Avnet 2000 Annual Report Download - page 17

acquisition in the industry’s history – Marshall/ Sterling reported sales of $1.7 billion in its
fiscal year ending May 31, 1999 – created the largest electronic components distribution
enterprise in the Americas.
Immediately upon the close of the transaction in October 1999, the integration teams
began to merge the companies’ back-office systems – a mammoth undertaking.
Impressively, Marshall/ Sterling was integrated into Avnet’s global information technology
environment in fewer than 60 days, a testament to the abilities, experience and can-do
attitude of Avnet employees. Synergies gained from the integration helped Avnet realize
more than $85 million in annualized cost savings by the close of FY’00.
The integration exceeded internal expectations, as did sales performance. Bolstered by
the expanded supplier lines and new customers brought by Marshall/ Sterling, the
newly expanded Avnet EMA officially launched in January. During the last two quarters
of FY’00, EMA’s sales grew 44 percent over the first six months of the fiscal year. The
market continues to look healthy as FY’01 begins, with industry growth estimates
exceeding 20 percent.
FY’00 was an outstanding year for Canada, South America and Central America.
Canada’s revenues increased by 33 percent; Mexico’s sales run rate increased by 191
percent and Brazil’s by 60 percent. Across Latin America, sales were up 168 percent.
EUROPE, MIDDLE EAST AND AFRICA (EMEA)
Avnet EM/ EMEA has a new presence in Eastern Europe, Russia, the Baltic States,
Spain, Portugal and the Benelux countries with Avnet’s acquisitions of Eurotronics B.V.
(which did business as SEI), the SEI Macro Group and SEI Nordstar. Its presence
increased in 21 Western European countries, including Switzerland and Austria, where
EM was seeking to expand. This expansion affords near-total coverage of the European
distributor total available market (DTAM). EM/ EMEA achieved sales of $1.5 billion, a 37
percent increase over FY’99.
EM/ EMEA highlights include the honor of being named UK Distributor of the Year for
1999 by Tyco Electronics AMP and the establishment of an ASIC design center for LSI
Logic in Munich. In addition, Avnet BFI OPTILAS, with locations across Europe, and Avnet
Gallium, Israel, had record years in sales and profits. Each significantly outgrew the
market. Avnet Kopp, South Africa, implemented two Avnet IMS POURS® (Point of Use
Replenishment System) sites, which are growing in excess of 40 percent. Further, South
Africa reports a vibrant economy and a growing electronics industry.
The EMEA organization has made tremendous progress in its re-engineering of the
SAP client/ server platform from version 2.2 to 4.0. Avnet’s pan-European network
was up on SAP 4.0 by November 1999. The benefits of a single, world-class IT system,
which performs in multiple languages and currencies and recognizes the various busi-
ness practices across Europe, are significant. Avnet, as a result of its investments, has
been recognized by several industry publications for its IT innovations. SAP is begin-
ning to increase productivity through automation and generate significant quality
improvements. It will improve customer service considerably as automation of the
European Distribution Center ( EDC) in Tongeren, Belgium, is completed.
ASIA/PACIFIC
The fastest growing region in sales and profits, Asia increased sales by 82 percent
year over year, and posted over 500 percent growth in profits. At the same time
13 countries rolled out on SAP 4.0, the Company expanded into Korea with the
acquisition of Cosco/ Jung Kwang, and Avnet forged its unprecedented business
alliance with China ECNet.
Avnet Asia’s infrastructure is well established and poised for continued growth
in this dynamic region. The Asia management organization is now operating with
27 offices across Asia/ Pacific, a 40,000 sq. ft. China Gateway Distribution
Center in Hong Kong, a new proximity warehouse in Shanghai, a 45,000 sq. ft.
Asia Regional Distribution Center in Singapore and seven other proximity ware-
houses in key markets.
One of the most memorable highlights of FY’00 was the ceremony at Beijing’s Great
Hall of the People, where Avnet and ChinaEcom (now China ECNet) announced an
e-commerce initiative in China. Avnet EM’s mission is to supply electronic compo-
nents, logistics and technical services throughout China to indigenous OEMs and
engineers via an Internet portal. Avnet was chosen for this Internet venture because
of its relationship with global suppliers and its leadership in strategic supply-chain
management, global logistics and transportation. China’s electronics market has
been estimated at $71 billion and is the country’s fastest-growing industry.
Since the announcement of China ECNet, Avnet EM has worked with the Chinese
government to obtain local distributor status – another first for an American-based
AVNET EM
SALES BY REGION
EM Americas 71%
EM EMEA 23%
EM Asia 6%
1999 Estimated Worldwide
Electronic Component Sales
$200 Billion
Direct 80%
Distribution (DTAM) 20%
Avnet EM’s Share of DTAM 17%
Sources:
Bear Sterns
Europartners
Merrill Lynch
NEDA
US Bancorp Piper Jaffray
Technology Forecasters
Avnet Business Information Office
Machine operator inserts insulators
into connectors, another of
Avnet’s value-added services.
To increase efficiencies in
customer service, Avnet EM
consolidated its major European
warehouses into the new,
250,000 sq. ft. facility in
Tongeren, Belgium.
Technicians programed nearly
100 million programmable
logic devices in FY’00, one
of Avnet’s many value-added
services.
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