It has a leading cloud-based platform for excess and obsolete (E&O) inventory. In 2012, Avnet and Components Direct entered in a strategic relationship. Components Direct is the exclusive channel for Avnet's factory authorized excess and end-of-life components. Components Direct is headquartered in Milpitas, CA with locations in the US and Asia.
Compared to leading industry giants, such as Element14 and RS Components, Components Direct, currently, doesn't have a detailed menu showcasing listed products, at least not on the home page, as yet. One hopes that'll make an appearance soon.
Speaking on the mission of Components Direct, Anne Ting, executive VP, Marketing said: "Components Direct is the premier authorized distributor for excess and end-of-life electronic components. We are the only company working directly with manufacturers and their franchised distributors to offer 100 percent guaranteed traceable E&O components as well as technology services to combat counterfeit components and other gray market activity.
"For our supplier partners, we enable them to put excess product back into the control of an authorized source, as opposed to the gray market. For buyers, we provide them with a secure, authorized one-stop shop for excess, obsolete and unsold factory components."
Combating gray market
How important is it to combat the gray market? Why will this endeavor stop/lessen gray market activity?
According to Ting, the gray market is a serious and growing problem. As early as 2008, a study by KPMG and the Alliance for Gray Market and Counterfeit Abatement (AGMA) stated that as much as $58 billion of technology products were passing through the gray market, and the problem has only gotten worse.
The gray market is rampant throughout all industries, with everyone from engineers, to procurement professionals and consumers impacted negatively when the products they purchase are advertised as new and authentic, but in reality could be used, refurbished or even worse, counterfeit.
In fact, a 2012 study by market research firm IHS found that over 12 million counterfeit electronics and semiconductor components have entered the distribution chain since 2007, with 57 percent of all counterfeit parts obsolete or end-of-life components. Many of these parts make their way into mission-critical industries, such as defense and aerospace, where a malfunctioning counterfeit part can mean the difference between life and death.
While provisions in the 2012 National Defense Authorization Act have enabled the government and trade groups to make some progress towards regulating the supply chain to ensure that components are only sourced directly from the manufacturers or their franchised distributors, the problem has not abated. The Act empowers the federal government to hold contractors financially responsible for replacing counterfeit products.
This, together with other changes, puts more responsibility on suppliers of electronic component to have risk mitigation procedures in place. The issue is become more topical and the industry must act in order to comply with the new legislation.
Components Direct takes this problem seriously, and provides supplier insights and tools to help combat gray market activity. In a recent study we conducted for a leading semiconductor supplier of both analog and digital devices, we discovered that over 124 million units of their product were floating in the gray market across 6,500 plus part numbers.
Over 70 percent of the products were found in Asia, and 20 percent also appeared in both North America and EMEA. The product age spanned many years with date codes of less than one year accounting for 22 percent of their gray market product. A further 5 percent had date codes over 11 years, demonstrating that whether you were an OEM looking for the newest product, or a military sub-contractor looking for obsolete components, no end customer is immune to the presence of unauthorized product.
Components Direct’s technology tools and services track gray market activity and provide suppliers with unprecedented visibility to their product leakage in the gray market by part number, region, data code etc. This data enables our suppliers to trace leakage in their supply chain and lessen potential unauthorized product from getting into the gray market.
Additionally, Components Direct provides suppliers and buyers with a secure, factory authorized channel for selling or purchasing 100 percent guaranteed traceable components. "We only sell products that come directly with manufacturers or their franchised distributors and all our products are inventoried in an ESD 20.20 and ISO 9001 certified facility," said Ting.
As an extension of the manufacturer, Components Direct provides the supply chain buyer with complete confidence and peace of mind that all products originate directly from the manufacturer and have been properly stored, handled and packaged. Sourcing from an authorized source like Components Direct eliminates the risks surrounding product quality, reliability and liability.
Storing all types of components
Does Components Direct store all types of components? What if there are specific requirements, especially from military?
Components Direct carries a variety of 100 percent direct traceable components along with warranty and engineering support from manufacturer for the majority of our products. Components Direct is contractually authorized to sell products from leading manufacturers including Atmel, IDT, International Rectifier, Marvell, Maxim, Micrel, Nvidia, PMC-Sierra, Xilinx, and more. All of Components Direct’s products are inventoried in an ESD 20.20 and ISO 9001 certified warehouse.
With mission-critical industries, such as the military, projects often have a long lifecycle and will require much older date code, obsolete, or end-of-life products. Buyers are seeking a supplier with ability to hold parts for processing in future. Components Direct meets their needs, as we are the authorized end-of-life components distributor for many leading suppliers and can satisfy the specific requirements buyers are looking for, even for components with date codes that are over 10 years old. Components Direct can also fulfill the needs of the military and other longer life cycle customers by holding inventory in certified warehouses.
And, how does Components Direct compare to ECIAAuthorized.com? Ting added that Components Direct is a factory authorized distributor of excess and end-of-life electronic components. "We are contractually authorized by several leading manufacturers to distribute their product to a broad customer base. Our products are available to buy directly through our sales team or online through our e-commerce vehicle, componentsdirect.com.
"Our e-commerce vehicle offers buyers of electronic components the ability to search for parts, download datasheets, compare products and buy online. We also operate an ESD and ISO 9001 certified warehouse to store and ship our products to our customers. ECIAAuthoirized.com advertises inventory listings online on behalf of authorized sellers or distributors, but is not contractually authorized by the manufacturer to directly sell its products."
ECIAAuthorized occupies a role in the value chain by referring buyers, part number by part number, to the online storefronts of several sellers, including componentsdirect.com!
How many listed suppliers does Components Direct have? What about those from Asia/other regions?
Components Direct provides buyers with a secure, authorized one-stop shop to purchase electronic components from over 150 manufacturers. It is contractually authorized to sell products from leading manufacturers including Atmel, IDT, International Rectifier, Marvell, Maxim, Micrel, Nvidia, PMC-Sierra, Xilinx, etc and continue to add to the linecard monthly.
All products come directly from the original manufacturer or their franchised distributor and are 100 percent guaranteed traceable. We are authorized by these manufacturers to sell their product on a global scale to customers both within America, Europe and Asia.
And, what are the tools and services used to track product leakage into the secondary market?
Components Direct works exclusively with several leading suppliers to protect their brands from gray market activity, and prevent market erosion by proactively monitoring the market and recovering revenue which previously would have been consumed by brokers. Our tools and services actively track a manufacturer’s product leakage into the gray market by part, region and date code. Armed with this market intelligence, our supplier customers are better able to combat counterfeit and gray market activity.
Asian suppliers missing?
Why does there seem to be lack of suppliers from the Asian region -- China, Taiwan and Hong Kong - within ComponentsDirect?
According to Anne Ting: "It is not a specific strategy, but more of a matter of focus than anything else. As Components Direct grows its line card, it has focused on the Americas first and then plans to expand to other regions. The company's warehousing and logistics operations are located in Asia, but corporate headquarters and main warehouse are in the US. The company has the capability to support a supplier from Asia as long as the inventory is direct from the manufacturer or its franchised distributor."
Finally, is Components Direct participating at major trade shows, especially in Asia?
Ting noted: "Yes, we participate in select trade shows in the US and also Asia. In Asia, we also co-participate in trade shows with ChinaECnet, a leading online marketing portal for engineers in China."