RoHS has been costly to distributors
By Jim Carbone, Executive Editor, Electronics, Purchasing Magazine -- Purchasing, 6/1/2006 2:00:00 AM
The European Union’s Restriction of Hazardous Substances (RoHS) directive goes into effect next month and the law has been costly to the electronics supply chain, including distributors. Many distributors had to re-design systems to improve the quality of data and to accommodate the new RoHS part numbers. They had had to make changes to their warehouses and work more closely with customers on RoHS issues.
“RoHS has impacted the information systems and the inventories of distributors,” says Roy Vallee, CEO of Avnet. “Many of the new compliant products have new part numbers. For compliant products that don’t have new manufacturer part numbers, distributors have to track the dates or lot codes that identify the parts as being compliant,” he says.
In addition, distributors have had to assist customers with RoHS. “Many customers look at us as their primary source of supply,” says Vallee. “We want to be able to take their existing bills of materials and help them identify which parts are non compliant, what are acceptable substitutes. It has been a big deal.”
However, RoHS has also been an opportunity for distributors as well. “We decided RoHS can’t just be a cost to our business,” says Paul Tallentire, president of catalog distributor Newark InOne in Chicago. “We’ve used it as a platform to help customers and grow our business. Newark InOne offered customers various free services such as RoHS bill of material scrubbing and email notification when non-RoHS parts became obsolete because they transitioned to compliance, or if the parts were just phased out by the part maker.
One key issue for distributors is that they will continue to carry compliant and non compliant parts. While many manufacturers have phased out non-compliant parts, others have not. Some manufacturers say they will continue to make both versions because they have customers in industries that are exempt from RoHS such as communications, medical and defense. Some manufacturers say they have no immediate plans to phase out non compliant products. That means distributors will have to carry both kinds of parts indefinitely.
“If they want compliant parts we will sell them. If they want non compliant parts we’ll sell those,” says Mark Larson, president of distributor Digi-Key in Thief River Falls, Minn.
However, Larson says prices may increase for non-compliant products. “Maybe down the road as non-compliant parts become less available there will be supply problems and there will be a premium price for them,” he says.
Other distributors see tighter supply and higher prices for non-compliant products as well.
“We are seeing the beginning stages of that,” says Craig Conrad, senior vice president, chief marketing & strategic planning officer for TTI in Fort Worth, Texas. “We have heard 40-50% price increases being talked about for leaded product.”
Higher prices will motivate those companies that have not transitioned to RoHS compliant products to do so.
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