Semiconductor Value Chain

On-Shoring, Counterfeit Parts in Spotlight at ECIA Conference

28 October 2013

The advantages of on-shoring rather than outsourcing to China, the so-called "Internet of Things" and the cost of dealing with counterfeit parts in the supply chain are some of the topics that will be examined at this week's Electronic Components Industry Association (ECIA) Executive Conference in Rosemont, Ill.

"Shift Happens" is the theme of this year's annual meeting, which will include presentations from executives of some of the leading semiconductor companies, electronics distributors and OEMs. About 300 electronics industry executives are expected to attend the annual confab.

"Made in North America—Why It Makes Sense to On-Shore" will address some of the hidden costs of outsourcing and why some companies have posted strong sales growth by keeping manufacturing in North America. Alexander Fernandes, president and CEO of Avigilon Corp., will discuss the competitive advantages of keeping manufacturing in the U.S., Canada and Mexico.

Mike Swenson, president of Mel Foster Company and chairman of the conference planning committee, said on-shoring is a hot topic because many electronics companies are rethinking their outsourcing strategies and some have brought back manufacturing operations to the U.S. and Mexico.

"Some manufacturing is going back to Mexico because labor rates there are getting closer to rates in China," Swenson said. "You also have lengthy transportation to the North American market from China. The on-shoring topic is very timely," he added.

Swenson said there also will be several sessions concerning the evolving use of the Internet, including a presentation by an Intel Corp. executive on the Internet of Things.

"The Internet of Things applies to how devices in the field are being enabled to go back up through the cloud and report analytics on devices," said Swenson.

Rich Dwyer, vice president of sales and marketing and general manager of Intel's embedded sales group, will discuss Intel's efforts to deliver end-to-end solutions that turn data into useful business information through the use of analytics of equipment in the field.

Conference attendees will also hear presentations on the use of social media in business, a panel discussion about online success stories and failures, and ways distributors and other electronics companies can harness the power of the Internet.

PEI Genesis CEO Steven Fisher will discuss growing a niche distribution business, and Jack Ablin, chief investment officer of BMO Private Bank, will deliver an economic outlook for 2014.

Ed Smith, vice president of Avnet Inc. and president of Avnet Electronics Marketing Americas, will address several issues facing distributors, including the growing problem of counterfeit parts, margin erosion and ship and debit.

"I will be talking about the cost of compliance concerning counterfeiting," said Smith. He noted that the Defense Logistics Agency has a new DNA requirement for electronic parts that are sold to defense contractors. Parts must be marked with DNA material to guarantee their authenticity, and there will be a cost to comply with the requirement.

Distributors also face added costs when customers return parts. "When we take parts back from a customer, we have to make sure that the parts are not counterfeit. What is the cost of that?" said Smith.

He said counterfeiting in the electronics industry has become more widespread, and the cost of making sure that fake parts don't enter the supply chain via customer returns is rising.

Smith added that he would also discuss "margin degradation" and whether demand creation "is still important enough that suppliers are willing to pay for it."

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