Why Working with an IDEA Member is a Great Idea

Have you ever seen an independent electronic components distributor touting its affiliation with a group called IDEA and wondered what that meant? What’s the big idea behind IDEA – and why should you care?

IDEA is the Independent Distributors of Electronics Association. This is a non-profit trade association whose mission is to enhance the quality of electronic products and services in the independent market, and to standardize the techniques and methods used to test and screen parts. Before IDEA was formed in 2003, each distributor had to rely on its own collected information and experiences while inspecting products for non conformance. Since its inception, IDEA has worked with quality leaders from many distributors to create the first reference manual of industry best practices and recommendations for inspecting and testing electronic components in the independent market.

This “standard,” Acceptability of Electronic Components Distributed in the Open Market, was updated earlier this year with the latest industry information (IDEA-STD-1010-B). STD-1010-B offers hundreds of new photos that help explain testing techniques, in addition to more than 400 example photos of acceptable versus nonconformance parts. This detailed electronic component inspection criteria, differentiated by product and package type, gives inspectors an enhanced ability to detect suspect parts from any region of the globe. In addition, the standard gives detailed provisions for managing test service providers and advanced inspection techniques. Any electronic component distributor can purchase copies online, and would be wise to do so, and follow its recommended guidelines.

Converge goes a step beyond simply following the recommended IDEA guidelines; we are also an IDEA member. Companies are accepted into membership only after meeting a long list of requirements and receiving a confirmation by the IDEA board of directors, which is comprised of a peer group. It is important to note that not every company that applies will be accepted. The standards are high.

This means that when you work with an IDEA member, you are guaranteed that the company, among other requirements:

• Maintains a demonstrated, sophisticated, and continually improving Quality Management System (QMS).

• Has incorporated IDEA-STD-1010: Acceptability of Electronic Components Distributed in the Open Market into its QMS.

• Holds at a minimum both ISO 9001 and ANSI/ESD S20.20 certifications.

• Maintains product liability insurance at a minimum of $1 million per incident and $2 million aggregate annually.

• Has at least one (1) IDEA-ICE-3000 Certified Professional Inspector at each inspection location around the world. (Converge has more than 30.)

I would hope that those are the kinds of guarantees in a distribution partner that help supply chain managers sleep better at night. I know I would – especially knowing how many independent distributors there are who are NOT IDEA members. In today’s technology industry, you constantly have to ask yourself: who can you really trust? Working only with IDEA members just might be a great idea.

You can read the full list of IDEA membership requirements on the IDEA website.

Download Free Shortage Market White Paper

Sooner or later, every technology-driven company will face an electronic components shortage. After all, the only predictable thing about the electronics supply chain is that it’s unpredictable. So how can manufacturers keep production lines moving when needed parts are not flowing through the typical distribution channels? That is one of the topics explored in the Converge white paper “Finding Components in a Shortage Market.”

This brief white paper also answers the most common questions about navigating the potential pitfalls of widespread supply chain disruption and allocation, including:

• What are the risks associated with shortages?

• What capabilities should you look for in a shortage inventory partner?

• Is there a way to plan ahead for shortage electronic situations?

If you prefer podcasts to white papers, then listen to our informative conversation with industry expert Scot Hennessey, Converge Director of Sales for the Americas, as he offers insight on “What You Need to Know About a Shortage Market.”

Supply chain disruptions in the electronic components industry may be a reality, but that doesn’t mean they have to derail your business. Partnering with a trusted independent distributor can give your company a significant edge when it comes to procuring shortage electronic parts and protecting your supply chain from unwelcome interruptions.

Seeing Is Believing in the Electronic Components Industry

At Converge, we like to say that seeing is believing in the electronic components industry. For more than 30 years, we have been among the leaders in quality assurance processes for independent distributors – starting with our original 76-point inspection. With each passing year, we further enhance our electronic component inspection and testing capabilities to continue to protect the supply chain from substandard components.

One of the many things that sets Converge apart is that we welcome customers who want to see our quality assurance processes in action. For customers who haven’t had the chance to visit, we have produced a short video that takes you inside one of our inspection facilities to highlight our in-depth quality inspection process. We hope you will take a few minutes to see what makes Converge such a reliable distribution resource:

When it comes to electronic components, it is imperative to verify your supplier’s electronics component inspection process and capabilities. Converge carefully screens all of its suppliers, and we urge our customers to do the same. It is the only way to guarantee the quality and peace of mind that your customers deserve.

Three Ways to Recover Value from Surplus Inventory III

Part Three of Series: Demand Opportunity

Converge offers three valuable ways for manufacturers to recover value from surplus inventory of excess electronic components. In this blog series, we have already learned about the outright buy and consignment options. Now we will take a closer look at the third option, which is taking advantage of our leverage program, also known as “demand” opportunity.

The demand opportunity option is very similar to consignment in that the seller receives the full benefits and expertise of Converge’s market intelligence, operational expertise, and extensive global network. In both arrangements, your company sends its surplus list to Converge and then we work to match the inventory to the demand that exists throughout our network. However, unlike the consignment program, Converge does not take physical possession of the inventory being sold. The products stay with their owners until Converge finds a potential buyer for them. If proposed terms and conditions of a sale are accepted, the products must come to Converge to undergo quality electronic component inspections before sales are finalized and the items are shipped to the buyers. All financial reconciliation and reporting are managed by Converge.

The demand opportunity is ideal for a company that has not previously worked with Converge. Perhaps you would like to evaluate our capabilities and performance on a smaller scale before you consider consignment? We completely understand, which is why we offer this program. Quite frequently, companies who start down this road will switch to the full consignment program as time goes by.

However, there are a few drawbacks to the demand opportunity option that companies should be aware of. Since Converge does not actually have electronics component inventory in our possession, we rely on the accurate descriptions that the sellers provide. Products received by Converge must be in the exact condition expected; otherwise, the status of a pending sale could be compromised. The seller may also be required to provide additional company resources to facilitate the flow of information and approvals during the negotiation phase.

In addition, valuable time (and potentially, money) can be lost in a leveraged transaction, because it takes longer for the product to get from the seller to the buyer. The consignment and electronic parts procurement program does not face these challenges, since Converge has the chance to inspect, sanitize, and prepare inventory for shipping before it is ever remarketed. When consignment products are sold, they can be shipped out the same day, which maximizes value for the seller.

There is no one “best” option for recovering value from surplus inventory. The one you should choose depends on your company’s specific situation. The important thing to remember is that there likely IS value in your surplus parts, even if you can’t use them. So before you scrap your surplus, give Converge a call. We will help you find a solution to recover the most value in the right amount of time.

If you missed Part One: The Outright Buy or Part Two: Consignment of this series, you can read them now.

Three Ways to Recover Value from Surplus Inventory II

Part Two of Series: Consignment

In our last post, we discussed the benefits of using an outright buy option to recover value from your surplus inventory, which includes finding someone to buy obsolete parts. Now let’s take a look at the consignment option. To simplify, we will start with a comparison.

In the last decade, consignment shops have become a popular way for families to resell expensive and unused child-rearing gear that they no longer need. The family leaves the unneeded items in the consignment shop. If the store is able to sell the items, the family receives a percentage of the sale. Buyers are delighted to find valuable items for less than retail cost, and the family is pleased to recover value from the unneeded items with almost no effort.

Consignment of surplus electronic components works very much the same way. If you find yourself with excess electronic parts, but you don’t think that you can maximize its value through an outright sale, you can consign the products to Converge. We receive, reconcile, inspect, and stage the products, while your company retains ownership, complete visibility, and control of each line item – down to the resale price if you choose. Then our commodity experts put their market intelligence to work for you, scanning the globe for buyers who may need the parts you have in surplus. When we find a buyer, we take care of the details. Then your company gets the majority of the proceeds, which enables you to recover a significant amount of value from items that otherwise may have been scrapped.

The consignment option is very similar to Converge’s third option for recovering value from surplus: taking advantage of our leverage program, also known as “demand” opportunity. What is the major difference between the two, and which option would work best for your company? We hope to answer those questions in Part Three of this Series: Consignment. 

If you missed Part One: The Outright Buy you can read it now.

Three Ways to Recover Value from Surplus Inventory I

Part One of Series: The Outright Buy

Every OEM and contract manufacturer has been down the same road at least once: you order the parts needed to build a specific product and then the plan unexpectedly goes off track. The forecasts change, the customer cancels, newer technology is introduced…whatever the reason, you are suddenly left with surplus inventory that you can no longer utilize. Now it becomes a liability on your books. The challenge is, what is the best way to handle the situation?

You can try to return surplus inventory and obsolete electronics to the manufacturer or franchise distributor, and you will likely end up paying a restocking fee if you are able to return it at all. If that doesn’t work, you can check to see if the materials can be used by another internal project. If those two options don’t pan out, some companies will resign themselves to taking a loss on the inventory and go into scrap mode.

OR…you could partner with an independent distributor like Converge to consider other possibilities. Converge offers three different ways for companies to recover value from surplus inventory: outright buy, consignment, and our leverage model, also known as “demand” opportunity. In this blog series, we will explain and differentiate these options, starting with the outright buy.

In an outright buy, a manufacturer sends Converge its surplus inventory list. Converge’s commodity managers review the list, determine what the products are worth on the current market, and then may make an offer to buy the inventory outright. This is the perfect option for a company that wants to unload the surplus immediately. Keep in mind that if you are an OEM that owns surplus sitting in a contract manufacturer’s warehouse, you are probably paying storage costs for that inventory.

In addition, there is the potential for depreciating technology due to price erosion and product freshness factors. So the longer the inventory sits, the more money you stand to lose. With the outright buy option, Converge takes the excess electronics component inventory out of your hands and off your books, and you are free to focus on other matters.

One drawback of the outright buy is that your product mix may be moderately liquid, which could negatively affect your buyout amount. If your independent distribution partner is unsure about the return on investment due to market conditions, product condition, date code, or other risk factors, the buyout offer will be lower than if the risk were being shared by both parties. If this is the case, risk-sharing options such as consignment or demand opportunity might be a better choice for recovering value from your surplus. We will explore the topics of consignment in part two and demand opportunity in part three of this series.

What to Look for in a Surplus Remarketing Partner

In our last blog post, we talked about the need to mitigate surplus risk by partnering with an independent distributor to remarket your excess electronics components inventory. But there are many different kinds of “remarketing partners” out there – and not all of them are reputable.

When looking for an independent distributor to help you remarket surplus inventory on the open market, there are several key qualities that you should check for:

Size. Independent distributors come in many shapes and sizes. The bigger the company, the more “tribal knowledge” you will have working to your advantage. Size does matter when it comes to recovering the most value for your inventory.

Commodity managers. Generally speaking, commodity managers go hand in hand with size. A small, independent distributor will probably not have experts who are solely dedicated to studying one particular commodity’s global activities; larger ones probably will. Commodity managers devote their time to assembling complete market intelligence around one or two specific commodities and can provide a wealth of in-depth market knowledge to the traders working on your behalf. 

Around-the-clock workforce. We operate in a global economy, not one that ends at 5 p.m. in the time zone that we happen to live in. When it is 5 p.m. here, the workday is just beginning somewhere else in the world. A global independent distributor will have commodity managers working around the clock in different regions of the world, which enables that distributor to find a solution for your surplus parts in as little time as possible. In addition, because an independent distributor with an around-the-clock workforce never stops working, it never misses a beat when it comes to knowing about world events that may affect the market.

The need to remarket surplus inventory will always exist, whether there is a surplus market or a stable market. Despite their own best-laid plans, manufacturers will end up with more parts than they need for the current demand of their products. It is simply the cost of doing business in an unpredictable world. The good news is that solutions do exist to help mitigate surplus inventory costs, no matter which market currently prevails. By partnering with an independent electronics distributor you trust, your company will be better prepared to handle any surplus market challenges that come along.        

Mitigating Risk in a Surplus Market

In the electronic components industry, there is no debate over the definition of “surplus” inventory. However, what kind of inventory should be classified as surplus has evolved a bit over the last ten years. Formerly, electronic components were considered surplus after they had been in inventory for at least six to twelve months. Now, due to the rapidly changing pace of modern technology, parts can be considered surplus the same day they arrive. At that point, the owner must rush to “move” the surplus inventory before the parts become obsolete electronics. With new technology continually being introduced, the velocity of turning surplus electronic components into recovered value is critical. It is more important than ever to move quickly to try to recapture value from the parts you no longer need.

There are substantial financial risks for any company that finds itself with surplus inventory in a surplus market. A manufacturer could lose millions of dollars, depending on the volume of surplus inventory it owns and the original purchase price, or established cost of the components. The majority of the time, the company will not be getting that entire established cost amount back.

It is possible to find a buyer for surplus parts - and someone to buy obsolete parts - in a saturated market with the help of an expert with vast market knowledge and global connections. A reputable independent electronics distributor mitigates risk and expense in a surplus market by helping manufacturers recover value from their surplus inventory. Of course, one must understand that the resale price may be less than the original price, but it is better to recover some of the loss on surplus inventory than to sit on it indefinitely. Timing is a vital part of the remarketing process. When it comes to surplus inventory, the company that goes to market with a specific type of component first is likely to see a better-value return than are the companies that remarket the same component in the days that follow.

So what qualities should you look for when choosing a surplus remarketing partner? Good question. We will give you some important tips in our next post. Stay tuned!

And remember – if you don’t want to miss a post, you can follow @market_insights on Twitter for the latest news from Converge.

Vendor Screening and Management Is a Must

There is a common misnomer in the electronic components distribution market. Just because an independent electronic component distributor operates in the open market, it doesn’t mean that they have an “open” policy when it comes to procuring parts. Although most technology-driven companies go to the open market to solve shortage electronic component or surplus electronic component problems at some point, some still think that independents simply click a button to purchase parts from anywhere in cyberspace – even from questionable sources. In fact, for most reputable independent distributors, nothing could be further from the truth.

At Converge, we have a very strict vendor screening and management program. Our commodity managers carefully screen each potential new supplier before any approved purchase is made. In most cases, this process qualifies the vendor as a potential sourcing partner, confirming that it is a legitimate company in good standing. Converge will not do business with vendors that fail this initial screening process.

Once a vendor makes it past our initial screening, it is registered as a new supplier in the Converge database. As an added layer of protection, every supplier is assigned a “new vendor” status for a probationary period. Throughout this probation, each supplier is graded on product quality history, performance and service fulfillment, stock supply/demand, and order history information. This information is visible on each vendor’s “supplier scorecard,” along with details about every Converge transaction with that supplier. After the probationary period, each supplier is assigned a status based on its performance. Thereafter, every supplier continues to be carefully monitored and could have its status upgraded or downgraded at any time.

Every time we purchase parts from any supplier, Converge utilizes a comprehensive 76-point electronic component inspection process to identify potential problems or concerns well in advance, before product ever reaches the customer. And we continue to make significant capital investments in the most advanced component testing equipment available, such as X-ray and decapsulation equipment. We leave no stone unturned when it comes to preventing substandard components from entering the supply stream.

Before your company works with an independent distributor, be sure to ask how they vet their suppliers. While vendor screening and management shouldn’t be an electronics distributor’s only line of defense, it should always be its first line of defense. In the open market, trustworthy distribution partners will go to great lengths to ensure safe and successful transactions for their customers. Your company should not accept anything less.

Why a Global Footprint?

It seems that most independent electronic components distributors want to claim they have a “global footprint.” But you may need to read the fine print to determine what that footprint really includes. Sometimes a “global” electronics distributor has a sales office in only one country besides its home base. That may qualify as international, but it probably isn’t exactly what you envision when you think about working with a global distribution partner.

True global reach is something you should seek in an independent electronic components distribution partner for the following reasons:

-When you have a shortage situation, a distributor with a network of thousands of trusted sources around the world increases your chance of finding even the most highly allocated component quickly and effectively.

-When you have surplus inventory, a distributor with visibility into industry wide usage of electronic components in every global region helps you find the right buyer in the right time frame.

-A truly global sales and electronic parts procurement partner never sleeps. So, an independent distributor with 24/7 coverage can find solutions to your needs as soon as they become available in any region of the world. It can also provide around-the-clock support.

-A global distributor has a thorough understanding of local cultures, customers, languages, and international transaction regulations, which means you don’t have to worry about anything but your core mission.

Converge is a true global independent distributor. We have three headquarter offices located in each of the world’s major trading regions: Peabody, Massachusetts (the Americas); Amsterdam, Netherlands (Europe, the Middle East, and Africa); and Singapore (Asia Pacific). Converge also has experienced electronic components traders, commodity managers, and logistics teams stationed at additional locations around the world.

Whether your company needs to recover value from surplus inventory or source hard-to-find parts to keep your production moving, you don’t want your solutions to be limited to a certain region of the world. You want the world at your fingertips – and a global independent distributor can give it to you.

Expert Engineers: Another Piece in the Quality Puzzle

At Converge, we are committed to ensuring the quality of every single electronic component lot that passes through our facility.

Recently, we have been using the Converge blog to explain some of the ways that we do this, from our advanced quality testing methods to our vendor screening and management program. Now I’d like to tell you about one more extremely important layer of defense: our expert electronic component engineers.

  

Every inventory lot that comes through Converge facilities undergoes a 76-point inspection process. This begins with our front line inspectors who check to make sure that the part numbers, manufacturer, quantity, date codes, and physical condition are exactly what were ordered. Then, the lots are further inspected by a skilled component engineer. Our engineers are the expert eyes that spot even the tiniest details that would qualify a component as “substandard.” They are a critical part of our quality process and line of defense.  

That is why Converge only hires certified engineers with a bachelor’s degree and three years of field experience, or an associate’s degree with five years of field experience. Upon joining Converge, they undergo an extensive training process that includes learning the detailed steps in the Converge electronic component inspection process from one of our tenured component engineers.

Among other credential and training requirements, Converge engineers are required to:

-Pass the IDEA-ICE-3000 Certified Professional Inspector exam within 90 days of hire, and be recertified every two years
-Be certified to ANSI ESD 20.20 – 2007 standards
-Attend ongoing Counterfeit Electronic Component Avoidance Workshops (CCAW), which highlight the latest counterfeiting trends in the marketplace
-Attend ongoing Measurement System Analysis training

In addition, many of our non-engineer inspectors go through the same training and certifications. In fact, Converge has more IDEA-ICE 3000 certified inspectors than any other IDEA member company – a fact that makes us proud. Every certification, every training course, and every electronic component engineer is a significant investment for our company. But we feel that these are investments that must be made in order to protect our customers’ supply chains and deliver the quality they expect and the peace of mind they deserve.

The Value of Commodity Management

One of the things that sets Converge apart from other independent distributors is the fact that we employ a full team of commodity managers providing around-the-clock global coverage for our customers. Not just one or two…but thirteen! Most independent electronics distributors do not have even one.

In the electronic component market, a commodity is defined as a type of component whose price is subject to supply and demand. Each commodity is considered interchangeable; the market treats it as equivalent no matter who produces it. The commodities that Converge tracks, buys, and sells in the independent electronic components market typically include, but are not limited to, CPUs and chipsets, memory, LCDs, integrated circuits (ICs), and passives.

A commodity manager is responsible for closely tracking the performance of a specific set of commodities in the marketplace, similar to the role of a broker in the stock market. This ensures that, in the ever-changing world of electronic components, a commodity manager can help determine the best time to buy and sell that particular commodity. Our commodity managers monitor market prices, analyze market trends, and provide Converge traders with real-time access to the information they need to make informed decisions.

How does this help our customers? Well, our traders buy and sell to serve our customers’ needs. If you have excess memory that needs to be unloaded, our memory commodity managers will put their market intelligence to work for you to obtain the best value for that product. Not only do they know what that commodity is selling for, and whether it may be affected by an excess or shortage situation, but they also know what companies are using that particular product and might want to buy it.

Conversely, in a shortage market, when you cannot obtain the parts you need from a contracted electronics distributor, our commodity managers can not only source the electronic components but also have the negotiating power to get the best price.

Converge has the broadest, deepest, and most dependable network of technology manufacturers and suppliers in the world. Those relationships do not come easily; they are the result of providing quality service for more than thirty years in the industry.

So what is the value of working with an independent distributor that has commodity managers? Competitive advantage. Our market intelligence will help you make better, more reliable, and profitable trading decisions as well as help minimize your risk in the supply chain more effectively around the globe.

When It Comes to Excess Inventory, Help Me Help You

Tips on how to extract the most value from excess electronic components inventory, special to the Converge blog from veteran trader Ed Graham

Even though it has been 15 years since “Jerry Maguire” was released in the theaters, I still hear lines being quoted from the movie all the time. You know the ones I’m talking about: “You had me at hello,” “Show me the money,” and of course, “Did you know that the human head weighs eight pounds?”

One memorable line from that movie has always jumped out at me, because it so succinctly says what I frequently wish I could tell my customers in my role as a trader of electronic components. It’s when sports agent Jerry Maguire begs his star client, Rod Tidwell, “Help me help you.”

Help me help you. I couldn’t have said it better myself!

As a trader at Converge, who deals primarily with excess electronics components inventory, my job is to help companies find buyers for inventory they no longer need. The longer these parts sit idly, the more investment companies stand to lose on them. When a company comes to me with an excess problem and I begin to evaluate their inventory resale possibilities, I can’t tell you how often I think, “Wow. If I had only known about this three months ago, when this part was in shortage, I could have found them a great price.” I can almost guarantee that the company has been sitting on the excess for longer than three months. They just took a long time to get around to telling me about it.

So here’s my insider tip. If you want to make the most out of your relationship with an independent electronics distributor, the key word is “relationship.” Build one. If you think back to “Jerry Maguire,” Jerry and Rod Tidwell end up forming a relationship through having constant contact. And ultimately, it is that relationship and an understanding of one another’s needs that enables them to help each other.

Getting to know your inventory as early in the game as possible will allow us to help you get the most return on your excess products. Talk to us regularly. Tell us about your excess inventory as soon as you know you have it. Not when you must get rid of it…but when you could get rid of it, if the price is right. Then we can put our market intelligence to work for you on an ongoing basis, instead of just when there’s urgency. And we can help you make educated decisions about when market conditions will be most favorable for you to sell. 

Whether you’re looking for an outright buy solution, a consignment program a demand opportunity, or something in between, I can find the resale solution that is most beneficial for your bottom line.

I’m always happy to help you find a solution for your excess inventory. It’s what I do. But if you tell me sooner rather than later, I might be able to get you top dollar for those parts, instead of pennies on the dollar. Help me help you.

X-ray Vision: Leading the Way in Electronic Component Supply Chain Quality Initiatives

At Converge, we are always looking to enhance our inspection and testing capabilities with technology.

As an established independent electronics distributor, it is a necessity for us to take extra care with components originating from the open market.

Recently, I have read several articles citing estimates that up to 10 percent of global technology products are counterfeit, equating to roughly $27 billion in product sales worldwide. Numbers like that can be frightening to electronics manufacturers, who could face serious damage to both their reputation and their bottom line if they unknowingly purchase counterfeit or substandard components on the open market. I can certainly understand their concerns. In fact, this is precisely why Converge takes quality control so seriously.

To ensure that every part we sell is 100 percent authentic, Converge has invested in the most advanced technologies available for electronic component inspection and testing services. Not only do our highly trained, in-house component engineers microscopically inspect a sampling of every part number purchased by date/lot code, we also use X-ray and decapsulation machines to view inside components to eliminate potential non-conformance. Much like an X-ray exam you might have at the hospital, our X-ray machine allows us to verify that everything that should be inside a component is there and intact.

If we need an even closer look, we can remove the top of a component with our “decap” machine. This gives us a magnified view of the interior of the circuit and enables us to confirm that the die matches the component, when needed. Not having to outsource these inspection services also helps us provide customers with faster delivery TATs.

Converge is one of only a handful of electronics distributors in the world who have this kind of testing capability in-house. These state-of-the-art machines require a significant financial investment and a highly trained internal inspection team.

I believe that our willingness to continually invest in technology and detection methods demonstrates Converge’s commitment to preventing counterfeit parts from making it into our supply chain. And after 30 years as an independent component distributor, we have the quality record to back that claim.

Counterfeiters continue to get more sophisticated, so electronic component distributors simply have to “up our game.” Converge has done it, and we will continue to use our “X-ray vision” to lead the way in the quality initiatives of the future.

Broker vs. Independent Distributor: What’s the Difference?

Once upon a time, if you needed to buy electronic components on the open market, there was only one way to get them. You had to work with a broker.

In the beginning, most brokers of electronic parts fit the classic definition of the word and didn’t offer much beyond that: They arranged transactions between buyers and sellers and earned commissions from the sales. A broker could be a large firm or a guy in a basement with only a handful of inexpensive parts stocked as inventory. A broker simply knew how to get the parts that you needed, and that’s what made his services valuable.

Times have definitely changed.

A new type of parts broker was born in the 1990s, when the founders of Converge coined the phrase “independent electronics distributor.” Although the company started out as an electronic components broker in 1980, it evolved into much more than that.

The founders identified the need to differentiate the new services that Converge provided from those of the “average” parts broker. The “independent distributor” distinction caught on immediately and is now widely used throughout the industry.

While brokers and independent distributors both help buyers and sellers find each other, there are significant differences between them. Five main points of distinction include:

1. Global footprint. Independent distributors have infrastructure (in addition to sales offices) sprinkled around the globe. This enables them to provide full end-to-end service — from warehousing to packing to shipping — for customers almost anywhere in the world.
2.  Robust quality programs. This is an important differentiator. Counterfeiters grow more sophisticated every day. The average broker does not have the capability to inspect and test the parts that it sells. Conversely, an independent distributor invests in capital test equipment, staff education, and internal engineers, who conduct rigorous electronic component inspections to ensure the authenticity of every component.
3. High industry standards. I’m not trying to say that the “average” broker doesn’t have standards. However, independent distributors (at least the ones that want to be taken seriously) are required to have them. Most aim to join industry trade organizations, such as the Independent Distributors of Electronics Association (IDEA), which has stringent membership requirements. These IDEA standards set the bar high on everything from the certifications that independent distributors must obtain to the amount of product liability insurance they must carry. When you work with an IDEA member, you are assured that you are working with an electronic components distributor that has dotted every “i” and crossed every “t.” 
4. Market Intelligence. Due to its global footprint and vast network of industry connections, an independent distributor can provide valuable insight into what is transpiring in the market. Instead of simply finding or selling the parts that a client needs, an independent distributor can help the client make educated, long-term decisions based on market dynamics prior to each transaction. 
5. Reliability. Since independent distributors offer more resources than do brokers, they are able to offer higher levels of service, quality, and liability protection to their customers. If there is a problem with a shipment that you purchase, you can trust that an independent distributor will be there to remedy the issue. Small brokers cannot make that same guarantee.

In the world of electronic components, brokers and independent distributors may share some of the same functions, but they are far from being the same. At Converge, we have worked hard for the past 30 years to set ourselves apart. We hope that our customers — and now you — will notice the difference. 

For more information on the differences between an independent distributor and a broker, please visit our website.

Japan's Earthquake Impacts Supply Chain

On March 11, 2011, Japan experienced a 9.0-magnitude earthquake and tsunami.

As we continue to monitor the situation, we have been in ongoing contact with suppliers located in this region to gauge any impact to their businesses and the supply chain. 

Suppliers with operations in Japan have indicated that they may experience delays.

Arrow Electronics has compiled a list of official supplier statements on their website. To view the latest updates please visit www.Arrow.com

At Converge, our thoughts go out to those individuals affected by this terrible tragedy.

Converge: A Recipe for Success in the Global Electronics Industry

Don’t you love the business success stories that start with two regular guys in an unlikely location with little money and a far-fetched dream?

We all know the story about the two guys who started a computer company in a garage back in 1975; the accomplishments of Bill Gates and Paul Allen have become the stuff of IT legends. In more recent digital-era folklore, there is the tale of a kid named Mark Zuckerberg and what he and a few of his college buddies developed in a Harvard dorm room (it was a little social media application known today as Facebook). There was also the Stanford dorm room start-up that turned into Google. But do you know the story about the global electronics company that started with two guys in a kitchen?

Back in the early seventies, two guys named Henry Bertolon and Jeff Filmore worked together as Radio Shack salesmen at a store in a Boston-area strip mall. There, they started to tinker with early versions of computers and fell in love with technology. In 1980, Bertolon convinced Filmore that there was a huge market for helping technology-driven companies to fill shortage electronic component shortages. Using Filmore’s kitchen, a small line of credit from a bank, and $22,000 from the sale of Bertolon’s house, they started a company called New England Circuit Sales. Their mission was to deliver “quality products on time.” By the end of the year, the small Beverly, Massachusetts, start-up was making headway.

Bertolon and Filmore were visionaries in the field of electronic component distribution. Early on, they had recognized that one of the biggest problems facing value-added resellers was getting hard-to-find electronic components delivered on time. They realized that sometimes manufacturers needed to be able to go outside of their partnered network to order necessary parts, whether it was due to a shortage, a need for faster delivery, or just to save money. In 1994, the pair coined the term “independent distribution” and changed the company’s name to NECX Exchange. To Bertolon and Filmore, there was a clear distinction between an independent electronics distributor and a broker. Brokers did not inventory large amounts of product, guarantee internal quality inspections, or offer any high-touch services — but independent distributors did, and built customer loyalty in the process. NECX continued to build a large network of global clients.

In the 1990s, NECX established additional offices overseas, including headquarters in Amsterdam and Singapore, in order to better serve its global client list. Even after Filmore and Bertolon sold their shares of the business in the late nineties, it has continued to grow exponentially. Of course with growth, often comes change. Over the years, NECX was sold and renamed as Converge. New segments of the company have been developed to provide reverse supply chain solutions and IT asset disposition, both of which are essential components of running successful technology-driven companies. Most recently, Converge was acquired by Arrow Electronics in June 2010, and is now under the umbrella of a Fortune 200 corporation.

One thing that has not changed is that Converge has continued to stand out as a leader in the global electronics industry. Over the past three decades, Converge has established the broadest, deepest, and most dependable electronic components distribution network in the world. While some companies currently are talking a lot about their new quality measures and advances in counterfeiting techniques, Converge has been leading the way in quality control for well over five years. Visionary … once again.

In 2010, Converge celebrated the thirtieth anniversary of its founding — that great “two guys in a kitchen” moment. Thinking back on everything that has happened since then, it’s almost hard to not be amazed. Who knew that helping companies find the right electronic components at the right time could turn into this? However, every business that starts with a great story also starts with identifying a real need in the marketplace and finding a way to fill it while meeting customers’ needs. That’s what Converge has done. As long as that need exists, we will continue to provide our customers with up-front, proactive, and responsive service, and an unwavering commitment to quality. It is a continued recipe for success.

Converge China offices closed for Chinese New Year.

Converge’s China offices will be closed from February 2^nd through February 8^th in observance and celebration of the Chinese New Year. All China offices will re-open for regular business on February 9, 2011. Happy New Year!