Digi-Key’s CEO: “For us, Israel is a Microcosmos of the entire world”
23 November, 2016
Dave Doherty revealed Digi-Key’s long term strategy, as well as its expectations from the Israeli market. "We don't want to be the biggest distributor - we want to be the best"
Dave Doherty revealed Digi-Key’s long term strategy, as well as its expectations from the Israeli market. “We don’t want to be the biggest distributor – we want to be the best”
A year and a half after replacing Mark Larson – Digi-Key’s CEO for 39 years – the Company’s new CEO Dave Doherty met Techtime during electronica 2016 in Munich, Germany. “We are committed to our mixed model, which includes customers of various types: small customers, customers in need of instant solutions, as well as bigger customers including electronic manufacturing solutions providers (EMS),” he said.
“Customers today are looking for solutions. We focus on our strengths, not the lowest prices. For example, many of our customers have to supply a product or a system prototype after a very short notice. They need to produce a very small number of these prototypes, in a very short time. Sometimes days. Such customers prefer a solution based on speed and quality – not the lowest prices available.”
Two years ago you entered the European market, after testing your model in Israel. What are your conclusions?
“We have built an excellent team in Europe and in Israel, and our customer base here is growing by the year in a double digit figure. For us, Israel is a Microcosmos of the world, and enables us to preform small scale experiments before adopting new policies worldwide.”
What will be your next experiment?
“We intend to test several models of e-commerce. The challenge here is to find the best equilibrium between a unified global commercial infrastructure, and special adaptation to the unique needs of each local market. David Mahal and his team in Israel support us on this issue. There are surprising differences between local markets – for example, we have customers in Russia, who purchase our components, in order to resell them to their own customers.”
How do you build your inventory mix?
“We don’t buy components based on the customers forecasts. We buy components based on our forecasts for future market demand. For this reason, we must have a very big stock. We work with customers, whose demands are virtually unpredictable, while our edge is based on service quality and rapid response, rather than low prices.
“This is why our internet site is our biggest asset. We conduct a lot of research in order to optimize it. Engineers use the site to find solutions, to define basic components in their products, to study reference designs and much more. In fact, we study our own site in order to make it possible for our customers to complete their development needs as fast as possible. We try to achieve what Amazon and Netflix achieve in the B2B arena, and as I see it, we are just getting started.
“Many of the site’s features change on a daily basis, according to the customers comments. We conduct many experiment – for example, some visitors see one version of the website, while others see a different one. According to their input, we then optimize the internet website. We recently hired six leading data scientists. They are using Deep Learning technologies as well as Artificial Intelligence and specialized algorithms in order to analyze our analytics.
“Our goal is to make our website better, but to do so gradually: We don’t want scare off our customers. People are nowadays accustomed to work in self-service mode, and they are interested in content which makes that process easier for them.”
Will you continue to work from a single warehouse?
“Today we offer over 1.3 million components in our website. Our customers say that their top priority is the availability of a wide range of standardized components, as well as service from one service point – including receiving a complete order in one package. This is the reason we intend to continue working from one big warehouse. This is the best model for us. A single building and a single logistic system enable us to complete an order immediately when we receive it, and to provide the customers with very accurate time frames”.
What about future acquisitions?
“Companies acquire other companies only when their growth is staggering. Until now, we managed to grow internally, and we have no intention to change this policy in the near future. We have 2,500 employees. We are a community – we protect our employees, and they protect us. The company’s owner, Ron Strohdal wants us to be the industry’s best distributor, not the largest and fastest growing one – just the best.”