RL Magazine
Edition 41
Site Visit: Avnet Integrated: New Business. New Life
by Avnet & Reverse Logistics Magazine

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Avnet’s pursuit of growth has led them to make some strategic investments in adjacent markets that provide a win-win benefit for Avnet and its customers.

Leveraging Avnet’s core competencies and brand recognition in traditional distribution, its global footprint and position in the center of the electronics supply chain, Avnet is pursuing opportunities in the aftermarket services industry by going to market under the brand name Avnet Integrated Resources.

FIGURE 1: BGA MACHINE

Aftermarket services include all activities associated with supporting a product after its sale. Two of the main business activities associated with the aftermarket are refurbishing or repairing electronic devices in order to extend their useful life and maintain their value. Then, at the end of life, electronic devices are collected, demanufactured and turned into scrap that is sold downstream to a refiner or smelting company for reuse.

CONVERGING FACTORS

Convergence of some significant economic, environmental and technological market factors led Avnet to move into this arena. With technology, one can always count on change. Technology advancements create growth opportunities as well as shortened product lifecycles. To keep pace and stay current by replacing electronic systems or devices, businesses and consumers often face the challenge of what to do with their aged equipment. And of course, environmental responsibility prompts people and industries to take steps to adopt more sustainable practices and avoid adding to landfills, as products can no longer be tossed in the trash bin.

Companies can no longer afford to throw away materials that are beyond their useful life. Environmental concerns prompt people and industry to take steps to avoid adding to landfills. And technology advancements cause confusion among consumers who don’t know when to buy the next cool gadget.

These concerns have created new global opportunities in repairing or refurbishing goods, which contributes to sustainability, ensures information security and recaptures base and rare earth materials and plastics.

FIGURE 2: BROCADE SWITHCOPEN

Market forecasts for aftermarket services are still in the early stages; as a result, there is a wide range of market numbers. The general agreement, however, is that the global aftermarket services market for electronics equipment is well above $250 billion. Moreover, these services create opportunities for solid margins and returns, which are attractive for Avnet and its shareholders.

FIGURE 3: NETAPP TEST RACKS

By expanding into markets adjacent to their core electronic components and enterprise computing businesses, they can leverage some key existing strengths while adding to overall services resulting in increased value for partners and shareholders. Avnet’s customers have come to count on them for delivering technology, services and solutions that matter; this is another example of ability to use their understanding of the technology supply chain to accelerate their success.”

FIGURE 4: PDSI TEST FIXTURE OPEN

Currently, more than 50 percent of Avnet Integrated’s target customers are electronics original equipment manufacturers (OEMs) who coordinate much of their own aftermarket activities, either internally or with service providers.

Generally, those who handle their own reverse logistics would prefer to turn it over to a responsible third party, and ideally a one-stop shop with capabilities that include a technical call center, board repair, field service, refurbishment, asset recovery, demanufacturing and e-cycling.

FIGURE 5: BURN IN AREA

Avnet Integrated is building a services business that answers the call, with locations in North and South America, The Netherlands and Singapore.

The electronic product aftermarket is fragmented and ripe for consolidation. Many small companies perform a specific service in the aftermarket, but none provide a total solution like Avnet Integrated is building with strategic acquisitions. “The plan is to continue to seek out and acquire companies in this space that will contribute revenue, management and operations expertise, and bring with them their existing customers,” says Steve Church, president of Avnet Integrated.

It is noteworthy to mention that a few EMS providers – or contract manufacturers – offer in-warranty repair for products they originally built; but again, they offer a specific service, not a total solution.

Initially, Avnet Integrated’s acquired companies will initially operate as independent entities and will only be partially integrated into Avnet.

FIGURE 6: NETWORK REPAIR

During the second quarter of fiscal year 2011, Avnet acquired two aftermarket companies: U.S.-based Broadband Integrated Resources, a specialist in cable TV equipment repair, refurbishment and disposal, and Center Cell, a Brazil-based cell phone and board repair operation. Since then, Avnet Integrated has added three more strategic acquisitions:

ROUND2

As a leading eRecycler, ROUND2 manages a global network of approved smelters and refiners to ensure secure chain of custody. The goal is zero e-waste to landfills, supplemented with full management of the byproducts – like paper and plastics – maximizing the commodity values of end-of-life materials.
Its IT asset disposition (ITAD) services integrate the core services of logistics, equipment auditing, information cleansing and customer reporting to provide the tools necessary to effectively and efficiently manage the end-of-life retirement process. ROUND2’s ITAD program allows customers to focus on key business initiatives and not worry about return logistics, data security or business disruption during equipment transition.

And finally, to meet enterprise security requirements, ROUND2 offers physical destruction of data-containing media, including hard drives, optical discs, magnetic media and flash devices. It certifies the destruction and provides video documentation.

Pinnacle Data Systems, Inc. (PDSi)

PDSi partners with OEMs to develop service programs tailored to their specific requirements. From depot repair and field support to global supply chain management, PDSi’s programs allow OEMs to minimize touch points and inventory costs, reduce administrative costs, shorten response and repair time and dedicate additional resources to their core competencies. It provides a broad range of services, including reengineering, redesign and reverse engineering for end-of-life (EOL) product support as well as for existing products, EOL component sourcing, lifetime inventory of EOL components, continued manufacturing of legacy products and OEM and third-party component warranty management.
Nexicore

Rounding out Avnet Integrated’s complete suite of aftermarket services is Nexicore. It offers a comprehensive suite of computer services and runs a technical call center supporting more than 4,000 field-service technicians with technical training, call dispatch and customer service. Nexicore also operates an onsite field support division, providing laptop and desktop repair, LCD flat-panel TV and monitor repair, repair and installation of interactive whiteboards and IT enhancement services for consumers and small businesses. It also performs depot refurbishment and repair at two locations, specializing in laptop and desktop computers, commercial computer systems, gaming units, printers, computer peripherals, servers, point-of-sale devices and related electronic equipment.

FIGURE 7: RECEIVING DOCK

Of course, repair and refurbishment services require spare parts and Nexicore manages parts across a broad range of product categories. And with its strong technical and engineering experience, Nexicore can provide unique solutions or obtain scarce parts when needed.

The Avnet Integrated executive management team, led by President Steve Church, includes experienced business development and sales leaders Bill Wentworth, Scott Delaney, Randy Weiss (formerly CEO of ROUND2), John Bair (formerly CEO of Pinnacle Data Systems, Inc.), Brian Mittman (formerly CEO of Nexicore) and Amy Roffmann New, who is the director of operations.

Avnet Integrated has developed a sustainability strategy and is building a business to serve electronic manufacturers and end-users that are specifically looking for repair, refurbishment, asset recovery and responsible disposition of technology products after they’ve served their useful life. As this market continues to grow, so too will Avnet Integrated’s far-reaching potential, which is good for customers and good for the planet.


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