Arrow/Schweber (A/S) a subsidiary of Arrow Electronics is a distributor of electronic parts and chips to various customer segments. The growth of Arrow Electronics has been mostly inorganic in the form of mergers and acquisitions.
The business model of Arrow/Schweber is based on a portfolio of products and services they offer to their various customer segments. It cross sells the products manufactured by various chip vendors and also provides value added services to certain category of products. Its product line, i.e. the set of products for which A/S was a franchised distributor, consisted of two categories of chips: standardized and proprietary. Standardized products were interchangeable chips produced by multiple suppliers whereas proprietary products were manufactured by only a single supplier. Often such proprietary products required value added programming by A/S. The customer base of A/S can be broadly divided in four distinct segments and A/S provides different value added services for various segments. The different segments and value added services provided are as following
• Original Equipment Manufacturers (OEM):
1. Opportunity to order in small quantities and small lead time
2. Sending all the products necessary for a specific manufacturing run in a single shipment.
3. Releasing products to shipment based only on a forecast and not previously entered firm purchase. This helps OEMs to management their JIT procurement systems
4. In certain cases also provides material management for the OEMs
5. Also provides programming of certain chips
• Contract Manufacturers (CM):
1. Small lead time
2. Programming expertise
3. Supply chain management
• x86 manufacturers of PC clones:
1. Provide credit
• Customers of Industrial Computer Products:
1. Flexibility to order in small quantities
2. Customized solution
Another important aspect of A/S’s business model is that it sells its value added products at a discount in a hope to...