Andre du Preez, a mainstay of the Altech group and one of the founders of Arrow Altech Distribution (AAD), conducted this exclusive question and answer session with Dataweek.
Q: How long have you been with AAD?
“I originally joined STC SA in 1969 (which was later acquired by Altech) straight out of the army, long before Arrow Altech Distribution had been formed. Apart from two years when I worked as a consultant to Altech, I have always worked for the group full time in various capacities. I was part of the original team that established AAD in 1998, so I was there from the very beginning.
I started my career in Altech as an Internal Sales Engineer in the STC Components Division, before progressing to Product Specialist for Interconnect Technology, then External Sales Engineer and then Sales Manager. Ultimately, I also became MD for a number of different companies within Altech over the years prior to 1998, but I am happy to end my tenure where I began, in the components distribution business, as MD of AAD.”
Q: What are some of the milestones of your career?
“My journey with Altech has been a great one. There have, of course, been some challenging times as the industry and market developed and changed, but it has certainly been a great experience and fun at the same time. I have experienced many wonderful highlights working in this industry and made many friendships locally and internationally that I will always hold dear. For me the biggest milestones would have to be the establishment of Autopage Cellular with Craig Venter, the CEO of Altech, in 1994 and being part of the joint venture team that led to the creation of AAD.
In around 1997, Altech was approached by Arrow Inc. from the US during my tenure as Group Executive of the Altech Component Distribution Division, as they wanted a foothold in the South African market. Along with Craig Venter, I was involved in conducting the due diligence on the joint venture, which was finalised in December 1998. During this time we had built offices and a 4000 square metre warehouse facility in Jet Park to hold inventory, and the four subsidiary companies (EBE, Fairmont Electronics, Pace Electronics and Allied Electronic Components) were merged to become Arrow Altech Distribution. It continues to be a highly successful joint venture with tremendous support from our shareholders.”
Q: In what ways has the component distribution business model changed during your tenure?
“Over the years, globalisation and the advent of online trading have changed the way things are done, and will probably continue to do so. These changes have enabled easy access to products around the world, particularly for very specific requirements, in the fields of design and pre-production, and for those looking to order smaller volumes on short lead times.
The component distributors recognise the extremely competitive market their customers operate in, and must ensure that they themselves provide competitive and efficient solutions and guarantee a consistent and sustainable supply chain. The component distributor continues to play a pivotal role between manufacturers of components and local equipment manufacturers in managing the supply chain.”
Q: How do you envision this model changing in the near future?
“The factors already mentioned will continue to play a crucial role. Customers will also weigh up the choice between procuring direct via the online platform versus procuring from local distributors, which offer local and international inventories with more competitive pricing for medium and high volume demand.
Having skilled people in place in the industry is absolutely essential as product knowledge will become ever more important in supporting our customers in the design process. As a broad-line distributor that represents world class suppliers, we offer a vast range of products across different technologies. AAD boasts 15 field application engineers and product managers to provide technology solutions to our broad customer base.
When it comes to inventory, AAD has the best of both worlds. We have a 4000 square metre local warehouse where we hold local inventory to service the market. This is a requirement by many of our customers with whom we have supply chain agreements, and have had for many years. On the other hand, we also have access to Arrow Inc.’s global inventory which allows us to address lead time challenges that may arise on parts which we do not carry locally. Our customer base is currently primarily sub-Saharan Africa, as little manufacturing takes place in the rest of Africa.
Online ordering is certainly something that is becoming increasingly important, as customers seek the convenience to purchase over the Internet, and it offers another channel to market for distribution companies. AAD is currently in the advanced stages of planning an online ordering facility.”
Q: Will AAD’s strategy change now that it has become part of the Altron TMT group?
“There are no current plans to change our Go To Market strategy. Being part of the Altron TMT group of companies allows us the opportunity to share in the group’s economies of scale, and to take advantage of the shared services model, which enables cost efficiencies, among many other benefits.”
Q: What is your prognosis for the SA electronics industry?
“Although these are tough times for the industry, given the state of the economy at large and the fact that the manufacturing sector has not shown growth over the last few years (which naturally has an impact on the component distribution industry), I remain optimistic about the outlook as there are still lots of opportunities in this industry, and with the right stimulation from government to support the local manufacturing sector, we can certainly look forward to a sustainable industry in the medium and long term. We certainly boast high quality and competitive local manufacturers in South Africa which can successfully compete with other international players.”
Q: What are some of the trends in the technologies and features that local engineers are looking for when selecting components?
“Connectivity between various devices is becoming vital, so components that enable these applications are extremely popular. We work with a very broad range of components for different industries so it would be difficult to give a comprehensive idea of all the trends. There is a move towards System On Modules (SOM) technology rather than single components, and customers require the most cost-effective solutions for their specific end product as well as speed to market.”
Thank you, Mr du Preez, for your time.
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