Avnet CEO: Strengthening our foundation to remain at the center of the technology value chain

By Phil Gallagher, CEO of Avnet

The old adage “change is the only constant” has taken on a deeper meaning for many of us after the year we’ve been through in 2020, and every aspect of the electronics industry and technology has experienced change. Whether in response to supply chain disruptions or a surge in design activity, these changes may seem reactive. But in reality, they are simply an acceleration of existing trends.

In this process, it is worth asking, “Can technological transformation become part of the company’s DNA?”

As Avnet celebrates its 100th anniversary this year, the answer is simple: Technology transformation is an essential part of our DNA. It’s at the core of our company’s success. It’s why we’re a 100-year-old company. It’s how we continue to deliver what our customers and suppliers need—not only today, but into the future.

Avnet is entering its second century of business with the same principles that helped us succeed in the first: We remain at the center of the technology value chain, and we continually adjust our position as that center changes and evolves over time.

The foundation of disruptive innovation

The mission dates back to 1921, when 33-year-old American Charles Avnet began buying and selling excess radio parts in Manhattan. At that time, the government had just lifted the ban on private radio stations. In his first year in business, he sold about $85,000 worth of components to radio enthusiasts (about $1.1 million in today's value).

Even as Avnet seized on the opportunity, he shifted his focus to helping more customers take advantage of the next step. Soon he was selling parts and other technology not only to consumers but also to dealers and manufacturers, and even to the military and aerospace industries.

Fast forward to 1969, Avnet went public on the New York Stock Exchange, expanding its range of electronic products to antennas and even guitars. Through continued innovation, Avnet became Intel's first technology distributor. Recognizing Avnet's commitment to helping customers accelerate innovation, the processor company licensed it to sell software development and demonstration tools to engineers.

Understanding this emerging market, Avnet began serving designers and engineers who needed board-level and development systems, peripherals, microcomputers, software and networking solutions. By 1975, these innovators were discovering what was possible with computers by visiting one of 33 Avnet Microprocessor Demonstration Centers around the world.

In the 1980s, the development of microprocessors fueled the manufacture of electronic calculators, digital watches, and microwave ovens. The introduction of 8-bit and 16-bit microprocessors led to more powerful PCs, minicomputers, and mainframes. Avnet supported all of this and became an early distributor of IBM printers and terminals.

Expanding our influence

Globalization and technological complexity will change the industry, and Avnet expects demand for products to grow. Customers clearly want more from their distributors, including solutions for value-added resellers (VARs), marketing, training, resources and services in 80 countries. Even so, the company has maintained its growing market share in semiconductor distribution, becoming the only U.S.-based company to own all five U.S. semiconductor distributors.

Then came the semiconductor chaos of the 1980s, when supply outstripped demand, leading to excess inventory across the industry. In response, Avnet centralized and automated its inventory management, a change that would prove revolutionary for the industry. In 1984, the company built its first large warehouse, which offered the widest range of value-added services in the industry. These value-added offerings, along with Avnet’s long-standing (and still today’s) global supply chain expertise, played a key role in Avnet’s continued growth. By the time the company moved its headquarters to Phoenix in 1997, it had firmly established itself as a leading technology distributor.

The 1990s brought the distributed computing revolution, in which mainframe computers gave way to networked PCs, workstations, and databases. Many customers intended to develop a new generation of technology called embedded systems, which specialized in displays, modules, storage, peripherals, and memory as building blocks for complex products.

Further technological developments prompted Avnet to rethink its business model to once again deliver what customers needed next. Building on its foundation of distribution, the company transformed its line cards and products to provide customers with comprehensive design, product, marketing and supply chain expertise at every stage of the product lifecycle.

Weathering any storm

In 2020, Avnet was named one of the World's Most Ethical Companies by Ethisphere for the seventh consecutive year. Fortune magazine has named Avnet one of the World's Most Admired Companies for the 14th consecutive year.

Avnet's vision and ability to execute effectively has put us in the position we are today, with a broad global presence and deep engagement in hardware, software, IoT, AI and security to effectively manage global supply chains across a variety of industries and foster an expert community of innovators.

As a company built on perseverance and fueled by change, we are returning to our roots at every turn. As always, we are looking to the future and continually adapting our offerings to ensure we are at the forefront of the technology value chain for our customers and suppliers. Our foundation will help us and our customers navigate the complex issues facing the world, from the state of the post-pandemic supply chain to the future of work.

Leading and prospering in the future will require resilience, which is also key to helping you transform from concept to design, product introduction, production, logistics and necessary adaptability. Over the past hundred years, we have helped guide the electronics and technology industries through major industrial disruptions and understand what it takes to succeed regardless of the environment. Our motto is "Together We Advance" and it has become the core of what we do. This mantra will keep us moving forward.