Balancing Opportunity with Diligence in the Digital World

| March 1, 2016 | 0 Comments
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Business-Balance-300x221E-commerce has literally opened up a world of opportunity for the electronics supply chain. Procurement has become borderless — components can be ordered online from any spot on the globe and fulfilled from the closest or most convenient location. At the same time, many of the challenges that have always dogged the supply chain – such as excess inventory and the risk of counterfeit components – are also expanding with the market. Aligning with diligent supply partners is more important than ever.

Imbalances between supply and demand have only been exacerbated as the electronics supply chain has expanded. Original component manufacturers (OCMs) and distributors invariably find themselves with more inventory they can sell because of customer cancellations, overly optimistic orders and other supply chain disruptions. Online electronics distributor Verical.com, a division of global distributor Arrow Electronics Inc., partners with component makers and other authorized distributors that want to post inventory for sale. “These are the main classifications of our supply partners,” said Dan Schoenfelder, director for supply chain optimization for Verical.com. “We take a number of steps in our business to ensure customers can be confident in what they are buying form Verical.”

Authorized distributors, as franchised sales agents of component suppliers, guarantee the storage, handling, quality and authenticity of the products they sell. Unauthorized distributors – which may manage components in the same way – can’t always extend the same guarantees. Some component makers won’t warrantee parts sold through unauthorized channels. That’s why global online marketplaces such as Verical.com only sell parts from original component makers and other authorized distributors.

Verical has implemented a rigorous vetting process for all its inventory partners. Suppliers enter into contractual agreements outlining the documentation that must accompany components for sale. Typical documents provided by OCMs include component batch or lot numbers; date codes; certificates of compliance (CofC) and trade-related information. “Within our agreements we also ask for the ability to verify an order,” Schoenfelder said. If necessary, Verical wants to be able to confirm a distributor offering parts for sale ordered them from an OCM.

Suppliers must also provide evidence of adherence to quality control standards. For quality control and counterfeit mitigation, Verical has been focusing on the AS6496 (Fraudulent/Counterfeit Electronic Parts: Avoidance, Detection, Mitigation and Disposition – Authorized/Franchised Distribution) standard, Schoenfelder said. “This is one a lot of customers are concerned with regarding counterfeit risk mitigation.”

“We’ve also put in place audit procedures with our inventory sources,”  Schoenfelder added, with elements in the questionnaires that are specific to the source. For example, distributors are asked how they handle counterfeit mitigation and component returns from customers, and whether they quarantine returned parts or make them available for resale.

Verical has adopted a fully digital business model by which its suppliers seamlessly share information. When appropriate, data is compared with other resources within Arrow. Verical then in turn provides that information to its customers 24/7, in real time, through its API.

Visibility is becoming an important partnering criterion as the industry adjusts to the worldwide market. According to the GT Nexus/YouGov study “The State of the Global Supply Chain,” as organizations continue to deal with global suppliers, and take on the challenges of doing so (such as import and export tariffs, weather-related challenges, geopolitical risk, and lack of visibility associated with a complex supply chain), keeping that risk in-check becomes paramount. “The companies most successful at managing their global supply networks have made investments in technology to improve visibility and better address the fluid nature of global markets,” the report concludes.

“[Verical’s] API provides real-time pricing availability as well as other data elements – date codes, lot codes and other precompliance information; and we’ll provide an API kit to any customer that requests it,” Schoenfelder said. For customers requiring a more sophisticated integration, Verical can deliver real-time information via an API or other information sharing technology which can be integrated into any company’s supply chain system.

Verical.com’s pricing is also transparent, providing a benefit for both buyers and sellers. Unauthorized distributors have a greater level of price flexibility than authorized distributors who work with their suppliers to main profitable price points. Verical works with its inventory providers in advance to establish an agreeable price. That price is listed on the site and is not subject to offline negotiation. This ensures there are no surprises for either seller or buyer.

Verical’s e-commerce model enables the distributor to fulfill orders from an OCM, authorized distributor or Arrow Electronics warehouse anywhere in the world. Verical can also fulfill large or small volume orders with equal ease. Verical.com maintains $10 billion worth of inventory throughout its global supply network.

“The way  we have chosen to go to market as an online marketplace provides a significant advantage over competitors that operate in a highly regional manner,” said Schoenfelder. “The model that Verical has developed fulfills customer orders as seamlessly as any distributor has been able to achieve on a global scale.”

“When customers understand the level of detail we pay to the selection of sources and the security and level of information we share on Verical.com, they become very comfortable with our online business model,” Schoenfelder concluded.

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Category: Smart Purchasing

About the Author ()

Barbara Jorgensen is managing editor of Electronics Purchasing Strategies. She can be reached at barbara.jorgensen@epsnewsonline.com

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