Supply Chain Transparency Aids in Compliance Efforts

| March 3, 2016 | 0 Comments

The digitization of data in the electronics supply chain has led to easier access to electronic components pricing and availability information as well as product data. It also has created a new way for component manufacturers and distributors to provide greater transparency in the supply chain to help buyers support their compliance efforts.

Component vendors through their distributor partners can now give electronic components purchasers access to all kinds of information to fulfill their compliance requirements. These include certificates of compliance for environmental regulations such as the European Union’s RoHS and REACH directives, Dodd-Frank compliance for conflict minerals, anti-counterfeiting procedures and standards, and other government and trade regulations.transparency-business (300x220)

One of the biggest challenges for OEMs is getting component-level information on conflict minerals, rare earth minerals (REEs), and hazardous substances. While this information is required by OEMs, not all suppliers provide the information with every component order, and instead, will often refer customers to their websites that outline their compliance measures.

OEMs must comply with a multitude of global trade and environmental regulations. Depending on their product portfolios, they often have to manage and track the materials content and environmental compliance for hundreds of products that are designed and manufactured worldwide. This means buyers need to collect the data from hundreds, and sometimes, thousands of suppliers, for thousands of parts. As a result, managing compliance, particularly for environmental compliance, has become increasingly complex and time consuming for purchasers.

This is where distributors can step in to help buyers reduce the time it takes to collect the data from their suppliers. By collecting the data, as well as buying the parts, from a single source, it can speed up the time it takes OEMs to aggregate, report and integrate into their internal systems such as ERP or PLM software. However, most distributors would agree there are challenges in trying to police and audit their vendor partners to ease the buyers’ vetting process.

This is where distributors can play a bigger role in helping buyers collect this data. In addition to pricing and inventory information, Verical, for example, provides all relevant attributes around an order including parts details, inventory location, shipping terms, and delivery estimate for every available part. When available, parts also are flagged for environmental compliance such as RoHS or REACH and trade compliance.

Verical also audits its supply partners’ processes to ensure authentic parts. This includes both component manufacturers and authorized distributors. Verical’s supplier contracts include built-in parameters that partners must meet such as a certain level of documentation and quality control processes. All supplier partners must complete a quality survey that includes how they handle counterfeit mitigation.

Verical implemented the auditing process for a couple of reasons – to be transparent and provide as much relevant data to buyers, and to provide a product guarantee to their customers with every transaction.

“Transparency helps facilitate a seamless transaction and provides the confidence that Verical has taken the right steps and that we have the right supplier programs in place,” said Dan Schoenfelder, Verical’s director for supply chain optimization. “We also have a breadth of inventory that saves them from having to go to multiple sources.”

To ensure traceability and supply chain control, Verical does not publish excess inventory from OEMs, electronic manufacturing services companies, or brokers. All of the available parts are 100-percent warrantied and traceable.

Due to counterfeiting issues across the product supply chain and customer concerns with regard to counterfeit risk mitigation, Verical also audits distributor partners on SAE’s AS6496 anti-counterfeiting standard, and maintains the right to audit distributors on processes such as how they handle product returns. Distributors may be asked whether they take returns from customers; whether the parts are made available to the public or if the parts are quarantined. Verical also asks for the authority to check if the distributor ordered those parts from the original components manufacturer. All of these steps deliver additional levels of authenticity to combat counterfeit parts in the supply chain.

Verical also provides 24/7 real-time data sharing via an API that suppliers and customers can integrate into their supply chain systems. In addition to inventory and price data, component orders include other standard data such as batch numbers, date codes, lot numbers, certificates of compliance, and trade compliance such as Export Control Classification Numbers (ECCN) and Harmonized Tariff Schedule (HTS) numbers.

One of the top-down edicts at Verical is that it will only sell traceable components. This means the provenance of the parts track back to the supplier. By auditing its supplier partners, and delivering as much parts data as possible to the buyer, Verical not only can guarantee traceability and authentic parts, it also helps the OEMs speed up and meet their compliance obligations.


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Category: News Analysis

About the Author ()

Gina Roos is executive editor of Electronics Purchasing Strategies. She can be reached at

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