Audit your independent electronics distributor
By James Carbone -- Purchasing, 9/11/2008 2:00:00 AM
Many semiconductor industry analysts say that cutbacks in capital expenditures by semiconductor suppliers and the trend of outsourcing chip production to foundries will result in tighter supply and higher semiconductor prices next year.
If supply does tighten and some parts are in short supply, more buyers will likely buy semiconductors from independent electronics distributors. Savvy buyers need to check out the capabilities and quality processes of independent distributors before they buy from them. Some have robust quality and traceability processes and guarantee the integrity of parts. Others do not.
Independent distributors are often blamed for proliferating counterfeit or substandard parts in the supply chain. Independent distributors acknowledge that counterfeit parts have been sold, but the problem in an issue for the entire electronics industry. They also note that franchise distributors have also unwittingly sold counterfeit parts.
To address the issue, many independents have adopted the Independent Distributors Electronics Association's (IDEA) 1010 quality inspection standard which recommends ways for distributors to identify, inspect and test parts. IDEA also offers an inspector certification exam for independent distributors.
Some distributors say the 1010 standard has already helped to identify "suspect" parts.
"The new techniques adopted allowed us to detect a shipment of Agilent HDMP-2689 optical transceivers that we think was refurbished and remarked," says Steve Calabria, CEO of PC-Component in Folsom, Calif. "We stopped this shipment from entering the supply channel. We now require all of our eligible quality inspectors to become IDEA certified."
Buyers should make sure their independent distributors update whatever inspection techniques they use because counterfeiters develop new ways to remark parts. For instance, acetone is often used to show if parts have been re-marked.
"Counterfeiters are now using ultraviolet ovens to rename parts," says Carleton Dufoe, vice president of trade of independent electronics distributor Fusion in Andover, Mass. "Acetone cannot rub off the new markings. The new ovens do away with the acetone test."
Dufoe also says traceability of parts is important to guarantee part integrity. He says Fusion has 95% traceability of parts. "We trace the parts back to the manufacturer, the plant where the part was made and the date it was made," he says. "On the ones we can't trace, it is usually because the products are older and the suppliers are out of business."
Dufoe says that counterfeiting is a big issue in the industry and many buyers are leery of buying from independent distributors. "We invite them to audit us," he says. "Quality engineers at a company will visit and audit us. They talk to purchasing, our warehouse people, quality people and our CEO and ask us all the same questions. Sometimes in separate rooms."
Dufoe says they check quality processes, how Fusion handles inbound and outbound shipments, traceability and non conforming parts. Fusion will also audit its top suppliers in an effort to guarantee parts integrity. Fusion has also reduced its number of approved suppliers from 5,500 to 500, in part, for quality reasons. Approved means anyone in purchasing at Fusion can buy from them.
While guaranteeing the integrity of parts is crucial, some independent electronics distributors are also offering services to OEMs and electronics manufacturing services providers in to products. Case in point: Converge in Peabody, Mass.
"Our services business has been off the charts," says Frank Cavallaro, CEO of Converge. Converge offers reverse logistics and IT asset disposition services. Such services include data erasure, recycling and remarketing.
"We are seeing lots of interest in the high-tech asset recovery space, taking products back from the field that are defective, testing, certifying them and doing a replenishment out to the field or a warranty capture and a settlement price," says Cavallaro, adding that providing such services helps Converge increase its value to buyers and differentiate itself from franchised distributors.
"Franchise distributors represent a brand, drive demand and drive IP value in terms of design wins," says Cavallaro. "We don't do that. We are brand agnostic."
He says Converge is a service based company. "We handle spot shortages, discontinued products, last time buys and event driven cost savings. We help buyers with cost in a specific geography, for a specific customer or for a product type."
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