As Avnet Abacus celebrates 50 years in business, Neil Tyler talks to the company’s President Rudy Van Parijs about the market challenges ahead.

Avnet Abacus, one of Europe’s leading distributors of interconnect, passive, electromechanical, power supply, energy storage, wireless and sensor products and a regional business unit of Avnet, is celebrating its 50th year in business since it was founded in 1972 with its headquarters at Newbury, Berkshire, in the UK.

In its original form, Abacus Electronics, it grew quickly to become a $500 million UK stock-exchange-listed electronics distribution company, and by the time of its merger with Avnet Time in 2009, Abacus Electronics had approximately 1100 employees based in 44 offices in 11 European countries, an office in Hong Kong and five distribution warehouses.

Abacus Electronics was acquired by Avnet and the company’s operations were merged with Avnet Time, which had been created in the 1990s by Avnet as a specialist distributor of connectors and passive components, to give birth to Avnet Abacus.

Today it is one of the largest forces in European electronic component distribution and the various business divisions of Abacus Electronics, such as embedded electronics and manufacturing operations, have been folded into other Avnet companies such as Avnet Embedded or Avnet Silica.

“2022 marks our fiftieth anniversary and over that time we have grown from a small start-up to become one of the largest component distributors across Europe and the EMEA region,” said Rudy Van Parijs, President at Avnet Abacus.

“Looking back the business has met and dealt with a number of challenges that have largely been driven by global external forces from the oil crises of the 1970s to the financial crisis of the late 2000s and the global pandemic of the past two years from which we are still slowly emerging.”

Big influences

According to Van Parijs over that time the distribution industry has rapidly changed and continues to evolve.

“There is certainly a more professional approach when you look at distribution. When I started, I worked for a small local distributor. They were small, local, with a very limited stock profile and financial resources. Over the past thirty years we’ve seen massive consolidation within the industry and today while there are fewer distributors, they are more professional, have far greater financial strength and offer far more in the way of stock.

“The information that is now available to customers has changed out of all recognition too. Digitalisation and the Internet has transformed the way in which we engage with our customers. I started as a Field Applications Engineer and our role was to bring new product information to customers – unless engineers had access to data sheets or books they didn’t know what was available, but today the Internet has changed all of that. There is now so much information available the FAE’s role is now one where they advise, educate and support product selection. There is certainly a deeper relationship between distributor and customer, and we can bring so much more to the table. That’s critical because if you select the wrong product in the prototyping phase, for example, that can have profound implications when it comes to commercialisation and the supply chain.”

Distribution is still a ‘people business’ according to Van Parijs.

“It’s all about trust and respect and whatever the impact digitalisation has had, and it’s been profound, those principles remain key and are, in my opinion, fundamental to a successful business.”

According to Van Parijs another significant shift in distribution has simply been the rapid evolution of technology itself.

“In the past it was all about hardware and today software, in many ways, defines the hardware. But despite that, electronics remains a great business to be in. Without it, nothing operates. Electronics are crucial to the way in which we live and work and despite so much electronic content it just keeps growing.”

For Avnet Abacus infrastructure, 5G and the Internet of Things are driving growth and further opportunities exist in markets like automotive, medical and defence and security.

“Sadly, we’ll see an uptick from our military customers due to the ongoing war in Ukraine, and we can expect to see increased demand for smarter weapons, communications, cryptography and drones.

“Another growth market is the medical space where electronics-based systems are growing in importance as are wearable technologies.”

Customer engagement

As these markets evolve and new technology is developed so distributors like Avnet Abacus will need to work more closely with both customers and suppliers.

“As a distributor we are focused on electromechanicals and, at present, manufacturers tend to do a lot of their business directly. That’s not the case with semiconductors and I think, in time, we’ll see that replicated in our space too. At present distributors account for just 30 percent of the market and we’ll see that shift. I expect we’ll end up much like semiconductor distribution which accounts for upwards of 80 percent of the overall market.

“That shift will be driven by the higher value we can bring to customers. Avnet Abacus is particularly focused on demand creation. Customers need a lot of data to make decisions and help in selecting the best options for their products.”

The supply chain – especially in terms of semiconductors – remains stretched with long lead times and customers, long use to just-in-time processes, have had to learn to adjust and change their behaviours.

“Our focus is on interconnect, passive, electromechanical and we’ve not seen the kinds of stresses that have been apparent elsewhere. When Covid struck we knew that design work would continue and that in the long run there would be a need for our components, demand can go up and down. Head office, based on feedback from our field teams, encouraged us to invest in more stock and consequently as a business we are now going faster than the market and gaining market share.”

Van Parijs points to the fact that Avnet Abacus is now holding 70 per cent more stock that it did a year ago and while there have been major production stops, they haven’t had a significant impact on stock levels.

“Crucially with our focus on demand creation, we’re deeply involved with customers when it comes to the development of new products. This delivers us a more stable business as we better understand projects, the components that are required and what’s needed to commercialise a successful prototype.

“It goes back to the point I made earlier. This is a people business and the importance of developing relationships that are open, transparent, and honest.”

Currently, over 25 percent of the Abacus’s revenue comes from projects in which its engineers are heavily involved.

“A few years ago, that was just 17 percent. Our aim is to raise that percentage to at least a third. I believe it’s a win-win for our customers. Our engineering involvement comes free of charge and our technical advice doesn’t cost the customer anything. It helps suppliers, we can provide feedback on components, and it’s good for us as it builds a strong relationship with our customers and makes it easier to manage the supply chain. We know when to ramp up supply when pieces are needed.”

The importance of communication and transparency in the supply chain is essential, especially at a time when the electronics components industry is confronting extended lead times, shipping delays and soaring price pressures.

“Our suppliers have had to raise prices two, three times in the past year, and we’re expecting a new round of increases,” says Van Parijs. “Raw material costs, as a consequence of the war in Ukraine, are doubling – just look at the pressure on aluminium, nickel and palladium – it’s very challenging.”

While inflation is likely to remain a concern for a few years, according to Van Parijs, it is just another challenge for a sector that has faced severe headwinds over the past few years.

“It’s been an exceptional period for the industry, with so much happening in a matter of a couple of years. But I do think we, as a business, are operating in a positive atmosphere.

“We can make decisions quickly, we work far more closely with the other Avnet divisions, and consequently our customers can rely on us whether that’s providing stock when its required or offering advice and help in the design process.”

A strong combination that suggests that Avnet Abacus is set fair for the next 50 years, whatever the market decides to throw at it.

TIMELINE

Charting the company’s history, from the birth of Abacus Electronics in 1972 to the creation of Avnet Abacus in 2009:

  • 1972 – Foundation of Abacus Electronics with headquarters at Newbury, UK.
  • 1993 – Listing of Abacus Group on the UK stock exchange.
  • 1994 – Acquisition of Promax (Denmark).
  • 1995 – Acquisition of Polar Electronics (UK).
  • 1999 – Acquisition of Micromark (UK).
  • 2000 – Acquisition of Trident Microsystems (UK) and C&CD; (UK).
  • 2001 – Acquisition of CCS Electronics (UK).
  • 2003 – Acquisition of ECC Elettronica (Italy).
  • 2004 – Acquisition of TDC (UK).
  • 2006 – Acquisitions of Deltron (Germany/Austria) and Axess Technology (France).
  • 2009 – Avnet Time and Abacus Electronics combine to create Avnet Abacus.