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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.

12 comments on “Names Can Be Phony, Too

  1. Nemos
    July 21, 2011

    About Independent Distributors

    Because I have read  lately a lot of articles and comments with a topic relative to independent distributors I have a messy image about them and a few questions:

    What are the characteristics that do a distributor to be named as an independent distributor?

    Why to be an independent distributor?

    What is the opposite of an independent distributor?

     

     

     

     

     

     

     

  2. itguyphil
    July 21, 2011

    That's a really good question Nemos.

    I thought all distributors are 'Independent'. I thought it was because they were not tied to any particular products or clients independently & are free to sell to anyone.

  3. Eldredge
    July 22, 2011

    I assume (dangerous, I know) that at least one motivation to use the term 'authorized' is assurance that product obtained through that channel is not counterfeit. If the perception is, then, that the independent channels pose more risk, some sort of certification or program to assure customers of part authenticity may be very helpful.

  4. MarkofWorldMicro
    July 22, 2011

    Great questions…The supply chain in its historical format has only allowed for three paths to obtain product- factory direct, franchise distribution, and brokers. This methodology has worked well but the industry has matured and as a result a new class of distributors has emerged to fill in the gaps that these three sourcing channels cannot provide. A simple summary would be to say that Independent Distributors provide solutions for the 20% of parts that cause 80% of the headaches. This includes the shortages, obsoletes, excess disposition, but also includes vendor consolidation, value engineering, low cost replacement analysis, and other services!

    Your second question regarding the characteristics needed to be an Ind. Disty is interesting. While there are many certifications and qualifications that can help demonstrate proficiency and a committment to quality, I think the thing that seperates independent distributors the most is that they have  a complete understanding of the supply chain, and as a result are able to tailor custom solutions to solve those difficult supply chain issues. Staying in that independent distribution category frees them from any contractual obligations to component manufacturers that might prevent them from delivering creative and outside the box solutions.

    I hope this sheds some light on your questions and I would to hear from others on whether you think independent distribution can really add value to the supply chain!

  5. Jay_Bond
    July 22, 2011

    This is a great article that brings up very interesting points. No matter how many times you want to rename a product or company, it's still the same component. I think independent distributors definitely have a place in the supply chain. The fact that they are not labeled a certain way is a formality that doesn't change the fact that they carry the same quality products. There should be some sort of certification that might help ease buyer’s minds. As for counterfeits, we all know they have ways of slipping into the supply chain even with the best of authorized distributors.

  6. Tim Votapka
    July 22, 2011

    Great article on independents. The supply chain has certainly evolved and we have to be clear on its various segments, particularly in quality-critical components. My advice – ask the distributor for its certifications. Some will make them readily available on their sites along with links to key certifiying bodies including IDEA and one you didn't mention – ERAI. Here's the link on that group:

    http://www.erai.com/

     

  7. Dawn Gluskin
    July 22, 2011

    Hi Mark,

    It is great to see another independent on here fighting the good fight.  I like the angle you took with it — excellent points.  Thanks for sharing your thoughts on this important subject.

    -Dawn Gluskin

    SolTec Electronics

  8. Kunmi
    July 22, 2011

    In agreement with you, independent distributors have a great place in the supply chain. They are of great value in the market place because of packaging and distribution cost to major manufacturers. It is cheaper for the big companies to use them and they make the products more readily available and cheaper to the consumer. Name or no name they carry the same quality product of the same component and value. My suggestion is to verify their certification and to perform quality control and quality assurance of the products.

    kunmi

  9. ElectronicSupplyChainSolutions
    July 22, 2011

     

    Mark,

    You make a great argument and I love the analogy to unauthorized beef. In our world of politically correctness you are correct that everyone is looking to reinvent themselves as they keep moving the cheese. We should however beware of those who can buy their way to prominence. I recently had a customer confide in me that he was duped by the credentials of his supplier. As he explained being an   ERAI member required his supplier to pay the subscription and not be reported. He bought military parts from an IDEA member only to find less than one third of their membership had an AS9120 certificate. We are a member of the ERAI who post possible suspect parts and have the highest regard for the work the IDEA administration staff has done for the betterment of their independent members however, certification  of its members by itself may provide a layer of assurance that may not protect the customer. Attending a book reading on religion does not make someone a strict practitioner.

    As a member of the SAE G-19 for the past two years I have worked with members of IDEA, ERAI, test houses, independent and franchised distributors. Prime contractors, contract manufactures and those from legal and governmental agencies are also in attendance. The committee is chaired by members of NASA as well as people outside the USA.

    The purpose and goal of all involved is to safeguard and protect the supply chain throughout the world. Our focus has been to adopt a standard that meet the needs of all who participate in the electronic supply chain. The knee jerk reaction by many companies to only buy from franchised or authorized I believe will change. The ISO9001 and AS9120 third party certification is currently governed by ANAB. These quality standards do not address counterfeiting and having one does not guarantee safety.

    My company was one of the first to achieve AS9120 and after 8 aerospace audits we are still formulating the extent of what we shall do in house as inspection and what shall be 3rd party to mitigate counterfeits. My hope is that the new SAE standard that addresses the requirements for independent distribution shall be embraced by the electronics community and lessen the name labels you discussed.

     

    Your term certified distributor may become a reality as we look to ANAB to oversee third party certification of both quality and counterfeit risk mitigation.

    PS. A special thanks to my fellow G-19 members and all those who have contributed in the battle to combatcounterfeits.

    Matthew Heaphy III

    ESCS President

  10. FLYINGSCOT
    July 23, 2011

    I am not a big fan of name changing just for the sake of it.  As a consumer I get tired of the same old fluff sold under a different name. I know people in the business of selling approved pre-owned certified cars and quite frankly these can be a joke.  However there is definitely a good case for using approved/authorized/certified etc. distributors when that product absolutely must work in an application.  Examples could be found in medical, aerospace or public transport applications.  In less critical applications independents play a great role in offering the customer better choice, flexibility and keener pricing which overall is a good thing for the consumer.

  11. Anna Young
    July 23, 2011

    Dawn, An old English adage says: “You don't throw out the baby with the bath water.” Somewhere along the way the electronics supply chain seems to have agreed it is better to ignore this maxim in the rush towards being “perfect.” Independent distributors, or whatever name they are called, obviously provide a service. Why don't we review those services and use it then keep an eye on the faults. There are obviously faults with any other group within the industry but I don't see anyone saying, for instance, that franchised distributors need to go away because OEMs can buy directly from component makers!

  12. JADEN
    July 25, 2011

    There are names and there is a name, names could faked while a name is certified.  Independent pose more risk except if authorise or certify is attached.

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