EDN: Electronics supply chain, heal thyself: How industry leaders inadvertently enable the counterfeit parts market October 20, 2009 No Comments
Press release: White Paper Advisory: “The Real Solution to Fake Parts” No Comments
Verical’s John Brown, Chris Cookson to Present White Paper to Members of Alliance for Gray Market and Counterfeit Abatement
- Available today, white paper helps manufacturers combat counterfeit electronics components
- Advances supply chain integrity for shortage purchasing and excess inventory sales
- Download free white paper at http://bit.ly/counterfeitwhitepaper
SAN FRANCISCO — October 20, 2009 — The high tech supply chain is more vulnerable to counterfeit components than ever before. Counterfeiting is just too easy and too profitable to stop. With increasingly sophisticated criminals, the only way to protect the supply chain is through tools, technology and new thinking about industrial aftermarkets.
In its new white paper, Verical, Inc., the Electronic Components Marketplace, looks at the risks counterfeit electronic components pose to global high technology manufacturing and to the overall global economy. To help successfully protect against those risks, the paper addresses the size and scope of the problem, the types and causes of counterfeiting, and finally, ways to defend the supply chain.
John Brown, Verical co-founder and vice president of marketing and strategy, and Chris Cookson, the company’s vice president of supply chain and operations, will present the white paper at the quarterly membership meeting of the Alliance for Gray Market and Counterfeit Abatement (AGMA) to be held October 21–22, 2009, in Sunnyvale, California.
The release of the Verical white paper coincides with the production launch of the company’s electronic components marketplace (see http://bit.ly/Verical). Designed precisely to serve global high tech manufacturers and distributors of electronic components, the Verical Marketplace uses information and technology to create a unique pedigree scoring system for component parts available in its catalog at www.verical.com.
What: “The Real Solution to Fake Parts: Securing Supply Chains through Data Transparency and Better Market Design” white paper
Who: Shortage buyers and excess sellers of electronic components for the global high technology manufacturing industry
Why: The rise of counterfeiting in recent years has been astounding. The pain reaches in to all corners of the economy, and high technology manufacturing is no exception. Counterfeit electronic components can be found in all areas of the high tech chain, from basic light switches and games to advanced medical scanners and telecommunications infrastructure. As electronic components find their way into more and more parts of modern life, the risk of counterfeits will threaten economic growth and consumer safety the world over. For the industry to successfully protect against this risk, we must understand its causes and be aware of how these parts find their way into the legitimate supply chain.
How: Download this free white paper at http://bit.ly/counterfeitwhitepaper.
Users who read “The Real Solution to Fake Parts: Securing Supply Chains through Data Transparency and Better Market Design” will learn:
- statistics on counterfeiting, as compiled by government and industry organizations;
- trends that have created the current counterfeit crisis;
- various forms of counterfeit components; and
- ways to protect the supply chain against the introduction of counterfeit components.
The Verical Marketplace is available today at www.verical.com. For more information on Verical, Inc., please visit Company Overview, Newsroom or call 415.281.3866. For additional perspectives, please visit and subscribe to the Verical blog, The Electronic Components Source at http://blog.verical.com/, and follow Verical on Twitter at @Verical.
Resources
News release: Verical Launches Electronic Components Marketplace, 10/7/09; http://bit.ly/Verical
Counterfeit white paper: “The Real Solution to Fake Parts: Securing Supply Chains through Data Transparency and Better Market Design” (October 2009); http://bit.ly/counterfeitwhitepaper
Newsroom: https://www.verical.com/about/resources/newsroom.html
Industry Insights: presentations, articles, websites; https://www.verical.com/about/resources/industry.html
Blog: “The Electronic Components Source” http://blog.verical.com/
Verical on Twitter: @Verical
Verical on Facebook: http://www.facebook.com/verical
About Verical
Verical is the creator of the Verical Marketplace, an online trading platform for electronic components that reduces the risk of chronic inventory surpluses and shortages. For sellers, Verical works with component manufacturers, OEMs and contract manufacturers to monetize excess inventory at substantially higher yields. For buyers, Verical provides small electronics firms to global high-tech manufacturers with a unique pedigree scoring system that hastens sound shortage purchasing. Founded in 2007, Verical is a San Francisco-based start up backed by Valhalla Partners. The company is experiencing rapid growth with over 27,000 unique part numbers available today in the Verical Marketplace at www.verical.com.
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All brand names and product names are trademarks or registered trademarks of their respective companies.
Tags: counterfeit electronic components, counterfeit inspection methods, distribution, economic recovery, electronic component catalog, electronic components, excess inventory, online catalog, shortage purchasing, shortages, supply chain integrity, supply chain security
Media Contact:
Susan D’Elia, media relations for Verical
TECHMarket Communications
650.344.1260
TMCnet: Verical Launches Online Trading Platform October 8, 2009 No Comments
Venture Beat: Verical launches online component market to defeat counterfeit chip fraud October 7, 2009 No Comments
Verical Launches Electronic Components Marketplace No Comments
Verical formally launched its marketplace for electronic components today. With enhanced search functionality, a broad catalog of some 27,000 part numbers from 230 manufacturers, the Verical marketplace has dropped its “beta” tag and is open for business. The release details includes quotes from company executives as well as industry legend, Steve Kaufman, former CEO and Chairman of Arrow Electronics, who now teaches strategy and operations at Harvard Business School:
Press Release: Verical Launches Electronic Components Marketplace No Comments
Online Marketplace Introduces a Pedigree Scoring System to Fight Major Risks
to the High Tech Supply Chain
- The economic rebound is catching many supply chains unprepared to meet demand.
- The resulting shortages are forcing buyers to turn to grey markets for parts needs.
- The counterfeit threat is escalating as methods are becoming increasingly sophisticated.
SAN FRANCISCO — October 7, 2009 — Verical, Inc., the Electronic Components Marketplace, today announced the production launch of its online trading platform for global high tech manufacturers and distributors of electronic components. Countering major risks to the high tech supply chain, the Verical Marketplace uses information and technology to create a unique pedigree scoring system for component parts available in its catalog at www.verical.com.
As the economy rebounds, buyers and sellers are growing more and more vulnerable to the risks of inventory excess and shortages that drive grey market activity and increasingly sophisticated counterfeit methods. In either a rebounding or floundering market, the Verical Marketplace optimizes transactions within the industrial supply chain for sellers faced with disposing of excess inventory and buyers faced with shortage purchasing.
Market opportunity: of the $600 billion annual market for electronic components, the time-critical segment is an estimated $22 billion, approximately $12 billion of which is serviced by unauthorized distributors, and 13 percent of which is counterfeit, according to the trade association IPC. The U.S. Department of Defense found that 15 percent of the shortage parts in its supply chain were fakes, with the number growing at a compound annual growth rate of 25 percent from 2005-2008.
“Today, the electronic component secondary market is fraught with risk and inefficiencies — buyers have no visibility into the true source of their components; they can only guess at a part’s authenticity or warranty, and have incomplete information about what the part really is and what a fair price is,” explained Stephen P. Kaufman, senior lecturer of Business Administration at Harvard Business School, and former chairman and CEO of giant distributor Arrow Electronics. “At the same time, sellers have to worry about not getting a decent price for their surplus inventory, protecting their brands, and the hassle of not having a single place in which to sell their parts. There is a significant opportunity to upgrade the entire supply chain by addressing the current flaws of the secondary market, and Verical is addressing this challenge head on.”
Growing exponentially since its beta introduction in January, the Verical Marketplace currently serves 3,200+ buyers from small electronics firms to global high tech manufacturers, with 27,000+ unique part numbers from 230+ manufacturers, including IDT, Molex, NXP Semiconductors, Texas Instruments, and Tyco Electronics.
Verical Redefines the Electronic Components Marketplace
To redefine the electronic components marketplace, Verical relies on a deep leadership team in supply chain software that includes industry veterans from Solectron, Agile Software, Dept. of Homeland Security, Classic Components, and Lockheed-Martin. Company president, CEO and co-founder Josef T. Ruef has over 16 years of experience with the secondary market, specifically in developing anti-counterfeiting best practices. John P. Brown, Verical’s vice president of marketing and strategy and company co-founder, has a wide range of experience in operations and the management of information-sharing networks between organizations. Additionally, VP of supply chain and operations Chris Cookson brings more than 20 years of supply chain and consulting experience; VP of sales and community development Bill Aston brings 20 years in enterprise supply chain software; and VP of Engineering Jes Lefcourt has 15 years in software management.
“The secondary market is being exploited by fraudsters and profiteers,” said Ruef. “Our deep experience with systemic failures in the secondary market led us to build the Verical Marketplace as an extension of the primary market. We believe ‘information’ and ‘traceability’ are the keys to retaining component part value for sound decision-making and confident transactions. By providing buyers and sellers with the pedigree scoring of component parts, a measure of each part’s traceability, we are uniquely positioned to complement franchise distribution as a trustworthy source of inventory when traditional sources cannot fulfill demand.”
Unlike third party auction houses and consignment sales, the Verical Marketplace permits only authorized channels and original owners of component parts to sell pedigreed inventory. Its innovative pedigree system assigns a score to each component part based on how far back Verical is able trace its chain of custody. The higher the pedigree score, the further up the supply chain the component is traceable. The end result is sellers can monetize unused assets at a greater return on their inventory investment, and buyers can manage their purchase risk and expedite their shortage fulfillment.
“For sellers, writing off excess inventory equals lost revenue. Typically, sellers of excess inventory get 4-8 percent return. Today in the Verical Marketplace, they’re getting 8-10 times that with the average seller recovering 60 percent of the historical cost,” noted Cookson.
| Buyer Benefits | Seller Benefits |
| Rich Component Part Information
Critical information to make better decisions faster, including fully transparent view of pricing, availability, restriction of hazardous substances (RoHS) status, delivery information, and more |
Maximize Surplus Inventory Revenue
Sell excess and slow moving inventory as an alternative to write offs and realize a higher and faster return on historical cost to improve seller’s cash flow |
| Fast Easy Search
Web 2.0 technology and processes to enable the most dynamic, quick-filtering search tools to give buyers the information they need, when they need it |
Anonymity
An anonymous marketplace to protect the seller’s brand |
| Trusted Sources
Hand-picked, trusted suppliers — the industry’s leading manufacturers and distributors — to ensure buyers get fully traceable parts with associated pedigrees, helping them mitigate the counterfeit threat |
Pricing Control
Seller-controlled prices, so the sellers set the prices to be paid for their components – not a third party |
| Automated Fulfillment and Proactive Expediting Components delivered by world class, third-party logistics provider partners |
Grey Market Protection
Protection against grey market risks through controlled marketplace that only permits the most trusted names in every segment of the high tech industry OEM, EMS, distribution and component manufacturers to participate |
The Verical Marketplace is available today at www.verical.com or call 415.281.3866. For more information on Verical, Inc., please visit Company Overview or Newsroom. For additional perspectives, please visit and subscribe to the Verical blog, The Electronic Components Source at http://blog.verical.com/, and follow Verical on Twitter at @Verical.
Additional Resources
Counterfeit White Paper: “The Real Solution to Fake Parts: Securing Supply Chains through Data Transparency and Better Market Design” (October 2009); http://bit.ly/counterfeitwhitepaper
Newsroom: https://www.verical.com/about/resources/newsroom.html
Industry Insights: presentations, articles, websites; https://www.verical.com/about/resources/industry.html
Blog: “The Electronic Components Source” http://blog.verical.com/
Twitter: @Verical
About Verical
Verical is the creator of the Verical Marketplace, an online trading platform for electronic components that reduces the risk of chronic inventory surpluses and shortages. For sellers, Verical works with component manufacturers, OEMs and contract manufacturers to monetize excess inventory at substantially higher yields. For buyers, Verical provides small electronics firms to global high-tech manufacturers with a unique pedigree scoring system that hastens sound shortage purchasing. Founded in 2007, Verical is a San Francisco-based start up backed by Valhalla Partners. The company is experiencing rapid growth with over 27,000 unique part numbers available today in the Verical Marketplace at www.verical.com.
###
All brand names and product names are trademarks or registered trademarks of their respective companies.
Tags: counterfeit electronic components, counterfeit inspection methods, distribution, economic recovery, electronic component catalog, electronic components, excess inventory, online catalog, shortage purchasing, shortages, supply chain integrity, supply chain security
Media Contact:
Susan D’Elia, media relations for Verical
TECHMarket Communications
650.344.1260
Managing Automation: Start-Up Electronics Marketplace Aims to Thwart Counterfeits October 6, 2009 No Comments
Ferrari Consulting Group: Technology Supporting Supply Chain Risk Management Needs- The Verical Marketplace No Comments
Technology Supporting Supply Chain Risk Management Needs- The Verical Marketplace
By: Bob Ferrari, Ferrari Consulting and Research Group
Component Buyer Tip #4: Evaluating Shortage Suppliers on Quality and Timeliness of Information September 22, 2009 No Comments
Research shows that buyers spend a full 40 percent of their time on shortages: a mere 1 percent of their annual spend. Why? Largely because of the need to watch their grey market suppliers like a hawk. Too often, a grey market supplier, either broker or independent distributor, will claim to be able to fill a buyer’s shortage, but may not always have the correct date code, lot code or even the correct manufacturer. Most independents will have policies in place to prevent this type of blatant misrepresentation, but when the salesperson on the phone stands to make a substantial personal profit from a transaction, it can be awfully difficult — if not impossible — to enforce those policies. Tip #4 is all about when and how information is delivered.
Before resorting to the grey market, purchasing teams should have a system in place to track the breadth, quality and timeliness of suppliers’ information. The system can be as simple as a spreadsheet with a basic table. The point is to capture data on when grey market suppliers share information, what information they share and how accurate it ends up being.
Component buyers know precisely what they need. When their primary suppliers have lead times too long to deliver the needed parts in time, they turn to the grey market and the games begin. Unlike their franchised counterparts, brokers and independent distributors usually will not have all of a part’s information up front. As a whole, the grey market is so unreliable that when a part is brokered, the only way to have any confidence in its description is to wait for the part to arrive and check it then. That creates all kinds of slowdowns and misinformation.
What would a perfect world look like? What information do buyers need to make better decisions faster? Buyers have straightforward needs: availability, conformance, transit time and price. For shortages, availability is easy: the items must be in-stock and ready to ship. Conformance can include several attributes: date code, lot code, RoHS status, an item’s pedigree, etc. Transit time and price are self-explanatory. While a buyer will weigh each of these needs differently from one transaction to the next, all are required elements for a buyer to have enough confidence to place an order. In the perfect world, suppliers would list all of these attributes up front and allow buyers to filter for exactly what they need. That is what happens in franchised distribution: full information presented up-front and total buyer confidence in the accuracy of the data and reliability of the processes used to complete the order.
In the imperfect grey market though, suppliers have imperfect information and are dependent on unreliable processes. As a result, buyers have to perform research at each step of the process to confirm information as it comes back from suppliers and evaluate it for trustworthiness. That is a slow and stressful process that takes time. Any supplier who can provide all that information to buyers early in the buying process and who can execute those orders reliably will have a compelling advantage over those that cannot. That is one main reason why catalog distributors have been doing so well in recent years.
Tip #4 of this series is that purchasing departments should evaluate suppliers on their ability to provide the breadth, quality and timeliness of the information buyers need to complete their shortage transaction. For every order, buyers track what was promised, when it was promised and the eventual accuracy rate. Frequent reviews of supplier performance, tied to a review of the approved vendor list, will highlight which vendors save buyer time and cut buyer risk the most. When applied regularly, this simple process will reveal patterns that can make shortage purchasing easier, more reliable and faster.
More tips and best practices to come addressing the Seven Challenges for Electronic Component Shortage Buyers. For Tip #1, see Trust; Tip #2, see Supplier Selection and Tip#3, see Inventory Control.
