Names Can Be Phony, Too

What's in a name? Sometimes, the answer is: "More than we might think." Consider the evolution of names and other terminologies in the world of automobile sales for example. First we had "used cars." Then "pre-owned" and "previously owned." Now, car dealers sell "certified pre-owned cars." Yikes!

Yes, these terms all refer to the same thing: a car that is not fresh off the assembly line and therefore not new. Yet the implicit meaning of each of these terms is different. When people hear the word "used" -- whether referring to a car, furniture, golf clubs, or most anything else -- the initial impression often is that the product would be substandard, damaged, and of questionable value. The seller has to overcome these implicit objections before getting to the specific offering, which may, in fact, be a very good product and a smart buy.

In the minds of most people there's just one alternative to a used car: a new car. That's not the case with pre-owned, previously owned, and certified pre-owned vehicles. The alternative may well be a different pre-owned, previously owned, or certified vehicle.

So, what does this have to do with the supply chain and distribution channel? Again, more than we might think. There's a change underway in electronics distribution channel nomenclature. Organizations formerly called "franchised distributors" are now being referred to as "authorized distributors." In and of itself, you might not think a name change like this would make a difference. But it can when the corollary is that anyone not "authorized" is "unauthorized."

Using this logic, a person who decides to open a hamburger stand not affiliated with the majors (Mickey D's et. al.) is in effect selling unauthorized beef. Seems a bit ludicrous don't you think? Unauthorized is a fear-invoking word. Unauthorized entry is illegal. So are unauthorized charges to a credit account. There's danger and risk implicit in the word.

Hamburger aside, it's not clear to me that the new terminology is serving the interests of the customer within a supply chain context either. The fact is that there are times when the constraints on authorized distributors make it impossible for them to obtain critical components. When that happens, there are only a couple of alternatives: Shut down production or do business with an independent. If the perception is that there's always risk in working with an independent (which, incidentally, I know is not a fact), then shutdown is the only answer, and that's an expensive, counterproductive way to go. I'd be curious to know if that has in fact ever really happened.

A colleague recently gave me pause to think as he pointed out an apparent error in logical thought that had escaped me for a long time. He said: "Authorized distributor is not the opposite of unauthorized distributor!" (Although it’s all too easy for the mind to make that assumption almost immediately.) Taking this a bit further, as an independent distributor, it's also important to me that my current and potential customers understand that "independent" is not the opposite of "authorized." And "independent distributor" and "broker" are not synonymous.

I need my customers to think about this. Some words have taken on meanings that are at best misleading. But it just doesn't follow that "it's risky to do business with an independent distributor." Now, I don't dispute that there may be more of a risk of receiving counterfeit components from an independent distributor than from an authorized distributor. But, let's be clear on this: Authorized is not synonymous with risk-free. I know that counterfeits can enter the supply chain at any point, including authorized channels and even through OEMs.

That's why the words caveat emptor have become so much a part of our collective vocabulary. You just never know. The good news is that when an independent is properly credentialed and vetted, my experience and that of my customers proves that there's no more risk than when purchasing through an authorized distributor. That's a fact if you're dealing with the right kind of independent distributor.

The right independent distributor is a viable link in the supply chain. Manufacturers need to embrace these independents and value them for what they add to the supply chain. Incoming inspection, audited and certified quality inspectors, training and certification for the proper handling of ESD sensitive parts come to mind.

For the record, there are many reliable ways to qualify an independent, among them:

• Is it a member of the Independent Distributors of Electronics Association (IDEA)? If so, then it will already be qualified as "safe." Out of thousands of independent distributors, IDEA currently has a roster of about 35 member companies that have undergone rigorous training regarding standards and ethics.
• Does it have a substantial, quality program?
• Does it have appropriate certifications; e.g., ISO or AS9120?
• How long has it been in business?

On a final note, most of the time, calling someone or something "independent" is usually seen as a positive, but maybe that's not the case in the electronics component distribution business. Do we need to consider a new name for the independent distributors that have met the highest quality standards and are able to be as "risk-free" as franchised or authorized channels? The time may be right for such a review.

How about "Certified Distributor?" Would a formal, perhaps mandatory certification process be a good idea? I'd support that. What do you think the next step should be? I look forward to your comments and suggestions.