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Meet the New Breed of Independent Distributor

When the US Senate Armed Services Committee took up the issue of counterfeit parts entering the military supply chain in 2012 the independent distribution (ID) world changed significantly. Since then many IDs have chosen to invest time and resources to break away from the traditional “open market/brokering” system they relied on in the past in favor of traceable sources.

Why? With so many original equipment manufacturers (OEM) and contract manufacturers (CM) demanding traceability, IDs responded to the trend. In a very short time period, a large percentage of ID revenue now comes from fully traceable sources, including factories, franchise lines, and authorized lines.

Many IDs now pre-identify how products were sourced at the time of the quote — whether open market or full trace. If needed, this allows the parties to collaborate on further screening of open market items with additional quality control checks, including in-house X-ray, X-ray fluorescence (XRF), and decapsulation testing (DeCap).

Today, many IDs have diversified into a blend of open market and franchise lines or have invested heavily in engineering departments to provide value-added services to support their customer's needs. For those independents with a majority of their revenue generated by new design services, the addition of franchise lines becomes a natural byproduct. This allows manufacturers/lines to be involved as their products are being spec'd in. For such IDs with a trusted design center staffed with knowledgeable engineers, the biggest challenge may be keeping up with demand. After all, most engineers prefer to talk to other engineers.

This new brand of independent distributor is fast and resourceful, and can often fill gaps where traditional franchise falls flat. Many have adopted a philosophy of “vendor neutrality,” a position that truly recognizes the best possible solution for each specific customer. This added flexibility of today's ID creates a strong industry for cost savings as migration moves away from the Tier 1 lines that large franchise players are contractually obligated to push.

Regardless of how the industry changes, many OEMs and CMs are choosing to invest in partnerships with today's progressive IDs. This allows them to enjoy new products, value, and much needed engineering/design services that many offer.

Let us know what role the ID plays in your supply chain in the comments section below.

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