What causes your company to purchase electronic components on the open market? It may be a combination of reasons or a single recurring element. Examining the history of your company’s independent-market purchases over the previous two years may reveal a weakness in planning or in your supply chain. Charting the reasons for buying on the open market can help you see if your organization is improving its counterfeit mitigation plan or just repeating history over and over. Ask yourself the following questions:
- Were there sufficient cross-checks designed in to your process, giving your buyer two or three alternates to purchase in the franchised market instead of only one?
- Are obsolete parts and end-of-life requirements designed into your bill of materials?
- Was the new product or production schedule released inside of lead-time for the components?
- Were incorrect lead-times loaded in your inventory system, not allowing franchised distributors time to deliver?
- Were incorrect costs loaded in the inventory system, potentially causing your buyer to shop large amounts of inventory in the independent market to re-coup costs?
- Was there inadequate management of contract manufactures supplying turnkey circuit card assemblies?
- Are inexperienced buyers not sourcing all available franchised distributors?
- Are buyers failing to check aftermarket sellers for end-of-life or obsolete parts?
- Are orders being placed with inferior independent distributors or brokers with inadequate counterfeit processes?
- Are team members failing to follow their company’s counterfeit mitigation plan by not verifying proper flow-down counterfeit clauses on purchase orders?
- Is there a diminishing manufacturing sources and material shortages (DMSMS) process in place to scrub existing bills of material for obsolete and end-of-life parts?
- Has there been a thorough investigation of excess material, verifying critical obsolete parts or end-of-life parts to confirm that they are no longer required in other programs or required for spares and repair?
Charting your reasons for purchasing on the open market will show which areas need the most attention. New product involvement, component costs and lead-times, efficient and accurate quoting systems, component sourcing and purchasing, DMSMS, enterprise resource planning and inventory planning, and dispersal of excess inventory all play a part in why we are forced to buy in the open market. Improving your processes will limit your purchases in the outside market, reducing the chances of obtaining counterfeit components.