FEATURE
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Routes to market

With the photonics market encompassing everything from the smallest component to the largest integrated laser system and beyond, tracking a product from manufacturer to end-user is often tricky, if not impossible. By Warren Clark

So, how do products reach you? Well, there are two main routes, but even they can be broken down into several variants according to the type of product and the sector of photonics. Principally, though, you will either buy your product direct from a manufacturer or via a distributor.

The direct route is often not that direct. It is rarely a case of picking a product off a shelf or calling the manufacturer direct and expecting the product to arrive next day. That does happen, of course, but the complex nature of the photonics industry means that unless you know exactly what you want - and that it is available as a standard product - you will find that the route to market involves a few more twists and turns.

Hans Dabeesing, marcom manager for Newport's European operation Micro-Controle - a major manufacturer, says: 'Newport has several different product lines and so inevitably there is not one single route to market, but several. With such an extensive product offering, the majority of our business comes via direct sales through our worldwide span of sales offices. Our website also backs our business in providing fully comprehensive information on our products and services. Customers can also purchase our catalogue products online.

'For our customised motion systems, the approach is very different and requires us to work very closely with the customer to determine his exact needs. Our sales engineer will establish the customer's basic requirements or we might receive a tender document. Then an applications engineer will take the lead on the project and work to the technical specifications with our engineering team, and come up with a tailor-made solution specifically for the customer.

'We also have our OEM business, which falls in between the first two routes. Here too, we provide a lot of value-added services to the client. Our engineering team can assist the customer in conceptualising the solution through in-depth technical discussion and rigorous engineering analysis. We can modify standard product designs for OEM applications, design new products or build to print, depending on customer requirements. Our goal here is to bring the competitive edge to the customer and to serve him as an agile company, capable of responding to sudden bursts in demands or accompanying the customer throughout the life cycle of his product.

'We use distributors in those geographical areas where we do not have any direct representation. Currently those areas include, for example, the Nordic countries or Spain, where we use a local distributor who has the knowledge and expertise of the markets in that area.'

Another major manufacturer, Coherent, also gets involved directly with customers. Paul Crosby, VP of marketing, says: 'Coherent sells all of its products through a worldwide direct sales network. In addition to the USA, we have sales offices in Japan, China, UK, France, Germany, Italy and Benelux. In each case, we have our own sales engineers. In some vertical sectors we sell standard products to end-users but in others, such as the semiconductor/capital equipment sector, we'll work with customers to develop solutions according to their needs. Also, each of our territories will have specialist sales advisers according to the demands of the specific market. For example, in Japan we have a couple of specialists in micro electronics, while in Europe there are specialists who deal with OEM customers in graphic arts or instrumentation. For certain low-cost items, such as power meters or laser diode modules, we carry out direct sales over the telephone.

'In countries where we have no direct subsidiary, we appoint distributors. We maintain long-standing relationships with our distributors, and many of them have been our partners for 10 years or more. This long-term relationship is important, in order to ensure you can establish a good contact with the end customer.'

Distributors

Of course, many smaller manufacturers do not have the resources to create regional offices throughout the world. This is where distributors can play a part.

John O'Connor, marketing manager with distributor Photonic Solutions, says: 'For offshore manufacturers, having a good local distributor is critical to successfully getting their products to market. A professional distributor smoothes the whole process and acts as a conduit between the customer and the manufacturer.

'We initiate the selling process by conducting the relevant marketing activity and providing the manufacturer with feedback on what our market place is looking for. A specialist distributor, such as Photonic Solutions, will use knowledge of the intended application and of the available products to aid the customer in the efficient selection of the most appropriate system to meet his needs and budget.

'Once a product has been selected, the order can be placed. Having a local distributor means this can be done in the customer's local currency. Then, on importation, we handle the importation duty, freight charges, customs and excise clearance, etc. This is critical to ensuring smooth handling, especially where equipment may fail during warranty and may have to be returned offshore. For the customer, the whole process is seamless.

'Upon delivery to the customer, we will install and commission the system, conduct acceptance testing and train the users so that the system can be signed off technically. Following that, we support the product throughout the warranty period and beyond, offering maintenance contracts where appropriate, supported by our pool of trained service specialists. A good distributor will also hold stocks of spares and consumables to ensure the up-time of the equipment.

'All in all, the good distributor has an in-depth and active role to play in the support of the customer throughout the lifetime of the equipment. A bad distributor does little but take an order, providing next to no support.'

Steve Knight, a director at UK distributor Laser Lines, has plenty of advice on what makes a good distributor: 'An electro optic distributor can only succeed if they add value to both the local customer as well as the overseas manufacturer. This added value must be perceived by both parties as being worth the additional cost to the customer and/or and the reduced revenue for the manufacturer.

'When overseas electro optic distribution companies were founded in the 1970s and 80s, things were very different. There was no email or internet, so access to information from overseas was difficult. Logistically, it was much more difficult for a local company to order from overseas, and shipping equipment - even within Europe - was slow and difficult due to customs.

'Since then the widespread use of the internet and access to email, as well as increased competition and rapid introduction to market of new products, has meant that the successful distributor has had to adapt to these changes. It is now much easier for an overseas company to sell locally and for an end user to purchase overseas.

'In the 21st century the successful distributor has to have a number of attributes to add value to the products and services offered to the local customer. For example, one should respond quickly - customers should never have to chase a distributor for information. Access to demonstration equipment is important, as is having the trained staff to be able to demonstrate it on site. Technical and application support at the customer's site is key, as is an effective order processing system that provides accurate delivery information and proactively works with the manufacturer in order to ensure that delivery schedules are met.

'A successful distributor should hold stock for fastest possible deliveries, and provide access to complementary product lines to be able to provide a complete solution. The distributor should have evaluated its suppliers' products before offering them to customers, and should be an information provider - i.e. if we can't offer a suitable product, we'll recommend someone who can. Also, beware any manufacturer who places restrictions on direct contact with the manufacturer.

'A distributor needs to add value for the supplier by, among other things, maximising face-to-face contact with local customers - something that is always preferable to telephone and email. A quick response is essential. In a competitive situation, the first rule of selling is to respond to the customer before the competition. The supplier should receive regular feedback on specific customer issues, as well as overall marketing information and regular accurate forecasts in order to plan manufacturing.

'The distributor should be prepared to invest the time and money in developing OEM opportunities rather than concentrating on low volume business. There should be flexibility of profit margins as, inevitably, high volume OEM business is price-sensitive so the profit margin has to reflect this.

'Finally, a distributor should restrict the number of overseas suppliers to a level where they can all receive the necessary sales, marketing and technical support. The distributor's resources should not limit an overseas manufacturer's sales.'

So, the route to market of a photonics component can't be summarised in a single sentence, but rather depends on where it's coming from, where it's going to and how it's going to be used.