The independent distributor Advanced MP, headquartered in San Clemente, California, focuses on added value and the Munich location.
To understand why Munich is such an ideal location for further growth, one must look at the beginnings of the company in Europe. Jens Gamperl, Vice President of Sales at Advanced MP, found time to chat.
Well, and what are the company’s beginnings here in Europe? “Ten years ago, Advanced MP still represented an American approach and believed that European customers can be supplied out of and supported from England. London was the location of the first major main office in Europe for Advanced MP. However, we found that the business approach with staff in London – even if they are German speakers – does not work for German-speaking countries. As a consequence, we decided to approach regional markets with regional offices in 2006.”
Today the majority of business activities are organised from Hungary. From there the company serves customers in Eastern Europe as well as the big contract manufacturers in the region.”At that time our customers – such as Flextronics, Jabil, Sanmina, Elcoteq – were located in the region. These contract manufacturers have had huge manufacturing plants in the country and Hungary was the obvious choice for a warehouse location. For an American, the distance of a few hundred kilometres does not necessary mean the same for a European. I came in 2006 to Advanced MP – shortly after this decision was made. We also realised very quickly that – if we wanted to succeed in Germany – we would need regional offices in this important European market.
So, in 2006 an office was opened in Munich. It has been very successful and the manager is proud of the accomplishment. “In Munich we have almost exactly ten sales people. Then we have in the north of Germany, specifically in Hannover, Mönchengladbach, two small offices with a total of four people. We also support Germany and the D/A/CH Region out of England with about 16 sales people.”
Many Western European regions have lost significant parts of manufacturing industry, whether to Asia or Eastern Europe. Contract or PCB manufacturers have had to learn to deal with this decline, and design business strategies to adapt to this development. Distribution companies of all stripes have likewise had to adapt.
The biggest challenge in southern Europe – and here not only distributors are affected – is the payment performance. Jens Gamperl speaks of 180 days for payment. “This kind of business behaviour does not fit into our philosophy.”
Other European regions offer ample opportunities for growth and Germany – or rather the German-speaking countries – is particularly attractive. “We currently evaluate how much we have achieved and whether we have exhausted our potential. I personally believe that we have reached only 50% of our potential. We can double our capacity and numbers quite easily.”
Jens gets down to brass tacks: “During the next 18 months we will open a new warehouse in Munich. In addition to the European main hub in Budapest, Hungary, it is the second major base for Advanced MP on the continent. The warehouse in Shanghai and Hong Kong (both China), San Clemente and Lake Forest (both USA) complete the global footprint.
Three years ago, a new regional office was opened in Sweden. “We currently have no real presence in Scandinavia. With the portfolio Advanced MP offers, we see great growth potential in this region. We are definitely confident that we will expand the office in Scandinavia.”
However, that is not the end to the expansion plans. New regional offices and more employees are also in the cards. “Today we are, for example, not represented in the Frankfurt area. Consequently we do not have that many customers there. I am of the opinion that to adequately take care of customers a company needs the proper infrastructure. As long as I do not have that, I don’t need to schedule a meeting with any customer.”
“During the next five years we intend to double our presence in Europe again.” – Jens Gamperl, Vice President of Sales at Advanced MP
Many distributors however, closed their regional offices and went with a central office for Europe. Why is Advanced MP moving in the opposite direction? “The services we offer only work with face-to-face customer meetings. We offer flexibility in stock holding, an important factor for a contract manufacturer. A large EMS provider always has problems if he has excess inventory. We hold stocks and we are prepared in times in which we create extra costs due to delays in delivery to bear these extra costs. We cover the entire portfolio as a partner. ”
And the subject of inventory management becomes more important during negotiations with the customer, no matter whether it is an OEM or a contract manufacturer. As public companies, all are focused on optimizing profitability. Low inventories and overstocks are not ideal. “Here we can help with our portfolio. Every customer has different needs and problems. We believe that a successful cooperation cannot be realised over the phone.”
Counterfeit: A problem for the entire supply chain
Advanced MP is also a founding member of IDEA, something that shines though in all business activities. “All of our employees – who have something to do with components – have to be IDEA certified. We conduct a lot of audits – not including those conducted by our customers – in order to ensure consistent quality. All hubs are mirror images of each other. So we can deliver what we promise; whether it comes out of Hong Kong, Hungary or the USA.”
However, quality checking does not start in the warehouse but, long before that, at the suppliers. “We currently use three types of suppliers: We buy from franchised distributors, and use regional differences in price; then work together as directly with manufacturers. And an increasingly important source for us are also our customers.”
“A large contract manufacturer has an excess inventory in the warehouse, and he may report this to us – a preferred supplier. We take the list of these stocks and match them with the needs of our OEM customer lists. Normally, the big contract manufacturers have better prices than the midsize OEMs.”
“Here we also have to address the issue of quality control. Since we do not know where the contract manufacturer has bought all the stocks, we will conduct our quality control. We have all machines that are currently available to secure a satisfactory quality. During the last 34 years we built up huge data and a photo collection of all the components we ever bought. So we can always compare whether the components which are delivered are of the highest quality,” Jens continues.
“In order to avoid errors, our quality control is strictly separated from our distribution system and the purchasing department. Sales staff cannot influence a delivery. Quality control has always the last say.”
“From time to time, we have customers with obsolete components. These we cannot acquire neither from franchise distributors nor from the original manufacturer. Here we have to turn to our colleagues in the independent sector. We have – over the years – created an audit system for Asian suppliers. We never buy passive components – whether obsolete or not – from brokers. Never. We have had bad experiences. We take absolutely no risk. If we are not 100% sure, then the purchasing deal will not go through.”
Companies that have been marked during quality control, are placed on a detailed blacklist. Here you find companies that offer goods and then cannot deliver. There will be companies that have delivered ‘goods with discrepancies’. If merchandise is clearly wrong or counterfeit, the company is immediately moved to the blacklist.
“This is an important issue. Our industry sector has changed insanely. When you’re talking to Jeff – our founder – he would tell you that 34 years ago there were 30 people working in sales and 2 in the warehouse. Today it is 30 in sales and 30 in the warehouse, just to ensure the quality expected. This is a very important competitive factor. You can deliver a shipment of USD 5’000 to a customer and cause damage of around half a million USD with it”.