Editor's Note: This column originally appeared in the May 2012 issue of SMT Magazine.
The cold calls never seem to stop. You have a stack of line cards on your desk thicker than the extended version of War and Peace. Then there’s always those creepy, overly friendly and persistent e-mails from a distributor you talked to six months ago who just won’t get the hint. The amount of unwanted correspondence and solicitations purchasing professionals get on a daily basis is enough to issue a restraining order for stalking. Whatever it may be, the non-stop onslaught of marketing and begging for business seems go on forever when it comes to the amount of independent distributors within the electronics manufacturing industry and buyers should choose wisely.
It’s apparent why all types of OEM and EMS providers choose the crème de la crème of franchised component distribution--Arrow, Avnet, and Future Electronic--to ratchet in fair pricing, favorable schedules, in-house stores, engineering support, and quality solid product. But what about the other guys? The smaller, niche-serving distributors who fill in the gaps when the big boys drop the ball?
Whatever the case may be, at some point you’ve done enough homework to form a viable group of “go to” distributors for all types of sourcing needs. Every company has a different approval process. Some will add a new supplier at the drop of a hat and others take careful measures to ensure the integrity of the supplier fits their quality objectives. So, how well do you know your supplier? I pose this question because I constantly see new distributors popping up and claiming tons of industry accolades, including quality certifications and thousands of lines of stocking inventory. In my experience, doing some quick online investigating and asking the proper questions can save you a world of potential supply chain disasters.
Two words can grossly change how you look at a new supplier--Google Earth. Recently, we were looking at adding a new supplier to our approved vendor list (AVL), but quickly changed our mind after inputting the company address into Google Earth and confirming they were misrepresenting who they were. The prospective supplier had boasted to me that he had over 30,000 line items of stock on hand. Google Earth told us a different story. The company address was legitimate…but it was an apartment complex.
Google Earth gives you the ability to view the actual satellite image closely to confirm the company is really what it’s presenting itself to be, showing building size and location. We’ve also found many times, and this is my personal favorite, a location showing up as “UPS Store.” I am guessing that’s for the distributor on the go who only has enough time to switch out packing slips and forgo any QA inspections.
Now, to claim that any distributor working out of their home or apartment has less integrity than a company working out of an actual office/warehouse would be insulting and untrue. A few very good home-based brokers do have key relationships that afford them an industry niche not requiring high-level inspection equipment, racks of inventory, or supporting staff. They typically trade direct from authorized or factory channels and are usually transparent with their customer base about their capabilities.
But, I’ve also seen the flip-side of the coin--larger stocking distributors with nice buildings and tons of employees that deliver highly questionable product. There are well over 1,000 independent distributors in North America actively supplying parts today and buyers need to be savvy when it comes to truly understanding who they are dealing with. Below are a few areas that should be examined closely when adding a new, independent supplier.
Obtain Industry References
Even newer companies should be able to produce decent references. If the supplier you are looking to do business with has any level of credibility, don’t just take their word for it; ask for a list of OEM or EMS customers that can confirm a high level of quality, service, and support. If they aren’t willing to produce references, consider that a red flag.
Obtain Quality Documents
If the supplier is claiming to be ISO 9001, ANSI S20.20, or AS9120 certified, ask for an actual copy of their certifications. Be wary of companies claiming to be “ISO-compliant.” As many of us know, getting ISO certified and maintaining that certification, as well as following procedure on a daily basis, is not an easy task. I find it hard to believe organizations would be compliant to the strictness of ISO standards if not being held accountable by an outside audit company on an annual basis. You should also request a copy of their Quality Management System for review to make sure what they are preaching is documented.
If you are dealing with an independent that does not have a documented anti-counterfeit procedure in place, I would consider that extremely risky. If they do have such a procedure, ask for a copy and make sure it meets your inspection and screening objectives.
Scheduled Site Audit
Nothing beats seeing your supplier’s facility firsthand. By visiting and inspecting in person, one can see a supplier’s quality team in action and get an excellent understanding of that organization’s level of expertise and capabilities in supporting needs properly.
Get it in Writing
Negotiating for payment and warranty terms are hugely important in today’s buying market. Make sure you are asking for a longer return policy in the event of faulty product. Companies who give you a very small window of time for returns are doing that because they don’t have faith in the product or have done little on their end to confirm the integrity of the parts.
Stop Googling Part Numbers
I cringe when I hear stories of buyers putting a part number into Google and using that information for vendor selection. If that is your plan for sourcing obsolete or allocated components, please call me because I have a bridge for sale that you’d be interested in purchasing.
Instead, align yourself with suppliers that can demonstrate how and why they can protect you from receiving substandard product. Just because a company is certified or affiliated with an industry organization doesn’t necessarily mean they have all the answers or are practicing a diligent approach. Set the criteria with your internal quality managers and hold suppliers accountable for those set processes.
The Internet and trading platforms have made it easier for buyers to find new vendors. If a deal seems too good to be true, it probably is. Make sure you are performing a diligent approach when searching and selecting a new supplier for your AVL and hold those suppliers to a standard that has been well thought out and signed off by internal quality engineers and managers.
Christopher Torrioni is president and co-founder of Sensible Micro Corporation, a professional stocking distributor and sourcing partner to hundreds of global OEM and EMS manufacturing companies. He obtained his Bachelor's Degree from the University of Central Florida and brings 11 years of industry knowledge and experience in electronic component supply, market news, procurement pitfalls and quality assurance standards. Torrioni is also a corporate sponsor to the SMTA Tampa Bay Chapter as well as the Tampa Chamber of Commerce and Tampa Bay Technology Forum.