electronica 2016: Resurgent RS plans big splash

This enhanced presence highlights the distributor’s progress since Lindsley Ruth (pictured) was named Chief Executive Officer of Electrocomponents 18 months ago.

“I once was lost but now I’m found” could sum up that period though Ruth asserts there is still plenty to be done. So far he has brought direction and dynamism to a business which trades as RS Components in most of the world and Allied Electronics in the Americas.

In a recent trading update Electrocomponents said it expected a “stronger than expected” first half performance delivering a profit of £54m up from £31m in the previous year. Cost cutting has sliced £15m of expense and two per cent sales growth is forecast.

So what’s behind the transformation from distribution plodder to one with a spring in its step?

The most important action for is Ruth declares, “Putting the customer back at the heart of what we do.”

The inference is that RS Components had become too inward looking and too bureaucratic and too bloated.

Research among 80,000 customers highlighted concerns including stock availability, delivery delays and poor handling of complaints.

These issues are being addressed alongside upgrades to the company website. These include improved product search, investment in products and content with more pictures and videos, site access speed upgrades, and an enhanced customer acquisition process alongside SEO and social media initiatives.

Rising customer metrics suggest these actions are already having a positive impact.

“People look to leadership to improve performance,” says Ruth. “They want direction.”

With that direction Ruth will also devolve responsibility.

The first question Ruth addressed is fundamental. “Is this a UK business with international operations or an international business with a UK operation?”

With the answer favouring the latter, Ruth has put responsibility for profit and loss back into the regions of the RS business. These regions will now hold their future in their own hands.

If they grow the business and demonstrate the need for more investment, they’ll get it.

The message from Ruth is “You grow, we invest.”

Ruth’s actions endorse this policy. The distributor’s Design Spark website will move to a new platform. Resource is being poured into the company’s own brand product business which now goes to market under the RSPro brand. The UK and North Europe business has a new boss and more sales resource.

At electronica, RS will need to show its intent in the electronics market. Currently it represents 30 per cent of the Group’s sales.

“It’s a big focus,” asserts Ruth. “We have a major opportunity to build our electronics presence.”

Hence the 150 personnel on duty in Munich who have been charged with finding 10,000 leads during the exhibition four day run.

“We want to show a strong presence, it’s an opportunity to project our business to the customer.”

The product area RS needs to strengthen is semiconductors, a point acknowledged by Ruth. “We want to be stronger in components on the printed circuit board.”

Recent additions to the line card include Infineon and Intersil, and says Ruth, “We are now in a positon where we can support a global franchise”

The focus will be on new product introductions and RS will remain rooted to the traditional low volume, high mix business model, which Ruth reckons is the best route to brining semiconductor suppliers on board.

It rules out any shift towards supplying production volumes, a strategy undertaken by competitors.

Ruth sees this as being a hassle for engineers at the start of a design project.

He is also eyeing the market for acquisitions, and to sharpen the search he has hired a Corporate Business Development executive.

“It would be a bolt on to fill a gap,” he explains. “It could add to the product portfolio, it could provide regional expansion, it could provide a service expansion, those are three areas to look at.”

“There are 1000s of distributors out there to acquire,” says Ruth.