Max Chan SVP & CIO, Avnet — HMG Global Viewpoint

Thank you, Hunter. Excited to be here. I'm looking forward to the discussion that we're going to have today.

You know, I think global is a way of business, a way of life these days. Globalization has been going on for a long time, more so than ever today. And being a leader without that global acumen, I find it almost difficult to really navigate, especially in the technology industry. Think about it this way: Avnet is a supply chain organization focusing in the technology industry. That strategic acumen for a CIO and for the Avnet leader is such an important thing because really, looking at reshaping the organizations, how do we leverage that global talent pool that is available to us, and also the different technology, the logistics network, the business migration that we see our customers and supplier partners expect of us to provide for them? Without that appreciation, without that understanding, also without that rich... it's really impossible for us to be able to operate effectively, to enable what the business is trying to achieve. Now it also brings along the diverse insights that is necessary for us to understand that there are different ways of doing things, there are different ways of addressing a strategic need or a solution or problem that the business has. And having access to the global talent pool more important than ever now is really a time to really have resources around the globe that is able to deliver effectively to our organizations. Then, you know, with the digital transformation, that global perspective is truly essential to allow me to do my job with my team effectively for the company and also for the broader industry as a whole.

We operate in 100 plus different locations around the globe. A $26 billion company focusing on the technologies, solutions, and supply chain services across the globe. We connect the upstream supplier partners that we have, bringing their line card and giving them access to the breadth of customers, be it through design services, go-to-market, the overall supply chain solutions, and even serving the engineering community to look at prototyping as well as the offering. One of the largest engineering communities in our industry to the constituents that we work with.

Interestingly, you know, a lot of people are asking me about AI and how we are applying AI, more so in the last two years than ever before. But if I look back, we have been applying and leveraging AI and ML in the last, what, six, seven years in a big way. It's just because of generative AI everyone gets so excited, and I would say mainstream in the sense that everyone feels that this is the new shiny penny that we need to be going after. But it's something that we have a lot of success with because, like you know, Avnet is in the supply chain, in the distribution business. We have been in business for 103 years, and imagine the treasure trove of data that we're sitting on with internal demand signal and supply signal that we collect through our transactions with our customers and supplier partners, as well as the external signal that we incorporate. AI and data analytics becomes a part of the value that we deliver through the organizations. We have been applying that either in point of sales, in inventory, in demand forecasting, and customer service, and everything else. However, generative AI in the last 12 to 18 months makes it a lot more exciting because all of a sudden now we can apply or help the rest of the company as well as our customer and supplier partners better leverage those insights that we have been generating for many, many years. Take for example, with the engineering community, what used to be a design service that our customers had to work with our internal engineers to develop, let's say, a board diagram to design a board. That used to take time for them to complete the process. Generative AI sitting on top of our data, like our product information management systems and also our point of sales data, allowing now the customer instead of having to wait on an Avnet engineer to provide them with additional recommendations, we are able to now generate designs based on criteria that they have or changes that they would like to make based on availability, based on physical size, based on price point, and potentially even to the extent of, we talk about global earlier, source and supply where it's coming from, who is coming from, and almost immediately generating alternatives for them to be able to make quicker decisions, and hence helping them with a quicker time to market. So one very simple example of how it can be applied across our industry. We have a lot more if we have time, we can talk about that.

I've been with the company close to about 12 years, and been the CIO for the last five and a half years, I think if not more. And when I was asked to take on the CIO position, the first thing that I instituted across the organization is that we do not do IT for IT's sake. It is not about just the backend support, the backbone of the organizations. Before becoming a CIO, I had the privilege and honor to work with every business line president. I became their go-to business relationship person for IT, and that allowed me to truly understand what are we trying to achieve from a business standpoint, what are some of the challenges that the business is facing, and the technology solutions that we can bring to the business to address that. With that in mind, when I took up the CIO position, I was very clear to my team that we need to exist for the business. And I basically started the mindset change, the transformation of my IT organization. If you think of it as a value chain, you have a four-step approach: starting with operations support, the next step being delivery and strategic delivery, then going up to thought leadership or consultative services, and last but not least, bringing innovation to the organization. I was very intentional driving that transformation to move my organization from operations support and delivery to more of a strategic delivery and thought leadership, and also institute this innovative mindset across the IT organization. Anything that is hands-on keyboard, operations support, we work with our strategic partners and have them do it better, cheaper for us. So, you know, I keep telling my team the differentiation between us and our partner is that we understand the business. We probably understand the business better than some of the business because IT touches every single part of the business. That change really repositioned the IT organization in a completely different light for the organization. That gets a thumbs up with the BU, that ultimately helps the stature within the C-suite of Avnet. So by doing that, we establish ourselves as business leaders that specialize in technology, that leverage technology and bring technology to the business to help them achieve what they need to achieve. So that is number one from a playbook standpoint. The rest of it is really then embedding it into the overall business technology strategy, the enterprise strategy. So I was very cognizant of the fact that I do not want to come up with our own IT strategy; instead, we become a strategy enabler for the business and look at capabilities that ultimately are delivering to the business strategy, the enterprise strategy itself. I'm going to take a pause there, but I'll probably take the entire 30 minutes talking about this stuff.

From a technology leadership perspective, over the years we have expanded IT to take on digital. I mean, to some of the audience out there, you might be thinking that hey, digital and IT come together. No, actually that's not the case for 15 years prior. We started a digital organization that is really sitting in the business because we wanted the business to be driving digital business, e-commerce, etc. But at the point where I would say the organization seeing how IT is really focusing on the business, it makes more sense for us to get the leverage and bring the digital organization and IT organization together and put it under my wings. That helps tremendously with my team because now instead of just focusing on the foundational piece of technology to help enable the business, we have the opportunity also to drive digital products and different things that directly are associated to any of the business pillars or the business strategic initiatives. So that's one. The second piece of the expanded responsibility is taking on a P&L-related responsibility for our digital SI business. We acquired that digital SI about five years ago, and it's been sitting in the business. But back to the point that Avnet is a technology supply chain, technology solution provider, and in the distribution industry, the selling motions of an SI is very different from the selling motions of supply chain solutions as well as moving boxes. And the CEO asked me to take on that responsibility. Best decision I have made to agree to that, and really reshaping that organization to be able to provide services, extended services to Avnet's traditional customer and supplier partners, be it helping them to become part of that digital extension, for example, that connects the demand signal and the supply signal together and be able to leverage Avnet's capabilities or additional digital services that they need to be successful in their industry and make it easier for them to work with us as a partner. So those are the different things that I have the opportunity to be leading and expanding into, looking at overall enterprise digital strategy. And because of that, it also gives me the opportunity to create a product-centric digital organization where we adopt a distributed delivery model for digital, where the IT team builds the foundations and maintains the foundations, the platforms, the digital team focusing on innovations and enterprise-level products, but we invite the business units coming onto our platform that we know is secure, it's in compliance, it has all the standard components and services and governance that they can safely build additional capabilities, digital capabilities that they want to serve their specific customer needs or the specific business needs. So that actually has taken shape and is showing great results. People are excited about the fact that hey, they don't have to wait on the queue on the digital team or IT team to get their own things; they are able to invest themselves with resources that is able to leverage generative AI capabilities or just standard cloud platform to build additional applications on top of it. We like to call it our building blocks of digital across Avnet.

If you ask me this six, seven years ago, no, I actually wasn't even thinking of taking up the role of a CIO that quickly with Avnet. But it was definitely an honor to be part of a great company, a long-time company, 103 years old, great team that I have in IT and digital. The roadmap getting us to where we are started when the pandemic hit. When business is struggling, we recognized an increased need of automation and driving digital transformation across the organizations, but we also recognized the challenges that the business is facing at that time. So what we ended up doing is that we continue to drive reductions in operations support, year-on-year reductions in operations support, so that we can free up funds to do our own skunk work. So you know, we always like to say that business or shadow IT do skunk works; this is IT doing skunk works. While we talk about it, the idea behind it is that we need to be able to show small success across the organizations in some of the things that we can do. So we identify an area that we can leverage. I don't even remember what specific initiative that is in the digital realm, but I believe it's a data platform that serves a particular business need in quoting. It's a small additional capability that helps in our quoting environment that provides them instantaneous insight into product availabilities as well as pricing competitiveness, etc., and they are able to have access to it at their fingertips. That success breeds more success. And doing that for a few quarters, suddenly people recognize that hey, look, there's some great things that is happening there, and the entire company didn't even realize that there is something going on in that space. That is how it led to an overall strategic roadmap from a digital standpoint that led us to where we are today, and we continue with that innovative mindset today because everything that we do, we start small, we show success with the business, and then we allow the business to come back and tell us the value that they believe they can derive from this solution or this capability. A very recent one is leveraging generative AI. One of our vertical market business units wanted to build a knowledge base that they can share across the organizations to allow people to figure out what can be done from, let's say, an EV battery or a building of a drone. And those information leads them to okay, here are the different white papers, a potential bill of materials that allows them to put this together and present them as a kit to their customer, etc., etc. So again, continue with that innovative approach used to be the playbook, but that small success led to the overall enterprise roadmap. And in fact, what we just announced this week to the entire senior leadership across the organization during our kickoff meeting for the year is that digital now is cutting across the enterprise strategic priorities, the new enterprise strategy that we just rolled out this week.

My CEO loves to talk about how proud he is that IT is always there and allowing the business to lead the strategy, but IT is there to enable every single digital capability necessary for the business. I am very happy with the positioning because I don't feel that we need to lead anything from that standpoint, but we are happy that the business recognizes that they get to lead it, they get to own the benefits and the returns of what we can deliver for them to their customers. I'll take it any time.

You know, if I were to look back in my 30 years of career, the one thing that I felt served me well is the opportunity that I have had in working in different countries across the globe. Over that time period, I think I worked in eight countries, not that many companies, but eight different countries, taking up different roles, in many cases really creating new roles that I feel is critical for the business at that point in time. The reason I'm bringing that up is that hey, don't be afraid of taking up new challenges. I know it's daunting. I know moving to a packing up and moving to a new country, taking up a new job is a daunting thought, but I can assure you that breaking through that fear and taking that up is going to be gratifying. And looking back like I do today, that has helped me tremendously through my career. Second thing is don't stick to what we know. Continue to learn and lead. Continue to learn and lead. But before you do that, because of my experience, the diversity that I have had in living and working in multiple countries, I realized that listening first is so important. So listen, understand, appreciate the different culture, becoming the connector of the culture, learn from that, and really leading behind that has been serving me well and I think will serve you well as well.

Thanks for having me and thanks for allowing me to share some of my experience. Really enjoyed the conversation. Like you said at the beginning, it goes very fast.