Distribution Outlook 2024: Q&A With Fusion's CRO, Luke LeSaffre

Despite excess supply and varying demand plaguing distributors in 2023, the new year marks an opportune time for customers to assess and activate a strategic approach to navigate market conditions. Fusion Worldwide’s Chief Revenue Officer, Luke LeSaffre, sits down with Supply Chain Connect to discuss the outlook for 2024. 

Here are some key takeaways:

• A moderately bullish approach to business in 2024 is key to navigating the current electronic component landscape.  
• Prioritizing innovative solutions for customers is essential to deliver results no matter the market conditions. 
• Opportunities relating to system-level components are expected to increase this year. 
• Uncertainty in the global economy is the greatest risk in 2024. 
• The military and aviation, computing, and automotive industries will likely see the most growth based on trends in the market.

Q: How bullish/bearish are you for business in 2024, and why?

A: As we reflect on the supply and demand landscape of 2023, we look ahead to the next year through a wider lens for our business and intend to be moderately bullish with our approach. When we expand the picture, we are looking at the supply and demand fluctuations of the current landscape—which overall shows how supply is abundant, and demand is weak—and the long-term drivers that will carry into early 2024.

This current imbalance, combined with the outlook for inventory digestion in 2024, results in a moderately bullish year for business. 

Q: What is your capital investment priority in 2024? (e.g. inventory expansion, digital marketplace, new product categories, new end markets, etc.)

A: We are always investing in new ways to improve our business and go above and beyond to add value to our customers' supply chains. For the new year, this means we are focused on the digital marketplace. We are set to launch an e-commerce platform to serve a broader array of customers in new markets while providing existing customers improved ways to engage with Fusion Worldwide.

This project is three years in the making, and we are now activating its capabilities to engage with customers in a whole new way to leverage its capabilities.

Q: What is the most significant business opportunity for you in 2024?

A: In addition to launching our e-commerce platform, we see 2024 oriented toward system-level commodity products as compared to board-level semiconductors. Given what we expect to be a strong year for computing (a product category Fusion has historically done very well with), we should be in a position to weather what will probably be a somewhat challenging year for standard ICs and semiconductors. 

Q: What is the most significant risk you are facing in 2024?

A: There is a degree of uncertainty around the global economy. We’re seeing a lot of demand weakness everywhere but the U.S., including Germany and China. The U.S. may have avoided a recession altogether, but there is some question as to how long growth will persist. Given the state of interest rates, worsening geopolitical trends, and the open question of whether current growth is just the result of a COVID-era hangover, the bigger picture has gotten worse in 2023.

Our most significant risk in the coming year is the same risk we constantly face in this business when navigating a tumultuous landscape—creating stability in a market that is always moving. 

Q: Which end market segments (automotive, aviation, communications, computing, industrial, military, etc.) do you think will provide the strongest growth opportunities in 2024 and beyond?

A: Military and aviation are significant areas for growth with the recent geopolitical events. Demand for hardware to support the ongoing conflicts is tremendous. Although well-documented, structural shortfalls within the industry make it difficult to penetrate, we’re still making significant investments in these segments because we expect growth. 2024 will also be a big year for computing, which has been challenging for the last two years.

AI is a major part of that, but 2024 is also shaping up to be a better year due to typical cycles of technology upgrades and refreshes. automotive will be challenging in the short term, but we intend to devote a good amount of time to it, because of long-term opportunities. 2024 is a muted outlook but one that we think we’ll recover from quickly.