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New York-based Arrow Electronics, Inc. (ARW) is one of the world's largest distributors of electronic components and computing products. The company sources products from about 600 suppliers and distributes them to over 140,000 customers through its 240 sales facilities and 21 distribution centers across 55 countries and territories. The company distributes products to over 70 countries and territories. Arrow also employs sales representatives who sell products on the field and by telephone. The customer base typically comprises original equipment manufacturers (OEMs), contract manufacturers (CMs), value-added resellers (VARs) and other commercial users. The company's products primarily target the industrial sector, (companies manufacturing machine tools, factory automation equipment or robotics equipment). Other important end markets include computing, telecom, automotive, aerospace, and scientific and medical devices. ARW has a broad customer base, with no single customer generating more than 2% of the total sales. Competition comes from other electronics product distributors such as Avnet, Bell Microproducts, Avx Corporation and Future Electronics.
Arrow's offerings can be broadly divided into two categories:
Electronic components: This segment is further split into semiconductors (roughly 76% of 2006 sales) and other electronic components (24%). The second division comprises passive, electromechanical and interconnect products like capacitors, resistors, potentiometers, power supplies, relays, switches and connectors.
Computing products: The computing segment includes products like servers, workstations, storage products, microcomputer boards and systems, design systems, desktop computer systems, software, monitors, printers, flat panel displays, system chassis and enclosures, controllers and communication control equipment. This segment is further split into enterprise and embedded computing systems and related services (49% of 2006 sales), storage 26%, software (15%) and industrial computer products (10%). Services are related to the distributed products, which reduce their time-to-market and lower the cost of ownership. Such services include materials planning, programming, assembly services, inventory stocking and inventory management, supply chain management and designing. Customers are, therefore, able to purchase their entire requirements from a single source and minimize their inventory carrying costs.
In order to facilitate product purchases, the company has installed a Worldwide Stock Check System, which enables online access to its real-time inventory system. Both North American and global operations are electronically linked to the central computer system so that real-time inventory information is available online at every warehouse, primary distribution center or selling location. About 83% of the company's consolidated inventories are covered by distribution agreements, which require a supplier terminating the agreement to purchase the entire value of its products that are held in inventory at the time.
The company has supplemented its organic growth with a series of acquisitions. Its global footprint spans North America, excluding the U.S. generated 4% of 2006 revenue while the U.S., generated 47%. Europe, Middle East, Africa and South America (EMEASA) generated 32% and the Asia-Pacific region, generated the remaining 17%.
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