Top Independent Distributors A quest for quAlity


The independent distribution channel continues to evolve as many of the top independent distributors move well beyond being just a source of supply during times of component shortages


By Gina Roos


Although the existence of the independent distribution channel grew out of the need to support electronic component buyers during times of tight supply and shortages, top independent distributors are evolving their business strategies to include inventorymanagement services including vendormanaged inventory (VMI), consignment and excess inventorymanagement.


They also have implemented tough supplier validation processes,


and in some cases,made some big investments in counterfeit detection and testing equipment and labs.


Leading independent distributors don't justwant to be the go-to


guys during times of component shortages, theywant to develop long-termrelationshipswith their customers. And oneway to do that is by focusing on quality, driven in part by rising incidents of


1. AdvAncedmP


AdvancedMP Technology offers three key services -- component distribution, vendormanaged inventory, and excess inventory management. But one of the distributor's biggest concerns is quality in the component distribution channel.


"Quality is a bigger part of any operation nowadays and Advanced


MP has putmore focus on that," said Jens Gamperl, vice president of sales, AdvancedMP Technology, San Clemente, Calif.


"Anything that comes into AdvancedMP goes through very strict


screening regardless if it's coming fromanOEM, franchised distributor or factory direct -- they all go through the same documented IDEA-STD-1010-A process for inspection," said Kamran Malek, AdvancedMP's vice president ofmarketing." In addition, all AdvancedMPQC inspectors are certified by the Independent Distributors of Electronics Association (IDEA).


Malek says AdvancedMP hadmore than 80 audits last year and


"passed all of themwith flying colors." Like any other supplier, independent distributors have to be audited in order to get on an OEMor EMS company's approved vendor list (AVL).


Malek attributes a lot of the company's growth to newmanagement 2. smith & AssociAtes A newquality initiative is the biggest focus for Smith&Associates


this year. The distributor launched SmithSecure to expand its quality processes throughout the supply chain.


The SmithSecure programconsists of four parts -- SecureSource,


SecureService, SecureTech and SecureTest. Echoing the sentiment ofmost top independent distributors, Smith


&Associates says quality is first,which has translated into big investments in counterfeit detection and avoidance. The distributor has state-of-the-art in-house testing labs at each of its three shipping and logistics hubs in Houston, Texas; Hong Kong and Amsterdam. Testing capabilities include dimensional statistics, digital imagery, stringent product verification, functional testing, and comparisons withmanufacturer specifications.


26 | June 2011


counterfeiting in the channel particularlywhen components are in short supply.


The independent channel has been undergoing amajor


transformation over the past several years, decidedly segmenting the channel into two distinct groups -- independent distributors that focus on building a quality supply chain and building customer relationships, and brokers.


What separates leading independent distributors fromthe broker


channel is plenty -- they typically have quality processes in place, in- house component inspection and testing and invite customers on a regular basis to do on-site supplier audits.


Here'swhat the top 5 independent distributors have to say about their industry and their company goals.


Advanced MP at a glance Headquarters:


2010 revenues: # of employees:


San Clemente, Calif. $382 million 272


% of value-added sales: 23% Key expansions in 2010: Expanded in France, Germany, Shenzhen, Brazil & Mexico Key challenges in 2011: Product availability, extended lead times and counterfeit components


in Asia, and newoffices in Shanghai, Hong Kong and Shenzhen. The distributor also expanded in Germany, France, Brazil and


Mexico in 2010, and earlier this year, opened a location in India. "Our focus is nowin Korea, the Philippines, and Taiwan, andwe plan to open onemore Chinese location close to Beijing," addedMalek.


Component shortages also fueled growth in 2010. "We haven't had


shortages for eight years and last yearwas the first timewe saw critical shortages for some passive parts," saidMalek.


As for shortages this year,Malek's primary concern is Japan's


infrastructure problems due to the earthquake and tsunami inMarch. "The industry is not going to get back to normal for severalmore months because power is a big issue. Power generation and blackouts are going to affect production this summer," he said.


Gamperl says growth this yearwill be driven by newtechnologies and components in renewable energy and LED lighting.


Smith & Associates at a glance Headquarters:


2010 revenues: # of employees:


Houston, Tex. $380 million 307


% of value-added sales: N/A Key expansions in 2010: Launched SmithSecure quality initiative and completed its counterfeit detection facility upgrade


Key challenges in 2011: Economic climate, competition and quality assurance In addition to the back-end testing, the distributor doesmost of its


screening on the front end through its vendor rating program. "We have narrowed our vendor base down tomore reliable, audited vendors that providemore traceability," saidMarc Barnhill, chief trading officer, Smith&Associates, Houston, Tex.


Still, the distributor's top job is sourcing hard-to-find parts for its customers. "That is the true value of any independent -- getting


p22


www.electronics-sourcing.com


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