1. You might not know Don Elario.
But if you own an electronics device,
chances are good that his handiwork has
affected you in some way.
Open up any gadget or appliance you
have, and it's likely there's at least one part
in there that came through the Northern
Nevada center Elario oversees.
More specifically, there's likely one
component in that device that went through
Arrow Electronics' Reno facility -- which
also happens to be the Englewood, Colo.-
based company's largest distribution and
logistics center in the world.
With an impressive list of more than
115,000 global customers that include
such heavy hitters such as Boeing and
General Dynamics, it's no surprise that the
distribution company's fingerprints can be
found on many electronics components.
And making sure the company's largest
center hums in tip-top shape is none other
than the Reno-based Elario, who works as
Arrow's director of quality for the Americas.
"Once Intel makes a microprocessor, they
rely on a company like Arrow to get the
product to the supply chain," Elario said.
"So any product using electronics, whether
it be in the military, aerospace, medical,
automotive or telecom industries, likely has
an electronic component that went through
this facility. That includes products like
your cellphone, your computer, your car
and even your washing machine at home."
A key role
Arrow Electronics trades on the New York
Stock Exchange under "ARW" and has a
market cap of about $4.03 billion. The
company is ranked 140th in the Fortune
500 list, posting $18.7 billion in total
annual revenue and $479.6 million in
annual profits.
Besides distribution, Arrow also offers
several services that aid in the
manufacturing process of its customers.
Its Reno facility, for example, houses
Arrow's largest programming center in the
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2. world.
When a manufacturer decides to buy a chip
from one of Arrow's suppliers, in some
cases, the manufacturer would ask Arrow
to program their specifications into the chip
as an additional service prior to
distribution.
Companies disposing old equipment also
hire Arrow to process machines via IT asset
disposal company Intechra. Reno-based
Intechra is one of the leading used
equipment recyclers in North America and
was acquired by Arrow in 2010.
Distribution, however, is Arrow's bread and
butter. Its customers on the supplier side
alone comprise more than 1,200
companies.
"We don't manufacture anything, but we are
one of the largest electronics distributors in
the world," Elario said. "That is our core
business."
As the man in charge of developing and
improving the methodology and technology
of Arrow's largest distribution and logistics
system, Elario plays a key role for the
company.
In his 30 years in the electronics industry,
Elario helped pioneer warehouse
consolidations and the development of
large distribution centers during the
1980s. He also designed, built and
implemented automated warehousing for
Marshal Industries and Arrow in the 1990s.
Elario's career at Arrow started in 1996,
when he was hired as vice president of
logistics after Arrow acquired the Bay Area
company for which Elario worked.
"There used to be lots of distributors and
competitors to Arrow," Elario said. "But as
the industry moved in to the '90s and
2000, there were a lot of acquisitions and
the industry went through a period of
consolidation."
When Elario was hired, he was tasked with
integrating the companies' warehousing
and value-added service programs and
moving the bulk of those to Northern
Nevada. By 1998, Elario moved to Reno to
help expand the Sparks facility, which was
growing at a rapid pace.
Shortly thereafter, Arrow started moving
from its original distribution center in
Sparks to a new facility off Longley Lane in
Reno. By August 2000, the transition to the
new Reno facility -- which boasts more
than 500,000 square feet in size -- was
completed.
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3. "Reno is very close to the Bay Area, where
a lot of our key suppliers are located,"
Elario said. "It is also a good location for
distribution and has a viable labor force.
From a business perspective, it's a great
place to be."
The perfect order
These days, Elario is halfway through
helping develop Arrow's ambitious 10-year
program for developing a system called
"The Perfect Order."
Given the current economic climate and the
thin profit margins that many companies
operate in, it is imperative for distributors
such as Arrow to ensure their processes
are as efficient as possible, particularly in
terms of speed and accuracy.
When you're looking at managing a
sophisticated network that processes
millions of orders per year, for example,
you have to make sure you have the right
inventory at the right time feeding the
manufacturing line so products can get to
market on time, Elario said. Cost also is an
issue, he added.
"Time is money, and everybody today is
operating on thinner profit margins
because everything is cost-embedded,"
Elario said. "There is a continuous pressure
on us to improve our processes so we can
reduce costs in the supply chain and
ultimately reduce costs to our customers.
You've got to work on it, every day, year
after year."
Right now, Arrow's process is meeting 99.5
percent of eight metrics the company has
identified as essential components of the
distribution process. These include having
the right product come in the right quantity
with the right packaging at the right price
and time. Although 99.5 percent is a good
number, it obviously still isn't perfect, Elario
said.
The key is being able to apply those
metrics at all stages of the product cycle,
from suppliers to distributors to
manufacturers.
"We could do everything right on our end
and you could still have problems," Elario
said. "If a customer orders the wrong part,
it's possible that component can make it all
the way through the process and get
loaded on the board."
This also is the reason why it's important to
systematically align the whole process
between suppliers, distributors and
manufacturers to prevent errors from
making it all the way to the end of the
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4. process and leading to costly delays. That
alignment combined with further
improvements to raise the 99.5 percent
metric is what Arrow calls "The Perfect
Order."
To get those final percentage points, Elario
is relying on decades of experience along
with lessons learned from studying under
W. Edwards Deming.
Known as "the Father of Quality" in Japan,
Deming is widely credited for helping Japan
develop the highly regarded manufacturing
system that turned it into an economic
power after World War II.
One of the lessons Elario learned from
Deming is process ownership.
"People involved in the process need to
understand they have ownership for quality
and are empowered to make the right
decisions," Elario said. "You have to build
quality into the process as opposed to
inspecting it in. Inspection is a nonvalue
added activity and just another way to
make a mistake. People must feel that they
are part of the process and take pride in
the importance of their role and
responsibility for quality."
Making adjustments
As with many businesses, the economic
downturn had an impact on Arrow.
But just like distribution companies deal
with issues in their process by identifying
them and coming up with counter
measures, Arrow dealt with the downturn in
similar fashion.
"Of course, we were affected by the
downturn -- everybody was," Elario said.
"Going into 2009, we made adjustments,
just like every other company did."
One thing Arrow did was expand the scope
of its services to the electronics industry,
including areas like design applications,
reverse logistics and end of life
management.
It also helps that electronics is one industry
that continues to grow despite the current
economic climate.
Another plus is the company's large stable
of customers, from little companies that
build the dollar changers in Coke machines
to high-tech firms that build heart
machines.
It's also crucial to keep improving and
refining one's systems and processes,
Elario said. Although some might say a
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5. "Perfect Order" system is impossible,
making it one's ultimate goal and striving to
achieve it undoubtedly pays dividends for
the company.
"There's a saying in our field that if you do
what you've always done, you'll get what
you've always got," Elario said.
"If you want to change the output, then you
have to change the input. Otherwise, you'll
just get the same thing over and over
again."
Less
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Vitae
Name: Don Elario
Age: 59
Position: Reno Distribution and Logistics Facility
Director of Quality, Arrow Electronics Inc.
Education: Business management from North Shore
Community College and Northeastern University;
studied under Dr. Edward Deming, Japan's so-called
"Father of Quality"
Family:
Two children, Shawna and Brandon, and two
grandchildren
Community involvement: Former chair and board
member of Secret Witness
Professional involvement:
Chair of the Electronics Components Industry
Association Components Council, member of the
American Society for Quality and the Strategic Council
for Standards and Guidelines for the Electronics
Industry; past member of the National Electronics
Distribution Association Components Roundtable
Distinctions: 2010 Distinguished Service Award from the
Electronics Components Industry Association
» If something isn't working, do something
different: There's a saying in our field that if
you do what you've always done, you'll get
what you've always got. If you want to
change the output, then you have to change
the input. Otherwise, you'll just get
» Don't be afraid to reinvent yourself: Concentrate on
reinventing yourself and reapplying your business in a
new way. If you look at things through a different lens
each year, then you can prevent yourself from falling
into the rut of doing the same thing all the time.
» Be curious: It doesn't matter how old you get or how
many years you have been in the business, I consider
every year as my first year, and I continue to learn.
When people stop learning, that's when they become
stale and drift away.
» Be humble: Stay confident but stay humble. No matter
how good you think you are, you are never that good.
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