October 1998 | Commentary | Checking In

How To Not Get 'Dissed'

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In the parlance of the street, getting "dissed" means getting disrespected. In the business realm, many intermediaries, or middlemen (distributors, for example) are worried about getting dissed another way, falling victim to the disintermediation trend. That's a lot of alphabet, but it means simply that technology, the Internet, and the need for corporate efficiency has caused some distributors, and many other parties, to fear being taken out of the business process.

Are their fears justified? Perhaps, but there are ways distributors can make themselves way too valuable to be cut out of the supply chain.

Avnet, one of the largest global electronics distributors, is a world-class example of how a middleman can leverage trends that kill off intermediaries. Avnet buys from companies such as Motorola and Texas Instruments, and sells to PC manufacturers and others. By mastering new skills such as supply chain management and logistics IT better than the very customers that might seek to engineer distributors out of the process, capturing value "spent" on middlemen, Avnet became indispensable to both its vendors and customers.

In 1992, Avnet noted that leading companies were shifting to SCM to create value. Realizing that value = benefits - cost, and not content to commoditize by the very commodities they were selling, Avnet set out to leverage SCM skills and create customer value. Early on, Avnet offered single-enterprise modeling, point-of-use replenishment, JIT, and vendor-managed inventory. As customers took advantage of this expertise, it became apparent that they wanted more, not less, involvement by this intermediary.

Today, Avnet runs a special Integrated Material Services division, managing $5 billion in inventory. The division helps customers in four key ways:

  1. SCM—ncludes asset management, logistics information technology, physical logistics, and warehousing.
  2. Globalization—helps customers go global and transplant supply chain excellence to every new market rather than starting from ground zero.
  3. Product life cycle management —ncludes physical, financial, and technological obsolescence.
  4. Logistics information technology—which goes far beyond what's needed just to be a computer chips reseller.

This company is a shining example for any intermediary to follow. If you want more information about Avnet's SCM adventures, e-mail avnet@inboundlogistics.com. You'll get the latest on not getting dissed.

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