What investments are you planning to further improve supply security for industrial customers in Europe?

We continue to invest heavily in inventory. Automation has been a strategic focus area for us for more than ten years, and we are continuously expanding our line card, meaning our supplier and product portfolio. We regularly add new suppliers and broaden our offering accordingly. At the same time, we continue to expand the breadth of products available from existing supplier relationships.

Our goal is to be a true one-stop shop for engineers and designers. A key factor is having products available for same-day shipment and being able to deliver them to customers in Europe within 48 hours. From a growth perspective, that is extremely important.

So there are no plans to establish a warehouse in Europe?

No. We ship globally from our central warehouse in Thief River Falls, Minnesota. From there, we can typically reach customers in Europe within 48 hours. Based on our discussions with customers, those lead times are often comparable to what they receive from local providers. For that reason, we do not currently see this model as a disadvantage.

What digital services do you offer your customers?

We offer punch-out catalogs, API integrations and EDI connections. In addition, we provide a website that is available 24/7 in local languages and designed as a self-service platform. These are the primary ways we interact with customers and make the procurement process as simple as possible.

What specifically are you doing to further improve procurement processes?

Our focus is on becoming even more digitally connected with our customers. Through API connections, customers can link their systems directly to ours. They can request quotes, place orders and make changes to existing orders. The objective is a fully digital process without unnecessary emails or phone calls. We want to remove friction from the process and make access to products and information as simple as possible.

Is this web-based, or does it require special interfaces?

It is an application interface, meaning a direct connection between two systems. Some IT work is required, but it is not a major software implementation. It is more of a lightweight technical setup than a large software package.

Do you use AI-based forecasting or inventory models to anticipate shortages of critical industrial components?

Yes. We use artificial intelligence across virtually all areas of our business. Data plays a central role for us, particularly when it comes to forecasting market demand. We do not purchase inventory only after a customer requirement already exists. Instead, we anticipate future demand using AI and data analytics. That is how we determine our inventory levels and decide which products to stock.

We collect information from suppliers, from our website and from as many other sources as possible around the world in order to understand what customers are looking for, which technologies are gaining momentum and what types of solutions are in demand. Based on that information, we invest strategically in inventory so that products are available when customers need them.

So you are not only analyzing purchasing data, but also search behavior?

Exactly. We try to identify which products and technologies are likely to succeed in the market. Even when suppliers tell us which products are currently their most popular, we also analyze customer behavior, such as search activity around specific technologies.

If we see strong interest in a particular technology, we evaluate whether we already offer enough solutions in that area. If not, we look for additional technologies or alternative solutions that can give customers a broader range of options.

Do you provide engineering services?

We employ engineers around the world who support customers. On our website, we offer an Automation Resource Center as well as a technical forum. Engineers can ask questions, interact with our experts and connect with engineers from manufacturers.

In addition, we provide regional technical support via phone and email across all three major global regions. It is essentially traditional technical support and engineering assistance.

What role does software play in your portfolio?

Software currently represents a relatively small portion of our revenue. However, we are actively exploring ways to expand this area. Software sales involve different requirements, including license management, information exchange and annual renewals.

Our goal is to deliver the same seamless, digital and frictionless purchasing experience for software that customers already expect when buying physical products.

Do you offer digital twins for your products?

Not across the board. Some suppliers already provide digital twin capabilities, and whenever they make that information available to us, we integrate it into our platform. However, it is not yet standard across the entire product portfolio.

As more suppliers develop and provide digital twins, we expect to expand those offerings on our website as well.

How important are sustainability, energy efficiency and regulatory requirements in Europe for your business model?

We have sales offices in Europe, but no distribution center. Sustainability remains very important to us. From our perspective, our centralized warehouse model in Thief River Falls also offers sustainability benefits.

While products are shipped from the United States, we avoid maintaining complex global distribution networks with multiple warehouses around the world. We also operate without a traditional field sales force that spends significant time traveling to customer sites. As a result, we believe our digital business model and centralized operations contribute to more sustainable business practices.

How does DigiKey address the growing complexity of industrial systems, for example through certifications, technical documentation or application support?

Our approach is to provide engineers with as much relevant information as possible directly online. That is why we maintain strong digital connections not only with customers but also with suppliers.

This allows us to obtain technical documentation, white papers, videos, start-up guides and other content directly from manufacturers and make it available on our website. Engineers should be able to quickly understand how a product works and how it can be used.

In addition, our Automation Resource Center enables users to discuss specific application questions with our technical experts.

Which three developments, technologies or interactions will have the greatest impact on DigiKey in the coming years?

First, our inventory strategy. We want to offer the broadest possible product selection while ensuring products are available for same-day shipment. To achieve this, we continuously expand our supplier base and product portfolio while managing inventory based on data-driven insights.

Second, digital connectivity with customers is essential. We want to automate processes such as purchasing, invoicing and system-to-system communication to the greatest extent possible. That allows people to focus on more complex tasks instead of routine administrative work.

Third, local presence is extremely important to us. That means local language support, local currencies, support within local time zones and regional shipping options such as FedEx, UPS and DHL. Even though we ship from a centralized location, customers should feel that they are being supported locally.

Which technologies do you expect to become particularly important in the coming years?

We are currently seeing significant momentum in robotics, including both traditional industrial robotics and humanoid systems. We also see strong activity in wireless technologies, particularly in the area of data collection.

The electric vehicle sector continues to be highly active as well. More broadly, we see tremendous growth in industrial automation and automation in general. One major driver is the global shortage of labor, which is encouraging companies to invest more heavily in machinery, tools and efficiency improvements.