to design competitive supply chain strategies. Given the continuing globalization of the high-tech supply chain, a significant component of those strategies is likely to revolve around building "cross-regional" relationships outside a company's traditional area of operations. So when Supply & Demand Chain Executive spoke with Frazier, shortly after Avnet announced his latest appointment, we began the discussion by asking about the risks and challenges inherent in building a more global supply chain.
Frazier: When we talk about the high-tech electronic components supply chain, everyone likes to talk about being "global." But in many cases companies still have very regional supply chains because they are still regional businesses. In other words, they still operate primarily in a single region, whether that's North America, Asia, Europe, Japan (which falls into its own region) or China (which is almost a region unto itself, too).
Now, of course, many of these companies are moving toward designing their products in North America and more specifically, in the United States and Canada but then doing the fulfillment, supply chain and manufacturing elsewhere in the world. That could be for cost reasons, because it's a lower-cost country, or because that's where the product is going to be sold, or due to the local-content requirements that different countries have.
So what Avnet has done to assist our customers in the globalization of their supply chains is to help them move what has typically been a European- or North American-centric supply chain into different regions of the world. Part of the challenge for a company in doing this is that they might not necessarily be familiar, for example, with the import/export tariff laws of different countries, the impact of currency fluctuations on the supply chain and those types of issues. Because Avnet does business in 68 countries today and we've already been dealing with those issues, we can help our customers mitigate some of the risks that they otherwise would have to deal with on their own.
Another challenge, frankly, can be something as simple as the fact that there is a 15-hour time difference between some places in North America and Asia. Also, there can be language barriers, a lack of knowledge about how business is done in other parts of the world and other communications issues involved in establishing new relationships in a different part of the world.
S&DCE: What strategies can companies apply to deal with those relationship issues?
Frazier: Typically when one of our customers in, let's say, North America wants to have their material built in, say, Southeast Asia or China, we already have relationships established in that region. So we work in a process called "global migration" to ensure that the communications lines are set up between our customer, our local North American organization, our Asian organization, and the contract manufacturer or original design manufacturer (ODM) that they will be using in Asia. That removes a lot of the "relationship gap." There's still some learning time, but a good deal of it's overcome by the fact that the customer doesn't have to start from ground zero.