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19 Feb 2021

Looking beyond the crisis to a better 2021 - By Steve Rawlins CEO, Anglia Components

As 2020 draws to a close, the big markets for electronic components seem to be recovering. Yet there remain some issues that are weighing on the market. Of course, our transition period in exiting the EU comes to an end at the end of January. Also, as I write, we are just about to enter a second lockdown which is disappointing and frustrating. Let me start by addressing these points before looking beyond them to the recovery that is now emerging.

Leaving the EU

As the UK leaves the EU, many customers have expressed concern about customs checks and duties, as well as additional freight costs. Anglia has continued to invest in inventory throughout the year, wherever possible taking strong positions where we see lead-times lengthening and shortages developing, allowing us to support our customers. We hold all our inventory in the UK, and we like to maintain a very high level in proportion to the size of our business. This puts us in the best possible position to buffer UK customers against any short term disruption as we exit the EU.

Much of our stock comes from Japanese and other Asian suppliers, so these are largely unaffected by Brexit. Some of these supplies are routed via hubs in the EU – so we may see some disruption as we try to replenish our own inventory, but by working with customers and suppliers, as well as planning ahead, we should be able to minimise the impact. We’ve also made in-plant stores an economic and practical option for so many more customers with Anglia 80/20. Customers just scan out stock as they use it and we replenish it automatically at no additional cost with no capital commitment, giving them a buffer in their warehouse. 

COVID

Despite the imposition of a second national lock down in the UK, the crucial thing is to look past the current crisis to the future. Anglia has continued to invest in the future of its business since the start of the first lockdown in March. Our software team has continued to develop new services for Anglia Live. We’ll be announcing the fruits of this effort at the start of next year – and some of these new enhancements will be industry firsts. We have also continued to develop new lines to ensure that we offer customers a truly comprehensive solution, and to stay abreast of new technologies and markets as they become mainstream. There are four or five new lines where we are currently building a stock profile – look out for announcements later this year and early next.

The value of relationship

Anglia has always been a relationship business, and the lockdown has opened up new ways of maintaining those relationships with respect for the safety of our staff and our customers. We are rarely visiting customers at the moment – meetings are via Teams or other platforms. We will go back to face-face meetings in time, of course, but I expect that we will continue to use online platforms in parallel. Using these tools, our technical support and customer relationship development has continued strongly during the lockdown.

These relationships are central to working together in a market like the one that is emerging at the moment. Whilst holding high levels of inventory helps us support our customers as lead-times lengthen, we are only as good as the information we’re given. It is well worth creating a well-balanced forecast of your likely demand in 2021, and placing orders against it certainly for Q1 to ensure that supply meets anticipated demand. As always, the way to avoid being caught out is to share information down the supply chain so that you always have the supplies you need to sustain your production. Equipped with that, we can set up a sustainable, balanced level of inventory, and hold it at a short, overland journey from you, eliminating the inherently higher risks and costs of airfreight.

A good start to 2021?

At the moment in fact, lead times are lengthening and the market is firming up. Fabs are filling up rapidly and forecasters are predicting 11% growth or more in 2021 – admittedly from a very low base in 2020. Although this may sound surprising, in fact the reasons aren’t hard to see. Customers who have taken the cautious view and used up their inventory over the year are now being forced to replenish. At the same time, automotive electronics is now at about 90% of pre-lockdown levels, 5G is ramping up and medical / healthcare related markets, as you would expect, are growing strongly. The new X-Box (Series S) and the Playstation 5 are also imminent and are soaking up manufacturing capacity and inventory now.

In the UK distribution market we can point to a number of specific sectors where we’re seeing increased demand. In addition to medical and healthcare, access controls, smart buildings and other areas which contribute to public safety and well-being are growing strongly. COVID has accelerated technologies and concepts by as much as ten years. Customers are shifting rapidly from a mind-set of ‘we could add this function to our product’ to ‘we must add it.’ Projects that have been sitting on the shelf awaiting funding or resource have been finally dusted down and implemented.

Taking all this together, next year could in fact end up being an extremely good year. Strong relationships, transparency and continuing to think beyond the crisis to the future are key to our mutual success in 2021. Those who maintain their investment (and keep their nerve) will bounce back quickly when the market recovers.

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