June 27, 2012

Independence Day: A Time to Celebrate Independents

On July 4th, Independence Day in the United States, Americans will celebrate their 237th year of independence as a nation. At Converge, we think this aptly named holiday could double as an occasion to celebrate independents … as in independent electronic component distributors. Why celebrate independents? Because the electronic components industry could not survive without them. 

There will always be a need for independent distributors. OEMs and contract manufacturers will always face shortages that could potentially halt production lines. There will always be obsolete electronic components and end-of-life parts that franchise distributors can’t help them procure. And they will always have excess inventory that needs to be remarketed. Without trustworthy independent distribution partners to help them navigate these commonplace supply chain issues, manufacturers would stand to lose significant time and money. This fact has long been known to almost anyone who buys or sells components, but only recently has it started to be acknowledged in the media. 

We have also started to see more articles and industry blog posts that focus on quality process improvements within the independent distribution industry. The Converge blog has long addressed topics such as the value of IDEA standards, strict vendor management policies, and advanced counterfeit detection capabilities. We even produced a video about our 76-point testing and inspection process last fall. But we are delighted to see more widespread recognition of the fact that the independent space has become very quality driven. Every major independent distributor wants to protect the supply chain – and our customers – from counterfeit and substandard parts. 

The industry is also recognizing that an “independent distributor” is not just a “broker.” In March 2011, Converge ran a blog post titled “Broker vs. Independent Distributor: What’s the Difference?” More than a year later, online searches on this topic continue to make it one of our most popular posts. This tells us that component buyers and sellers now realize that there are differences that make one more trustworthy than the other. What are those distinctions? In addition to robust quality programs and high industry standards, our original list included the facts that most independents offer a global footprint, market intelligence, and reliability. We invite you to take a look and let us know if you would add anything to that list. 

This Independence Day, we are proud to celebrate independents and the vital role we play in the electronic components industry. For Converge, it has taken three decades of dedication to build the commodity expertise, vast global network, and stringent quality processes that now make us a respected player in the game. We will continue to build on our quality and service offerings to maintain that respect for decades to come.

June 12, 2012

How to Handle the Rise of Counterfeit Components

If you work in the electronic components industry, you can’t avoid the headlines. Lately it seems as though every news outlet and industry blog is writing about counterfeit components. And for the most part, they all have the same message to deliver: counterfeiting is on the rise. Here are a couple of recent story examples:

  • On May 21st, the U.S. Senate Armed Services Committee released a report on a yearlong investigation into counterfeit parts. The 70-plus-page document revealed that the SASC found approximately 1,800 cases of suspect counterfeit parts that had made their way into the Department of Defense’s supply chain. That translates into more than one million individual suspect parts bound for use in critical military systems.
  • In early May, market research firm IHS released a report stating that the number of counterfeit parts reported in the electronics supply chain reached a record high of 1,363 for 2011. Additionally, IHS predicted that figure to soar even higher in 2012, particularly surrounding counterfeit semiconductors.
These are concerning facts for any component buyer to read. At Converge, we are concerned about the rising counterfeit numbers as well. But we are also concerned about the advice that we read in some of these well-intentioned articles – namely, that the best way to protect your company from counterfeit incidents is to only source parts directly from suppliers or franchise distributors.

In a perfect world, that would be great advice. But the truth is, that is simply not always possible. Independents like Converge exist to help fill the gaps when suppliers or franchise distributors can’t meet current demands. Independents are a necessary part of the electronics supply chain. So really, the advice shouldn’t be to avoid non-franchised distributors, but instead to be selective about which independent distribution partner your company chooses to work with.

While counterfeit components are on the rise, so is the level of quality within the independent distribution market. Industry associations such as IDEA and ERAI continue to raise standards and disseminate better information about known quality issues and high-risk parts. The largest independents continue to invest in state-of-the-art testing and inspection equipment, as well as in teams of highly trained inspectors and component engineers. At Converge, every order must go through a robust 76-point quality inspection before it is shipped to a customer. If our engineers uncover even the smallest discrepancy, they can immediately utilize in-house advanced testing techniques such as X-ray and decapsulation for further verification. These processes – like our resolve to keep substandard and counterfeit parts out of the supply chain – have been in place for years. And our resulting record on counterfeit detection is stellar.

So how should your company handle these headlines about the rise of counterfeit components? Do your homework before choosing a distribution partner – whether franchised or independent – and make sure that it has robust quality processes and testing capabilities in place. Visit its facility to be sure. Don’t take anyone’s word for it.

The rising counterfeit problem is not because of the independent distribution industry as a whole; rather, it is made possible by the willingness of any manufacturer or contractor to source parts from any unvetted distributor.