Cool Stuff Being Made: Building the Boeing 777 Jet Airplane

Independent Distributors and Brokers…Villains or Super Heroes?

obsolete parts

Yesterday, one of my sales people contacted a customer.  He dialed the number and I could hear the phone ring.  The sales person introduced himself to a new buyer.  After rattling off his 5 second pitch the buyer asked, “Oh…are you a BROKER?” the sales person replied, “We’re an independent distributor of electronic components certified to ISO 9001:2008 and AS9120A plus CCAP-101 certified for counterfeit avoidance. If you have a list of products that you can no longer get from your regular supplier and we don’t have the part in stock, then, of course we operate as a broker as well.”  “Oh…” said the buyer, “Well send me your information”.
 

 If you are reading this blog post it is likely…

A.  You’re an electronic part buyer or engineer who wonders if brokers and independent distributors are villains or super heroes?

B.  As an independent distributor or broker you also wonder if you are a villain or super hero?

C.  You really like comic books that feature villains and super heroes.

My company services upwards of 1,400 different customers depending on the year and the needs of the market place. I’ve always viewed the people in my company as a group of super heroes.   Here’s the thing.  Our industry is entrenched in the electronic part distribution market place represented by industry associations. One group association, representing franchised and authorized distributors, invests a large amount of capital on marketing and advertising campaigns to create the persona that independent distributors and brokers are villains.

Despite this fact, my highly educated electronic component engineers and buyer customers, shake their heads and tell me that we saved their company a board redesign that would cost $250,000.  That service alone elevates us to super hero status.

…but let’s discuss the villains for a moment. 

Every drama worth it’s entertainment value has at least one really good villain.  In our industry, the villains are the bad people with bad intentions who sell bad parts to good people and good companies.  At least on the surface, that is how the story is told.

Recent villain characters in our industry include the late Shannon Wren, who is reported to have taken his own life, and Stephanie A. McCloskey of VisionTech Components, LLC . Stephanie pled guilty to a federal charge of conspiracy to traffic in counterfeit goods and to commit mail fraud, and she subsequently cooperated with authorities.

As part of her plea agreement, she agreed to forfeit to the government the benefit she received from the scheme, a total of approximately $166,141 in salary she earned as an administrator for VisionTech Components, LLC. and other fines totaling $600,000.

Stephanie was sentenced to 38 months in prison for her role in a scheme in which she and others imported counterfeit integrated circuits from China and Hong Kong and sold hundreds of thousands of them to the U.S. Navy, defense contractors and others, marketing some of these products as “military-grade.” This is the first federal prosecution in a case involving the trafficking of counterfeit integrated circuits. Source http://ow.ly/bab1C

Were Shannon Wren and Stephanie McCloskey super villains out to hurt our military and defense?  Certainly, I’m grateful their operation was stopped. I would be remiss to not acknowledge that the electronic component brokerage business has attracted some very colorful personalities.

The barriers we’ve erected in our business to protect our customers and our company are monumental.  Navigating through an industry where the majority of vendors don’t share our same values has been a challenge.

If independent distributors and brokers want to survive in this business then they need to get educated.  The government is watching closely and can you blame them?  They’ve set up undercover operations and ongoing criminal investigations.

Viewing ourselves as super heroes doesn’t preclude our responsibility to educate our customers.  Any engineer or buyer who decides to purchase parts outside the franchised or OCM market place is making a business decision.  I don’t want to sell to an uninformed buyer.  New customers don’t always understand why they have to sign a Declaration of Intent or Export Compliance.

Transaction times are now extended because we have to perform our due diligence.  No longer can our customers stick their heads in the sand and not know the character and quality of the vendors they are dealing with.

OEM electronic component manufactures discontinue product lines.  Engineers faced with this challenge and working within budget constraints often have no other choice but to procure product from independents.  In the real world of electronic manufacturing, board redesigns are a costly business decision.

A classic scenario presented by one of my very large Fortune 100 customers is the fact they were offered a life time buy from their supplier.  At the time the life time buy was offered, my customer decided not to purchase the product.  As time went by it turns out my customer needed the product after all. Now the product is no longer available from the regular supplier.  My customer ran the numbers and the board redesign will cost over $500,000.  I can’t tell you how many times I’ve heard that story.

I agree with the industry association representing franchised distributors and electronic component manufacturers that buyers should purchase from the original supplier.  Going to the original manufacturer or authorized supplier is always preferred common sense.

What happens when the buyer can’t find the part anymore?  Another statement I’ve heard from prospects before they become customers is “I’ll NEVER buy from you…you’re a broker”.  Then they call a week later asking to place a purchase order.  Hey…we’re here when you need us.

Electronic component buyers and engineers who make a commitment to get training on how to navigate the marketplace will better position themselves to find parts from quality independents.  The best independents have connections and relationships that benefit electronic manufacturers when they need us the most.

Are Independent Distributors and Brokers Villains or Super Heroes?  If you perform your supplier due diligence and educate your purchasing, engineering and inspection team on how to avoid counterfeit and substandard product, then everyone who avoids a costly board redesign will be a super hero.

One last thought…if you purchase electronic components from the open market because they are obsolete or hard-to-find, purchase Discontinued Products Liability Insurance.

Del Mar Electronics Show 2012 Review

Del Mar Electronics Show 2012 Review

Located at the idyllic beach side site of the Del Mar Fair Grounds
in Southern California, The “Del Mar Electronics Show 2012 Review”
is about what attracts Contract Manufacturers (CMs), Original Equipment
Manufacturers (OEMs) and Original Design Manufacturers (ODMs)
to the sunny Southern California trade show every year.

Del Mar Electronics Show Review 2012

Buyers and engineers as well as folks that
were “just browsing”, attended the free show which showcased
what is new and available for anything related to electronic manufacturing.

Attendees and exhibitors gathered to exchange ideas for designs, find companies to assemble and manufacture
products, locate new suppliers, see what is new and
talk to test houses about their capabilities.

I walked the trade show on Wednesday to visit booths and
chat with fellow exhibitors to find out what they do and what types of
products and services they have to offer. As I rounded the
corner at the end of building 3, I came across a booth full
of realistic heads of people created by using 3 dimensional
printing technology.

One of the Highlights of the Del Mar Electronics
Show 2012 Review includes learning more about Rapid
Protoyping and 3D printing.

3D prototyping and printing is used as a design tool,
communication aid and a way of testing form, fit, and
product functionality.

I discovered that ordering a 3 dimensional prototype of a product
before rolling it into production is cost effective and smart.

Also, 3 D printing is flat out cool. I’ve embedded a video below
from 3D Systems showing 3 D printing in action.

The trade show had three buildings filled with exhibitors.
Wednesday, May 2nd, 2012 was busy with attendees walking up
and down the aisles. I can’t say that the show is the busiest I’ve ever attended.

Ron Jiron, President and Mike Rogoff, OEM Account Executive took over on
Thursday at the Del Mar Electronics Show.

I’ve discovered over the years that it isn’t always the quantity
of people that walk up and down the aisles but the quality of the contacts.
It’s such a pleasure to run into the real players in the Southern California region and talk
shop for awhile.

The value of gathering at these types of events can’t be underestimated.

Inland Empire ComponentsDel Mar Electronics Show Review 2012

exhibited because we were anxious to get out of the office and socialize with our fellow electronic industry comrades. Honestly, we haven’t gotten out much over the last 3 – 4 years and it was time to show our faces at the local Del Mar Electronics Show 2012.

I can’t tell you how valuable
it is to meet with current customers face to face and then
have potential new customers say “hey…I didn’t know you
existed”. I guess I need to work on my marketing.

In this Del Mar Electronics Show 2012 Review

I found that The Del Mar Electronics Show 2012 offered
Inland Empire Components the opportunity to meet new buyers and share insights
with current customers.

The Del Mar Electronics Show had several informative seminars and workshops.
The workshops were hosted by exhibitors who provided attendees an opportunity
for a closer look at the benefits, products and services available to buyers
and engineers seeking electronic manufacturing solutions.

Michelle Moore, OEM Account Executive at Inland Empire Components,
attended the Anti-Counterfeiting seminar titled “Counterfeit electronic components
are no longer a threat; they are a reality.”

Attendees learned how the proliferation of counterfeit
components in the electronic manufacturing supply chain has
accelerated over the last 10 years.

According to the speaker, Dr. Bill Cardoso of Creative Electron, Inc.,
“the number of counterfeit incidents for all electronic part types
in the US climbed by 240% from 2005 to 2008*.
Therefore, a well-designed line of defense is
vital to protect you and your customers against
counterfeiters.

Michelle discovered how to leverage the latest tools in the detection and identification
of counterfeit electronic components.

Inland Empire Components recently added an X-Ray Inspection machine to ourX-ray machine
warehouse for inspection of incoming and outgoing electronic components.

The counterfeit seminar reinforced the importance on how inspection personnel and component engineers, can utilize state of the art equipment enabling participants to drastically improve their quality control programs. The seminar focused on utilizing X-ray Inspection, Decapsulation, and Microscopic inspection to perform visual packaging inspection marking permanence and blacktopping tests.

The speaker, Dr. Cardoso, formerly led the Electronic Systems Engineering Department at DOE’s Fermi National Accelerator Laboratory. Dr. Cardoso is on a subcommittee of the G-19 as a subject matter expert on the coming regulation concerning counterfeit component avoidance.

Another hot topic of conversation around the trade show was on electronic manufacturing companies in the United States.  The focus is on bringing manufacturers back to our shores as well as keeping the electronic manufacturers here in America. Having a business in the State of California can be challenging enough, moving manufacturing overseas has turned out to be troublesome because intellectual property laws don’t always harmonize with the United States.  Also, rising costs in Asia (particularily China) is making electronic manufacturers take a closer look at their income statements and balance sheets.

Michele Nash-Hoff, President of ElectroFab Sales, an independent manufacture’s representative agency, wrote a book titled “Can American Manufacturing Be Saved?” 

And, Ted Fogliani of Outsource Manufacturing, Inc. – Made In San Diego titled his seminar “Why aren’t you building your product in San Diego?”.   

Both Ted and Michele Nash-Hoff ask great questions. Michele makes some great points in an exerpt from her book:

Manufacturing is Critical to our National Defense

Manufacturing ensures that the U.S. has a strong industry base to support its national security objectives. We need to preserve out national and homeland security to be able to produce the goods that allow us to defend America.

Manufacturing Supplies Millions of  Jobs

Many may not realize that while the U.S. has lost millions of jobs in manufacturing in the last 20 years, manufacturing jobs are still the foundation of the U.S. economy and the basis for its middle class. Manufacturing provides high-paying  jobs for more than 14 million Americans and creates an additional eight million jobs in related industrial sectors. The five states with the largest manufacturing workforces  are: California, Texas, Ohio, Illinois, and Pennsylvania.   California’s manufacturing workforce of more than 1.5 million is almost the size of the Texas and Illinois manufacturing  workforce combined.

Manufacturing Jobs Pay Higher Wages than Service  Jobs

Manufacturing wages and benefits are approximately 25 percent higher than in non-manufacturing jobs. Manufacturing compensation averages more than $65,000, compared to an average of $53,000 in the remainder of the economy.

Dana Jiron says,

“While others ran off to manufacture in Asia and other countries, Ted put a stake in the ground right in San Diego and set up his successful contract manufacturing company, Outsource Manufacturing, Inc. in 1997. Yep, not every business owner runs screaming for the hills and out of the state.  Some of us love California (well maybe not the politics) and plan to stay strong.”

The Del Mar Electronics Show 2012 Review

concludes with an invitation to visit next year.  No, we have not booked our booth yet, but whether we exhibit or attend, we plan to be there in 2013.

About Inland Empire Components

Established in 1989, Inland Empire Components supports electronic buyers and engineers from OEM, ODM and CM manufacturing service providers.   Electronic manufacturers and distributors utilize our solutions to procure obsolete and diminished supply parts as well as commonly available products. Headquartered in Lake Elsinore, California Inland Empire Components stocks active, passive and electromechanical components from most major part manufactures.

Our commitment to continuing improvement and quality includes certification to ISO 9001:2008 & AS9120A. We are also certified by The Components Technology Institute for Counterfeit Components Avoidance Procedures (CCAP-101).

Inland Empire Components offers a level of quality and service that exceeds the industry’s highest standards. With our local ESD compliant warehouse packed with millions of parts ready to ship today and billions more available from around the globe,  we’re recognized as a preferred vendor to some of the world’s largest OEMs and Electronic Manufacturing Service (EMS) providers.

Contacts

Dana Jiron, Business Development, 951-245-6555 sales@iecsolutions.com

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