Market Convergence is Key to Future Success for RS

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The electronics industry is one that never stands still. New products are launched on a daily basis to provide new features, better performance, smaller form factors and lower power usage. On a higher level, the industry also changes, albeit at a slower pace. For the last 30 years, we have been outsourcing our manufacture to the far east. Now, after the COVID19 pandemic caused massive disruptions in the global supply chain, it looks like that manufacturing will be returning to Europe and the US. Last week, I had a discussion with Chris Beeson, Group Senior VP for Electronics at RS to hear how he sees the market and how RS is evolving to tackle the challenges of a changing market.

The first topic we touched on was the current trend of reshoring, and if RS with multiple locations would have an advantage over some of its competitors that choose to service the market from a single warehouse location. In particular, the US has upset some of its allies with the protectionist policies in its CHIPs act, passed and signed into law earlier this year. The act was intended to target China, but the EU, South Korea and other allies will be affected by some of the new rules. This may lead to these areas imposing restrictions on US products in the future, fracturing the supply chain further.

Beeson doesn’t see this scenario having much of an effect on day to day operations so far, but the company is keeping an eye on it along with other current geopolitical events. However, he reckons that RS’ more decentralized organizational structure offers other advantages, such as being more adaptive to the needs of its suppliers and customers. He expanded on that by saying, “having multiple distribution locations provides us with the ability to engage a supplier at a macro level, at what products that they want to promote and where, and then action that plan locally. We do have people in every region looking at its specific requirements and they try to focus in on what is best for that area. This strategy allows us to work with suppliers on the most relevant products and marketing for each region and provides the customer with a higher level of service”.

As for the market itself, he sees convergence as a huge trend and thinks RS are in exactly the right place to service that demand. As the IoT becomes more important, electronics products, such as sensor clusters, are designed into systems along with products that have traditionally been thought of as industrial. Beeson claims that the RS product portfolio is ideal to cater for this trend, “If you look at the top twenty suppliers for RS compared to any of our competitors, you will see a lot of differences. For example, in the RS list you will find companies like Schneider, Siemens and ABB along with traditional electronics suppliers. We are unique in that we have a huge amount of experience in providing both products and support for these areas that are now converging”.

That support comes in many forms, one of which is DesignSpark, the RS community site that also functions as a home for the company’s software tool offerings and a documentation hub. RS has over 2,000 suppliers, and each has different expectations on how their products should go to market. DesignSpark offers a proven route that allows suppliers to position themselves with the electronics community. It also works the other way around and offers RS and its suppliers a way to see how that electronics community’s needs are changing in a dynamic market.

If you live or work in the UK, that dynamic market is typified by Brexit and the UK’s ongoing relationship with its biggest trading partner, the EU. That must have thrown up some problems for a UK-based company that is a huge exporter? Not so much according to Beeson. He says that Brexit is only one of several current geopolitical challenges that the company is facing. Others include global inflation and the war in Ukraine. All of these challenges must be overcome for the company to remain successful. Beeson claims that the company’s diversification is key to meeting those challenges, as it was during the COVID19 pandemic. In a cyclical market, like the electronics industry, as some areas are in a downward trend, others are increasing in value. The 2,000 suppliers and over 500,000 products on offer from RS ensures that the company always has the parts that customers needs, no matter which area of the industry is prospering at the time. The company's local representatives also help the company to keep up with local trends and allow it to be prepared for any change.

Decentralization also helps, especially with a challenge such as Brexit. RS has recently upgraded and expanded its distribution centre in Bad Hersfeld, Germany with the latest technology to service the European market. However, the UK still remains central to RS’ plans as its biggest individual market and the area where the company tests new initiatives with customers that can be expanded into other relevant areas later.