Avnet 2000 Annual Report Download - page 12

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Avnet’s strategic focus has shifted toward creating a company capable of generating
and sustaining shareholder value throughout the economic cycle.
The economics of the semiconductor revenue growth cycle, the migration to
supply-chain management and conventional go-to-market approaches have had a
substantive impact on Avnet’s and the electronics distribution industry’s ability to
improve financial returns.
The previous semiconductor revenue cycle lasted eight years – five years up and
three years down – with the longest up cycle in recent history. These cycles are
driven principally by supply imbalances. To meet growing demand, component
manufacturers, in an intensely hot rivalry for market share, bring online not only any
existing manufacturing capacity, but start building new fabrication plants and equip-
ment. This eventually results in excess capacity – the manufacture and delivery of an
over-supply of components to the market – causing erosion in average selling prices,
gross profit margins, operating margins and potentially, earnings per share.
Industry cycles are driving Avnet’s strategic planning. The conception and imple-
mentation of new business models will further help insulate revenue growth from
cyclical effects. In addition to the Computer Marketing and Applied Computing
businesses, which are largely acyclical revenue streams, new fee-for-service models
and other value propositions will assist with this goal over time. The Company will fund
value propositions that achieve its financial targets, and will divest those that do not.
As its role as a supply-chain integrator melds with the trends of outsourcing
procurement and materials management, the Company possesses a key
competitive weapon – inventory. This important physical asset combined with
authorized status with the world’s leading component suppliers are not only
effective barriers to entry, but they position Avnet as a central point of strategic
flexibility in the supply chain.
The Company also has more than $1.7 billion in receivables that, along with inven-
tory, constitute the two principal sources of working capital within Avnet. Moreover,
the balance sheet risk on these assets is low, given the generally solid financial base
of most of Avnet’s customers and inventory return and stock rotation privileges that
apply to much of the Company’s inventory .
To keep pace in the wired world, Avnet is leveraging the Internet to effect a dramatic
reduction in operational expense and create a more streamlined organization — one
with the ability to reduce expenses quickly to mitigate market price fluctuations.
Avnet’s employees are the Company. Striving to attract,
retain and continuously develop highly skilled people ,
Avnet has developed a number of strategies from effective recruiting to training
programs and alliances with major universities. To create total compensation
programs, the Company proactively seeks innovative ways to find and keep the
best and brightest people.
COLLEGE RELATIONS PROGRAM
Long-term engagements with several colleges and universities have forged strong ties with
promising students and academics. Avnet sponsors a summer internship program, attract-
ing students majoring in Industrial Distribution, Business, Computer Science and Electrical
Engineering. The program exposes students to day-to-day job responsibilities and at the
same time, exposes Avnet to new and fresh perspectives and ideas from the students.
Avnet places a high value on a diverse workplace, and one of its recruitment objectives is
to target minority colleges and minority students.
STRATEGIC ALLIANCE WITH ARIZONA STATE UNIVERSITY
Early in FY’01, Avnet pledged $1 million to Arizona State University, which will benefit from
two endowed professorships in Supply-Chain Management. The interaction between
strategically aligned faculty members and an industry leader provides the foundation for a
powerful university/ industry relationship, distinguished by ongoing collaboration and high-
level information exchange. The advantages extend to the faculty-student relationship as
well. ASU will provide students with opportunities to interact with Avnet professionals and
participate in intern programs, thus generating interest in Avnet’s exciting, global business.
LEARNING ORGANIZATION
The Learning Organization enables employees to practice personal mastery. Avnet’s
Intranet allows employees to view lists of available training classes, identify their own train-
ing requirements and options, and register for courses in business and personal skills.
Instructor-guided classes and self-guided online training are offered in areas ranging from
computer software to leadership development. Computer-based training lets employees learn
at their own pace and convenience. With employees all over the world, distance learning is a
very important initiative for the Company. Avnet training is also tied to new technology roll-
outs and is designed to support process changes and technology.
Through focused innovation, Avnet will continue to differentiate itself from its peers,
especially in information technology and processes, and will continue to create
opportunities for its employees and provide the tools for their support.
Engineer at Avnet BFI OPTILAS
in Evry, France, performs value-
added calibration service on an
optical system.
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To differentiate Avnet from its
competitors in the area of
training and employee
development, Avnet Electronics
Marketing has launched
Learning Organization practices.
PEOPLE
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