How has business been for America II?
2010 was an excellent year for the company. Here in Europe we had a record year and worldwide the company posted the second best in its history. Needy customers were looking outside their usual distribution suppliers. They came to us because we have invested heavily to ensure product quality and in the infrastructure of the company.
Where does America II source its components inventory?
We have many sources for our products. We buy from component suppliers, though the major proportion of the $1bn plus stock we hold comes from OEMs and electronic manufacturing service companies.
How do you process incoming stock for quality?
We have invested heavily to ensure top quality in-house inspection and test procedures. We have assigned a third party - Premier Semiconductor Services to undertake test for us. They are completely autonomous and operate from a completely separate unit in our warehouse. They have no invested interest in whether the parts are good or bad. They call it as it is. It is the first time a third party test facility has been placed in an independent distributor's facility. We have traceable and non-traceable suppliers. The latter undergo rigorous test procedures. We have a library of test procedures. For example we check whether the logo on the device is the right size and colour. We measure the thickness of the device under test. Counterfeiters generally shave off the top of the device to disguise the part with a false logo. We have two certified inspection engineers in the company. If they fail a device we reject it. If they have doubts we pass it to Premier for a decision on authenticity.
Counterfeiting is becoming a real problem. How is America II countering this issue?
The Electronic Components Industry Association in north America has been doing a lot of work on this issue including how to identify counterfeit devices. They are also helping companies with their procedures to repel this menace. At America II we have the procedures mentioned above in place. The emphasis is on sourcing well and testing well. We are confident when we offer a 10-year warranty on parts. We put our money where our mouth is!!
Do you get feedback from customers?
If a customer does make a "bad part" call to us, we immediately assign one of our engineers to go talk to the customer engineer to engineer. To be honest 99 times out of a 100 it is an application issue where the customer is pushing a device up to and over its performance limits. If the part is dud we replace it immediately.
Obsolescence is also causing headaches for engineers. How does America II address this problem?
This is an important part of America II's business. Component life cycles are getting shorter, and there are more frequent redesigns of products, so customers are regularly looking for obsolete components. We tend to source them from manufacturers excess inventory, and we share the revenue with them. Customers are happy to use the secondary channel to source these hard to find parts. And to emphasise all these parts go through our third party test programme. It is important that we present America II as a professional organisation.
America II seems to have stepped up its franchise distribution business recently. What is the strategy here?
We now have 13 approved suppliers, and we are always alert to opportunities with niche suppliers who make parts popular with customers. A good example would be Walsin. They are a $600m company who are immensely strong in the chip resistor and chip capacitor market in Asia. They don't have the same presence in north America and Europe so we can take to market. We can offer a wide range of good quality products to cover many applications. Another recent signing is Union Semiconductor, which offers a second source for analogue devices, especially those made by Maxim. The company was established by ex-Maxim guys, and they use the same foundry. To be clear the franchise business won't become dominant in America II. We are probably looking at a target of 40 franchise suppliers. They will be mostly commodity lines, as we aren't looking to establish a technical sales strategy. We would look to help customers by being price competitive on the tail end of their Bill of Materials, giving them the opportunity to save money on expensive parts. We would offer continuity of supply to customers, and like most franchise distributors be in a position to schedule business. We have a team of experienced purchasing directors and product managers who can identify opportunities in franchise distribution. It can complement our core business.
Will America II continue to invest and expand its business outside north America?
Yes absolutely. I would expect an announcement in the near future, probably in Asia/Pacific.
What about Europe?
Once the Asia/Pacific announcement is up and running you will see us expand our European business. We have a team of 34 in Europe, with a presence in the UK and Germany markets, and we have a rep in Israel. Field service engineers cover the other European countries.
We have a small warehouse in the UK, where for example we may hold some of our consignment stock as customers don't want the product to leave the European Union region. We will also hold some buffer stock in the UK. Most of the product is shipped from our St. Petersburg warehouse where by the way we keep over 3 billion parts.
