Arrow Case Study
Arrow: What is Arrow's Business Model? What Value does it add for suppliers, customers?
Business Model
Relationship with suppliers - franchised distributor
Motorola and Intel were two of the major supplier of Arrow. As some costumers were too small for the supplier to sell directly, they sell through distributors like Arrow with offering return privileges and price protection.
Relationship with customers
Arrow operates with two kinds of customers, transactional and relational customers. The former are customers that placed requests for quotes for one or a few product with a number of distributors, while the latter are royal to the company.
Transactional customers are price sensitive, thus sales people provide them with current pricing information and negotiate with them in order to offer them the best price. This customer segment is a major source of relational customers in the long run.
What is extremely important for Arrow is to find the right customers to develop long-term relationships. They need the customers to invest along with them in processes that enabled them to provide value added services.
Value Added for Supplier
Arrow creates demand for the suppliers' products (design win), enlarging their market share
Arrow provides the inventory buffer for suppliers.
Arrow pays the bills for them, stocks products and schedules orders with enough size and scale.
Arrow identifies growth opportunities before anyone else does.
Value Added for Customer
The Customer benefits from Arrow of low cost parts, technical support, and short delivery lead-time.
Transaction Cost Reduction
Total Cost of Ownership Analysis – Helping companies to identify the total costs associated with particular activities or processes.
Automated Replenishment – Reducing inventory and associated carrying costs.
Electronic Data Interchange - EDI supported faster, more accurate, information transfer, which reduced supply chain costs, and improved productivity and made its
Business Model
Relationship with suppliers - franchised distributor
Motorola and Intel were two of the major supplier of Arrow. As some costumers were too small for the supplier to sell directly, they sell through distributors like Arrow with offering return privileges and price protection.
Relationship with customers
Arrow operates with two kinds of customers, transactional and relational customers. The former are customers that placed requests for quotes for one or a few product with a number of distributors, while the latter are royal to the company.
Transactional customers are price sensitive, thus sales people provide them with current pricing information and negotiate with them in order to offer them the best price. This customer segment is a major source of relational customers in the long run.
What is extremely important for Arrow is to find the right customers to develop long-term relationships. They need the customers to invest along with them in processes that enabled them to provide value added services.
Value Added for Supplier
Arrow creates demand for the suppliers' products (design win), enlarging their market share
Arrow provides the inventory buffer for suppliers.
Arrow pays the bills for them, stocks products and schedules orders with enough size and scale.
Arrow identifies growth opportunities before anyone else does.
Value Added for Customer
The Customer benefits from Arrow of low cost parts, technical support, and short delivery lead-time.
Transaction Cost Reduction
Total Cost of Ownership Analysis – Helping companies to identify the total costs associated with particular activities or processes.
Automated Replenishment – Reducing inventory and associated carrying costs.
Electronic Data Interchange - EDI supported faster, more accurate, information transfer, which reduced supply chain costs, and improved productivity and made its