Professional Documents
Culture Documents
NEWS
September 2012
IV - Great success for the 1st IDEA Executive Conference VI - The Ten (eleven) challenges VIII - The local, regional and global nancial markets X - Are organizations now really managing risk in their supply networks XI - Open book policy: the bad good idea for collaboration? XII - Sustainability Data Exchange Hub XIII - Buying from authorised source XIV - The Euro crises potential impact on India XIV - South African Electronic Industry XV - Fortronic RF & Wireless Design Forum XVI - The problem of counterfeit components in Russia XVII - FDBi have just published an Environment and Compliance compass XVIII - S.E.E. - Scandinavian Electronics Event 2012
FEDERATION
IDEA
orders across Europe together with the book:bill ratio. The gradual rise in the Book;bill ratio is great to see. But we are clearly not on track to match the market performance of 2011. Secondly Graphic T6 shows that the billings are still declining across all the regions with cumulative sales, compared with the prior year.
ASSOCIATIONS
ADEC - South Africa
Association of Distributors of Electronic Components
ASPEC - Russia
he second quarter of 2012 was not as good as the rst! Both bookings and billings levels slipped back to a level of around that of Q3 2011. However, the book:bill ratio did improve from 0.94:1 in Q1 to 0.97:1 in Q2, this is at least a positive sign. However, as it is still below 1:1 this still means that the market trend is downwards. Graphic T1 shows the actual sales and
ECONOMIC BACKGROUND
In this quarters IDEA News there is an excellent article by Paolo Guida on the latest economic situation so I will not attempt to duplicate this in my market summary.
Graphic T1
ECAANZ - Australia
1. 40
1.33
1. 20
Billing
0.95 1.16 0.94 0.97 0.94
1.11
0.89
0.99
1000
1.08
FBDI - Germany
1. 00
Boo king
0. 80
B2 B
Japan Electronic Products Importers Association The Swedish Electronics Trade Associations
500 0. 60
SPDEI - France
MAY 2012
0 Q 3-09 Q 4-09 Q 1-10 Q 2-10 Q 3-10 Q 4-10 Q 1-11 Q 2-11 Q 3-11 Q 4-11 Q 1-12 Q 2-12
0. 40
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50%
30%
F ra n ce UK
10%
I ta l y N o rd ic G e rm a n y
-1 0 %
-3 0 %
-5 0 % Q 3 -0 9 Q 4 -0 9 Q 1 -1 0 Q 2 -1 0 Q 3 -1 0 Q 4 -1 0 Q 1 -1 1 Q 2 -1 1 Q 3 -1 1 Q 4 -1 1 Q 1 -1 2 Q 2 -1 2
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D istrib u ti on o rd e rs for E le ctron ic co m po n en ts by co un try com pa rin g Q 4 2 0 11 w ith p rio r qu a rter (Q /Q 1) an d sa m e q u ar te r p rio r yea r (Q /Q Y-1 )
0%
-4.6%
-5 %
-2.7%
-1 0 % -11.2%
-6.9%
-4.9%
-2.5%
Percent change
Q / Q -1 -12.9% -14.0% Q / Q Y -1
-2 0 %
-2 5 % -26.9% A vg Fr a nc e UK Ita l y No r di c
-3 0 %
G er m an y
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Graphic S1
Distribution semiconductor bookings, billings & book:bill ratio for Germany, France, Italy, U K, 1.60 Sweden, Norway, Denmark & Finland
1.44
1200
1.40
Billing
1.19
1000
1.13 1.17
1.20
1.12 1.08
800
Booking
0.96 0.93 0.97
1.00
B2B
0.87
600
0.91
0.91
0.80
400
200
0.60
0 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q 1-12 Q2-12
0.40
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Graphic P1
Graphic T3
D istr ib utio n sa le s o f E lectro n ic Com po ne n ts b y Cou n try comp a rin g cu rre nt q tr w ith p rio r qu a rter ( Q /Q1 ) a nd sam e q ua rte r pri or ye a r ( Q/Q -4 )
0%
1.14
1.13
1.13
Billing
1.09 1.06
1.01
1.02
- 10%
0.98
0.97
0.92
0.97
150
1.00 0.90
Booking
Percent change
- 15%
-13.3%
0.89
-8.8%
1.10
-7.8%
-5.5%
200
1.20
-4.8%
-5%
-3.4%
- 17.8%
0.70 50 0.60
- 20%
-18.0%
100
0.80
-15.7%
B2B
-15.5%
Q/Q-1 Q/Q-4
- 25%
0.50 0 Q3-09 Q4-09 Q1-10 Q2-10 Q3-10 Q4-10 Q1-11 Q2-11 Q3-11 Q4-11 Q1-12 Q2-12 0.40
- 30% Avg F ran ce UK Italy
-27.2%
-21.3%
No rd ic
G er man y
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the book:bill ratio did improve from 0.94:1 in Q1 to 0.97:1 in Q2, this is at least a positive sign
Semiconductors. Graphic S1 shows that the improvements made in Q1 have been lost in Q2. The only good element is that the book:bill improved from 0.91:1 in Q1 to 0.97:1 in Q2. Concerning the prospect for Q3, sadly history tells us that this will be worse than Q2. Passive Components Graphic P1 covering Passives also shows that the gains made in Q1 have also been
However,
wiped out with the overall market levels similar to Q3 2011. Electromechanical components Graphic E1 shows that Electromechanical components have also posted a lacklustre performance in Q2 falling below the Q1 levels in the same way as semis and passives. In addition the book:bill ratio has dropped below 1:1 for the rst time in three quarters.
The improvements
made in Q1 have been lost in Q2
when I summarised the Q1 results, this quarter the situation has worsened with all regions performing badly against both the prior quarter and the same quarter last year. It also looks as though the problems are equally shared between the various regions as shown in Graphic T5.
Just to remind readers. If you would like to have the original graphics used in this article just email to the IDEA secretary at segreteria@ ideaelectronics.com The IDEA statistics are taken from actual bookings and billings returns made by a substantial percentage of the electronic component distributors in Europe, including all the major distribution groups. Their sales represent Circa 70% of the total European distribution market so the trends shown are truly representative.
Graphic T5
C umu la tive o rd er s fo r E lectro n ic co mp o ne nts via distri bu tion by co un try for cu rr en t ye a r to d ate co mp are d w ith sa me p e rio d p rio r yea r
0%
-5%
Percent
Graphic E4
-10% Q1
-12.4%
Q2
-15%
-13.7%
-17.6%
-18.8%
-18.8%
-20.3%
No rd i c
-23.5%
G erm an y
200 150
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-19.4%
-20%
-19.1%
-18.2%
-17.0%
-16.8%
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III
News
DEA held a Major International Conference to coincide with the 2012 Assodel Gala in Milan on the 31st May 2012. The conference - Can improved collaboration in the supply network encourage growth in European Electronic Components markets? - provided an insight into the thinking of a range of industry leaders and commentators on how improving collaboration encourages growth. The event was a great opportunity to meet up with suppliers and friends across the European and international electronic components industry and gain an improved insight into whats happening in the market It is the rst time IDEA has staged such an event at a worldwide level with many important international participants.
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of DMASS (Distributors and Manufacturers Ass. of Semiconductor Specialist), and Malcolm Penn, CEO of Future Horizons, then presented the status of the worldwide and especially European electronics market giving trends and data on the current situation and forecasting what is likely to happen in the next few months. The representatives of the electronic distribution associations (members of IDEA) of China (Amy Wang), India (Rajoo Goel) and Russia (Roman Kamaletdinov) nally gave their opinion about the future distribution market challenges in their countries.
A. Fletcher
Among the speakers, Paolo Guida, Head of Retail and SME Research of Intesa SanPaolo bank, analyzed the current economic and nancial situation from a global and a local point of view stressing the difculties that the Euro area is facing and the risks which are likely to occur if the situation does not change in the next few months (see the article on page 8 for more details). Georg Steinberger, Chairman
P. Guida
G. Steinberger
M. Penn
Commenting on the success of the event, Adam Fletcher, Chairman of IDEA, said: Im delighted that our rst IDEA Executive Conference has generated such wide international support. Its a great opportunity for any organisation interested in collaboration in the electronic components supply
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ASSODEL AWARDS
The Assodel e Awards are the prizes promoted d by Assodel ociation (the Italian association ppliers) of electronic suppliers) y and given every year to n manufacturers in the electronics re industry who are honored nt for their excellent quality mance of both performance and collaboration. Since 2003, wards the Assodel Awards - the on Italian Distribution Awards - are e perceived by the industry as an gnition. important recognition. On occasion of Assodel Gala dinner , which took place on 31st May 2012 in Milan, the Assodel Awards have been given to: Avago Technologies Actives Nichicon Corp. Passives TE Connectivity Connectors Weidmuller Electromechanicals Inneon Technologies Power Telit Wireless Solutions RF&Wireless Tianma Display Philips Lumileds LED Rohde & Schwarz Test&Measurement While the special Career Award was presented to Mr. Gary Kibblewhite.
R. Goel A. Wang
network to hear from and meet with a wide range of industry experts and practitioners. Following the IDEA Executive Conference, the Assodel Gala Dinner was attended by more than 450 people from across the electronic components supply network. The Gala dinner hosted the traditional Assodel Awards ceremony. The full list of the Conference speakers is as follows: Silvio Baronchelli - IDEA President Adam Fletcher - Chairman of IDEA and Afdec-ECSN (Electronic
Component Supply Network)
A. Visser
Otmar Deubzer - Consultant Intern. Product Recycling and Sustainability, Fraunhofer Institut Gary Kibblewhite - Industry Advisor Fortronic Glenn Palmer - Joint Managing Director Murata Europe Robert Martin - Director Lifecycle Services, Arrow Electronics
Malcolm Penn - CEO, Future Horizons Georg Steinberger - Chairman of DMASS (Distributors and
Manufacturers Association of Semiconductor Specialist)
G. Kibblewhite
Paolo Guida - Head of Retail and SME Research, Intesa SanPaolo (Financial Analyst) Amy Wang - Representative of CEDA (Chinese Electronics
Distribution Association)
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industry as we know it? End of the 1940 with the invention of transistor could be a good call, so we are around for roughly 60 years (interestingly enough also the period when rst franchise contracts were signed between manufacturers and distributors). Electronics at that time was, all counted in, an industry of at best a few 100 Million Dollars worldwide, maybe a Billion. Today its an industry of 2 Trillion US-Dollars, of which components represent roughly 1/5 or US $ 400 Billion. Components Distribution counts for approx. US $ 100 Billion. Excluding the nance market, the global world production/ services are rough US $ 70 Trillion. (Financial trade volume = US $ 2000 Trillion, which shows why the nance market is so dominant and completely out of synch with the real world). Although Electronics may only occupy 3% of the general world production, the trigger effect is massive almost no industry today would be at the achieved level without the electronics revolution, starting with the transistor and not ending any time soon with multiple-core-processors or whatever the inventors may have in mind. Eventually the rarity of copper resources could bring it to the knees, but
of scale in electronics components industry command volume, which by denition makes Europe less a directsupport model (manufacturers with their own sales force) and more distribution-service model.
Innovation needs
stounding challenges and developments for mankind, society and potentially freedom- this is what will be remembered of 2012. It may almost appear silly in that context to talk about our little world of electronics distribution. But I will do anyway for two very good reasons.
We have arrived
The rst is that we have arrived in the real world macroeconomics is impacting our little industry. The second is that we face challenges of our own that will shape our industry and eventually will work beyond. I want to share with you ten that I see, and it is up to us to turn them into opportunities. But rst lets set the stage: How old is the electronics
So far the numbers need to nally prove the trend, but the distribution share in the electronics components industry of Europe is growing. 50% DTAM are still a while away, but except for the automotive-dominated Germany the DTAM shares are all well beyond the 30% line in the major regions and at 50% or more in the smaller countries. Reversely, the growing share of distributors comes with more responsibility for the functioning of the overall market - design-chain, supplychain, nance-chain. Customers increasingly rely on distributors to help solve problems instead of being part of the problem.
THE 10 CHALLENGES
Now with the context
Graphic 1
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explained, lets go to the ten challenges. The European (to be fair, the global) macro economy currently poses a massive threat to the entire industry, not just electronics, and the Euro crisis will potentially impact production and subsequently domestic consumption and export opportunities (the world will buy less industrial equipment). Nothing for us to solve but to deal with the ramications, this means just to be prepared for a weak market - or the opposite as we have learned often enough. Electronics cycles will remain with us as well, and despite all efforts to optimize production ows, simulate bottlenecks etc., the semiconductor production underlies economic rules that need to be understood, specically in Europe, which has become sub-strategic for many suppliers: the fact that one customer in Asia has a higher component demand than the whole of Europe should tell you what can happen at minor upturns and downturns. Innovation plays a major role in every society, and to make it prevail you need an innovation culture. Europeans are not dumber than anyone nor are they less inventive, but we need to be careful not to lose the edge in building and maintaining an innovation culture and accompany it politically and structurally. Take the market for renewable energy and the necessary infrastructure rebuilding to make Europe the leading green continent (which we theoretically and engineering-wise are) as
an example that could see massive improvement. Directly connected to it is the tendency of complicated constructs as the EU to make things more complex, by over-regulation. Environment, product safety, tax, channel policy - take your pick. It its easier for an Asian company to import goods than for a European company to produce it, it would be worth looking at some rules. Compliance of all sorts will put another layer of complexity on the European industrial activity and it will be a massive effort to comply, whether with traceability rules, transportation safety, import and export.
knowledge market potential, growth segments, innovation strategies - culminating in the questions: Can a distributor help his customer to make a certain market? How can a distributor support a customer if he does not understand his market constraints? What may sound crazy has become reality in single cases and will potentially grow: supporting a customer from a marketing idea via the refocusing of technical expertise to other products all the way to new nance (!) and supply-chain models.
and engineers have become a rare species in Germany certainly, but maybe also in other countries. The average of European electronics design engineers is - according to a study by Hearst Publications - extremely high. Over 60% of them are older than 45 years (compared to China, where 63% are younger than 35 years). Moreover, application or design engineer are most difcult job vacancies to ll - since years! Everyone competes for them: customer, manufacturer and distributor. It is no consolation here that the distribution job might be more versatile than a pure design job: the resources are very often not available. At the same time, India and China educate legions of young people in those elds. Two things need to happen to make innovators again a core ingredient of Europes success. Governments need to put the innovation culture on their political and educational agendas, if they nd time besides saving the banks. It should be more rewarding to become an innovator than being a fund manager. And young people need to understand and embrace Europe as the opportunity of a boundary-less working environment. Become true Europeans! Spanish and Greek engineers welcome to Germany!
Governments need to
put the innovation culture on their political & educational agendas
I am sure there are more than these 10 challenges that I listed as macro and micro, impacting our industry over the next ten years, and certainly, each of them deserves more editorial space to elaborate on. Not many of them are particularly new except for their increasing complexity and level of nancial challenge. I am certain that distribution will play a key part in managing this all better.
INNOVATION CULTURE
Let me end with one eleventh challenge that is certainly disputable and different by region/country. Innovation needs engineers
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VII
News
rom Local to Global, the macroeconomic outlook describes a mixed picture, because of very different growth rates that the major countries are experiencing and are likely to experience in the next quarters. Starting from the Eurozone, most recent data show how diverging have been the economic growth rates among the major countries. Germany has beneted from a higher competitive position and a lower scal consolidation need, while countries like Italy (or Spain) have suffered from a stronger scal adjustment and specic economic problems.
A GLOBAL OUTLOOK
Even if we move to a more global picture, different growth rates are justied by different economic conditions. China still has a signicant growth potential and the slowdown it shows is almost welcome, given the price pressures they face, especially in the housing sector. Japan is sharply recovering from the effects of the earthquake, with temporary disruptions followed by the reconstruction activity. The United States are actually accelerating, thanks to a still loose scal policy up to the end of 2012, with the housing sector starting to give important signs of recovery. Hence, the most hit region is the Euro Area, with the specic countries very differently affected by the crisis.
Graphic 1
Bloomberg
The European
The European economic outlook keeps on being weak, as conrmed by the surveys on both the industrial and the service sector.
GDP GROWTH
However the global picture is far from comparable to the 20082009 recession, which was much more severe than the current. In that case, the recession was synchronous and intense while today the global slump is denitely mixed and softer. As a matter of fact, the most recent data show how diverging is the scenario for the US and China on one side and Europe on the other side. But the potential for contagion is very real and explains why US and China authorities are so interested in the European sovereign debt crisis to be solved.
Spanish interest rates have reached fresh highs because of the nancial sector worries and the ongoing recession. However Spain (as well as Italy) is too big to fail and triggered a quick reaction by the European authorities.
The unemployment
situation in most European countries is dramatic
EUROPEAN INSTABILITY
Financial markets have shown considerable turbulence during last 12 months, with big countries like Spain and Italy involved in a perverse spiral of distrust and increasing risk premia. Stock markets have plunged since April, after a good performance in the rst quarter. Government bond yields have increased in peripheral countries, with spread over Bund
The markets turbulence may bring Europe to accept a Fiscal Union and the idea of Eurobonds, which are bonds guaranteed by all Eurolands countries. The so called Fiscal Compact is a rst step towards a Fiscal Union but probably isnt enough. Germany opposition to Eurobonds could be mitigated if they are softly adopted through a Redemption Fund, which is a Fund that pools the amount of European public debts exceeding 60% of GDP. That hypothesis has originally been suggested by the wise men in Germany. The main risk to this process is
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political, as the people could refuse such a stronger integration. Political leaders play a key role in explaining the benets of a more integrated European Union and remarking the costs of coming back to the past. As for politics, something new occurred last May the sixth, when Hollandes victory in France and Syriza victory in Greece have shown how people can drastically change the way Europe is managing the crisis and can even put at risk the Eurozone survival.
is heading to. However the most urgent issue that was actually addressed was the perverse link between sovereign debt and banking problems, with Spain as the most recent and dangerous example of that loop. Allowing for a direct recapitalization of European banks from the EFSF/ESM in the future, without channeling resources through the sovereign debt, was a major step towards breaking the vicious cycle between the banks and the State.
UNEMPLOYMENT RATES
Graphic 3
A DIGITAL SCENARIO
The scenario has become digital: 1) one or more countries exit the Euro Area; 2) the sovereign debt crisis is managed with more attention to economic growth and with more exibility on scal consolidation. The latter is denitely the least costly solution for all countries because it avoids a huge nancial and economic disruption. However stimulating growth is not an easy task, because most of the European countries lack the resources needed to increase public expenditure or to reduce taxes. Nor zero cost structural reforms have quick benets. They usually start to deliver after many years. The third way, which is likely to be followed, is the use of European resources for specic infrastructural projects around the continent. Euro Project Bonds or a massive use of European Investment Bank funds are examples of instruments that are going to be used.
The most urgent issue that was actually addressed was the perverse link between sovereign debt and banking problems
Even if conditional to the installment of a unique banking authority in Europe, which is going to be the ECB, that marks the rst concrete example of a more integrated Europe after the adoption of the single currency. On the other hand, the Compact for growth and jobs is probably the rst comprehensive effort to rationalize the resources and the methods to stimulate economic growth in Europe. The recapitalization of the European Investment Bank through EUR 10 billions of additional resources and the immediate launch of the Project Bonds pilot phase are examples of concrete initiatives to improve the nancial conditions for productive investments, in order to create new jobs. The employment situation in most European countries is dramatic, as quickly increasing unemployment rates show. An assessment of the quality of the public expenditure by the European Commission has also been clearly stated, paving the way to the so called golden rule in calculating the public decit.
Flexibility is another message coming from European economic policy decisions, as the international authorities, including the International Monetary Fund, seem to be ready to allow for a more diluted adjustment process for the countries involved in a Program or under other forms of bailout. Spain, Ireland, Portugal and Greece have all been given or are likely to be given more time to adjust their public nances in the next years. That could reduce the impact of tighter scal policies on economic growth, a vicious cycle that has already been seen in countries like Greece. Another point of view to read the end-of-June summit results is about short term and long term measures. Short term measures refer to the possibility for the bailout funds (EFSF/ESM) to buy Government bonds in the secondary or in the primary markets (with the ECB acting as an agent), for countries in compliance with the European Commission recommendations, without the stringent conditionality of a new Program supervised by the so called Troika (European Commission, European Central Bank and International Monetary Fund). That could help countries like
Italy or Spain, which are currently on track to achieve the targets agreed for the public accounts. As for the long term perspective, the European leaders endorsed a report presented by the President of the European Council and called Towards a Genuine Economic and Monetary Union. The report was prepared in collaboration with the Presidents of the European Commission, the Eurogroup and the ECB and sets up four essential building blocks for the future of EMU: an integrated nancial framework, an integrated budgetary framework, an integrated economic policy framework and strengthened democratic legitimacy and accountability. A Road Map is expected to be drawn by the President of the European Council, with a nal report to be presented before the end of the year. Even if it will probably take years before a more integrated European Union will be in place, drawing up a long term perspective of where Europe wants to go marks an epochal shift in the European policy, allowing for a moderate optimism on a favorable outcome for the European sovereign debt crisis.
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IX
News
Looking back over the last eighteen months and the natural disasters that have disrupted the global electronic components supply network ecsn chairman Adam Fletcher wonders if organisations have learned a valuable lesson and are now actively managing the risk, or are they gently slipping back into status quo...
he electronic components industry has always been cyclical, initially as a result of the semiconductor sectors bi-annual migration to new manufacturing process nodes, although this is now reducing as the industry matures and more closely tracks key changes in regional or global gross domestic product (GDP) and/or macroeconomic activity. The bulk of semiconductor manufacturing is located in areas of high seismic activity, and output has been signicantly affected by the natural disasters that have occurred over the last thirty years. Whilst the smoothed trend of global sales revenues over several years shows less dramatic changes than could have been expected, closer analysis reveals many and frequent peaks and troughs, probably due the speed of communication
between organisations and increasing globalisation of the market. Thirty years ago it was possible to spot a regional change in say the US and anticipate that it was likely to impact the European market some 4 to 6 months later. Today Europe reects a change in hours or days, and even a small change can have a signicant effect. This phenomenon is no more apparent than in the electronic component market, where it causes lead-time availability of many parts to change very quickly, extending or shrinking in days rather than months.
But the fact remains that despite all the advances in manufacturing processes, it still takes a minimum of 12 to 14 weeks to make a semiconductor product, assuming there are no delays in the process, which in reality there always are. Most organisational Enterprise Resource Planning (ERP) systems use fairly standard algorithms primarily for determining the quantity of material to purchase and the required delivery schedule based on key metrics such as historic or forecast usage, the lead-time, item class, unit price etc., which all interrelate to determine the economic order quantity (EOQ). The role of EOQ is to balance the cost of ordering and holding inventory. It does not however provide any guidance into the cost of not having the inventory when its required.
wonders if organisations have learned a valuable lesson and are now actively managing the risk, or are they gently slipping back into status quo
Adam Fletcher
Organisations operate in diverse markets and are accordingly affected differently by severe changes in lead-time availability. The automotive market generally requires a small range of electronic components in high volumes, often supplied within sub-assemblies from captive suppliers. The military aerospace markets need small batch-build volumes available against planned long term multi-year contracts, where spares or repairs may be required
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at short notice. The industrial and medical markets require a huge variety of electronic components in mid-volumes. Contract Electronic Manufacturers supporting any of these markets are reliant on their customers forecast accuracy and support from manufacturer authorised distributors.
that cost a few cents each. Many organisations - incorrectly in my opinion - still regard investment in inventory of electronic components and other materials as a liability rather than an asset. This view has to change!
- incorrectly - still regard investment in inventory of electronic components and other materials as a liability rather than an asset
Manufacturing organisations need a minimum of 6 - 8 weeks of average usage as their in-house safety stock investment. This should be further enhanced by buffer stock agreements with electronic component manufacturers and their authorised distributor for a further 10 - 12 weeks average use inventory i.e. the same time period as the manufacturing cycle. Good communication throughout the supply network is essential. Both customer and their suppliers must closely monitor the inventory (and key business parameters such as payments, new opportunities etc) and make necessary adjustments at least on a quarterly basis to reect actual use and any forecast changes. My concern is that whilst some organisations are actively engaged with a risk management reduction processes, many are still overreliant on the macho we can source anything strategy. Recent history has proved that the itll never happen to me complacency poses an unacceptably higher risk and it is worth preparing. Executive management would be well advised to insist that risk reduction strategies are implemented in their organisations without delay.
Many organisations
control over its suppliers gross prot, then this is very likely to inhibit their suppliers creativity and will diminish the collaboration efciency longer term. Think about it, a common theme when discussing with OEMs about their logistic service providers, is they regret their lack of creativity. Many are saying they would love to have more dialogue around innovative solutions. Those conversations will only be enabled if we move from open book policy to a shared benet practice. A conclusion drawn in a paper by Christopher and Gattorna was that alignment of supply chain strategies and processes between business partners enables service improvements to be achieved at less cost and that by releasing value in this way prices can actually be reduced if necessary whilst still maintaining the suppliers margin (Christopher & Gattorna, 2005, pg.15). Targets should be focused on longer term process improvements reducing cost across the supply chain rather than being short-term and stand-alone, being obsessed by suppliers gross prot. I dont see how an open-book policy between supply chain partners can encourage anything but a short term focus where the attitude is more towards making quick wins on the back of one another instead of embracing the overall efciency of the supply chain.The planned economy showed its limit, the opportunity for enhanced prot is the fuel for innovation; if that opportunity is taken away I fear that there will be a loss of appetite for innovation.
REFERENCE: Martin Christopher and John Gattorna, 2005,Supply Chain Cost Management and Value-Based Pricing, Industrial Marketing Management, Vol. 34, No. 2, pp. 115-121, 2005
ecently at a Supply Chain conference I was attending, the discussion came around collaboration and transparency in the communication between the Supply Chain actors. The question was what information should be shared, and what are the limits to transparency if any? As expected, service providers, OEMs, Distributors and logistic companies had different approaches. In the customer supplier relationship, the customer wants to understand everything about the cost structure of its supplier where the supplier is trying hard to preserve its margin. As every company is the customer and supplier of someone else there is some sort of a schizophrenic attitude; the information we expect our suppliers to give us, we do not want to provide to our own customers! My feeling is yes there is a denite need for a better understanding of each others cost drivers, the better the understanding the more collaborating partners know what they can expect from each other, this drives better responsiveness, predictability, nancial sustainability and overall it contributes to de-risk the supply chain. At the same time the fuel for process innovation and improved efciency is driven by a companys appetite for improved growth, prot and return. If for the sake of collaboration the customer ends up having full
Organisations operate in diverse markets and are accordingly affected differently by severe changes in lead-time availability
Its amazing how executive management attention is refocused when manufacturing output worth $1,000s is held up for the want of electronic components
http://martin-christopher
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XI
News
any organizations within the global electronic component supply network are struggling to ensure they are compliant with the complexity of legislation on environmental issues. The cost of communicating information effectively throughout the supply network is increasing rapidly and is becoming a burden for our industry. IDEA members have evaluated the available solutions and after careful consideration recommend SustainHub as the best-in-class independent solution for our industry.
SustainHub is a research
project with the goal of developing an integrated network solution for managing product compliance and sustainability data across the supply chain
evaluated the available solutions and after careful consideration recommend SustainHub as the best-in-class independent solution for our industry
1. Adaptability
With rapidly changing data reporting requirements, it is imperative that an exchange hub is able to adapt, with an architecture that is not tied to any platform, data format, or content. Materials reporting, emissions tracking, sustainability reporting can be mapped.
Sustainability Data Exchange Hub (SustainHub) is a research project with the goal of developing an integrated network solution for managing product compliance and sustainability data across the supply chain. The project is funded by the European Commission under the Seventh Framework Programme. There is an increasing demand for eco-efcient products and services, provoked by public opinion, and being incorporated into legislation worldwide. Customer-driven
6. Future-proof
The data exchange is built openly to allow for incorporation of new data formats. Additional information may be found at www.sustainhub-research.eu/
PROJECT PARTNERS: Frauenhofer Institute, CoreSource AB, Intertek AB, Rapid-i GmbH, Board of Innovation BVBA, University of Ulm, Denkstatt GmbH, iPoint-systems GmbH, University of Graz, Microelectronia S.A., Johnson Control GmbH, AGFA Health Care, Continental Teves AG & Co., HG, IDEA-International Distribution of Electronics Association, Consorzio Tecnoimprese
2. Freemium
Existing data exchange systems charge companies for providing data. SustainHub is different: it incentivizes participants. Basic functionality is available free of charge.
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EID NEWS
DISTRIBUTION
To strengthen Avnet Abacuss position in the German passive components distribution market, Avnet has acquired Altron, an interconnect, passive and electromechanical components (IP&E) distributor in Germany, representing over 40 suppliers. Altron is a specialist distributor of IP&E products from suppliers including Vishay, Kemet, Wima, Yageo and FCI. Avnet has also agreed to acquire the Magirus Group, a pan-European distributor of data centre solutions and services, and has launched a tender offer bid for all outstanding shares of Internix, substantially expanding its presence in the Japanese market. EBV Elektronik and Integrated Device Technology (IDT), a supplier of mixed signal semiconductor solutions, announced a distribution agreement to promote and deliver products to customers within the EMEA region. Avnet Memec has been appointed as the pan-European distributor for Innite Power Solutions, a US-based manufacturer of solid-state batteries. The new agreement will enable Avnet Memec, a specialized semiconductor distributor, to provide a broader product offering to the growing energy harvesting segment. Arrow Electronics has completed its previously announced acquisition of the Altimate Group, a European value-added distributor of enterprise and midrange computing products, services, and solutions. Arrow Electronics and Elo Touch Solutions have also signed an agreement under which Arrow will distribute the Elo portfolio of touchscreen components throughout Europe, Middle East and Africa.
Source: Electronics Industry Digest
verication of authorization
In all likelihood, customers would submit their own forms for verication. Consequently, ECIA opposes the letter proof portion of the G19 proposal. Having customers go to the OCMs website appears to impose the lesser administrative burden, quickest response time and lowest risk of counterfeiting. However, it is incumbent upon component manufacturers to improve their websites to make it easy to nd their list of authorized distributors and to keep this list current. The OCM website should state what in regions a distributor is authorized to sell its products. Finally, OCMs should also make it clear whether distributors that acquire product through a buying group and/or master distributor are considered authorized for purposes of product warranty and support, as well for purposes of customer verication. ECIA has a task force that is considering a number of proposals regarding distributor authorization, including a possible certication process. In addition, the association operates www.eciaauthorized. com as the industrys only unbiased inventory search website that only features authorized components. Finally, the association recently tightened its criteria for distributor membership by requiring 100% of a members published in card to be authorized.
istributor authorization has become a hot topic within the electronic component supply chain. Customers and government are becoming increasingly aware of the importance of buying electronic parts from an authorized source (i.e., directly from the OCM or from an OCMs authorized distributor) to reduce the risk of buying counterfeit products. As a result, efforts are underway to dene and verify what constitutes authorization. ECIA is intimately involved in this effort, given that the associations mission is to promote and improve the business environment for the authorized sale of electronic components. The association denes an authorized distributor as a business that has been contractually authorized by the component manufacturer to resell its products. As it turns out, this denition is also becoming the de facto denition for everyone.
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he European Union and India currently have good trade relationships with both imports and exports being about the same. However, since the late-2000s
companies are also major investors in India and invested Euro 3.0 Billion during the same year. These numbers are most signicant and have a major impact on Indias economic wellbeing. The EU and India have been working on a Free Trade Agreement since 2007 to increase their trade in both goods and services and investment. Negotiations are expected to be concluded this year. The EU is a huge importer of electronic goods with a trade decit of Euro 104 Billion for this sector. It is relatively strong in telecommunication and components, and weak in computers & ofce equipment, and consumer electronics. This is a signicant opportunity for India as an attractive market. It has to be noted that a large proportion of global electronics trade (about 70% of EU imports, 55% of EU exports, with the notable exception of consumer electronics) is covered by the Information Technology Agreement (ITA) of 1997 and thus not subject to customs duties in countries that are signatories to the Agreement. India too is a part of the ITA-1. A strong Europe is vital for the global economy and one of the pillars on which the edice of global economic growth and prosperity rests. Indias economic interests are tied closely with that of the EU and there is much that we can learn and benet from this continent. We hope that Europe will solve its problems and emerge a strong economic force as we have always known it.
nancial crisis, the Eurozone has established and used provisions for granting emergency loans to member states in return for the enactment of economic reforms. This system is not working as smoothly as it is required to and needs addressing. The EU is a major trade partner of India exporting goods worth Euro 34.7 Billion as of 2010 and importing goods worth Euro 33.2 Billion from India. Similarly there is signicant trade in services amounting to Euro 9.8 Billion exports to India and imports worth Euro 8.1 Billion. European
he Association of Distributors and Manufacturers of Electronic Components (ADEC) DTAM gures as received from our members each half year, gives an overview of the billing trends on a half year cycle. The graph shows the % growth based on the previous half year results.
Program (MCEP) of the Industrial Policy Action Plan (IPAP) 2012/13 - 2014/15. The R5.8 billion MCEP was launched by Trade and Industry Minister, Dr Rob Davies in May2012. The MCEP will help to assist manufacturers to upgrade their production facilities to sustain employment and maximize valueaddition in the short to medium term. The main aim is to encourage manufacturers to invest and raise their level of competiveness. (Source: www.dti.gov.za) The tariff reduction project is an initiative from the South African Electro-technical Export council (SAEEC). This will assist the competiveness of locally manufactured products by reducing the input costs and help stimulate our local industry. SAEEC in conjunction with the support of the South African Electronics Industry Federation (SAEIF) and ADEC will ensure the success of the project. Lastly, the Independent Communications Authority of South Africa (ICASA) intends to nalize the Digital Terrestrial Television (DTT) regulations by September2012. It will be interesting to see when the Department of Communications (DoC) will start the migration process as the intention is to switch off the analogue transmission by December2013. The international deadline for digital migration is June 17, 2015. This will be the much needed stimulus that we need for 2012H2/2013H1 which everyone is eagerly looking forward too.
Graphic 1
the trend for 2012 H2 and what impact the slowdown will have on our industry
If we look at the total billings and the % growth from the previous half year we see the results of the slow down and a declining trend. As indicated below we saw a 3.95% growth from 2009 H2 to 2010 H1, a 1.61% growth from 2010 H1 to 2010 H2, an 8.7% growth from 2010 H2 to 2011 H1, a 5.89% growth from 2011 H1 to 2011 H2 and a 3.34% growth from 2011 H2 to 2012 H1. It will be interesting to see the trend for 2012H2 and what impact the slowdown will have on our industry. One of the key initiatives from the department of Trade and Industry is the Manufacturing Competitiveness Enhancement
ADEC DTAM
A large proportion of global electronics trade is covered by the Information Technology Agreement (ITA) of 1997 and thus not subject to customs duties
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presentations they have missed after the Forum. Both Murata and LPRS chose the event as the ideal opportunity to launch their new products to engineers. Bluetooth Low Energy was a hot topic at the Forum and Murata were there to show their LBCA2ZZVZE Bluetooth Low Energy (BLE) module LPRS launched their Connect2 Development Kit for eRA Wireless Modules, David Schmider, Technical Director at LPRS stated that; Real engineers with real applications are hard to nd but Fortronic brings them to us. Fortronic was the perfect forum for us to meet new people and launch our new Connect2 development platform for easyRadio.
Both Murata and LPRS chose the Fortronic event as the ideal opportunity to launch their new products to engineers
Mike Meakins, Innovations LPRS, also commented Fortronic really know how to organise a great electronics event. The recent RF & Wireless Forum was not only informative and educational but a great day out. There were opportunities to listen to expert speakers, have a good look at whats new in an exhibition
area and a chance to get some indepth knowledge from industry experts in the afternoon workshops.The format of the event, a true forum, is just perfect and the intelligent choice of exhibitors, speakers and delegates demonstrates just how networking should work. Turn around whilst enjoying the lunchtime buffet and there was always someone interesting to chat with! Praise from delegates was equally positive; Jerry Roberton from Malden Electronics stating that the speakers and the demonstrations were excellent. Quinten MacMorland of Quma Systems declaring that the presentations were inspirational and Steve Braithwaite, CEO of Ash Wireless stating that the day was well presented, excellent Chris Osborn observed that with the feedback and praise we have received from sponsors and delegates we have had no hesitation in conrming that a full programme of events will be held throughout 2013. I would also like to thank our sponsors for the great
amount of work and preparation they put in to help make these events so successful. Our next Forum on 23 October 2012 will focus on Power & Power Management is lling fast with manufacturers and distributors already conrmed that include; Vicor Power, Linear Technology, Texas Instruments, Microchip, Universal Science, Murata Power Solutions, Power Integrations, Microsemi, Inneon, GE Energy, ACAL BFi, Avnet Abacus, Avnet Memec, Solid State Supplies, Arrow, Richardson RFPD, Rutronik. Sponsorship places are limited and we fully expect to be over subscribed, as we have been for all our Forums, to ensure their place is reserved I would advise companies to register their interest with us as soon as possible.
FORTRONIC UK:
To register your interest or for a brochure and calendar of events please contact Chris Osborn, CEO Motiv8. +44 (0) 7822 4444612, email: chris@motiv8uk.com
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the Russian market but also for all countries producing electronics. However, the problem of bogus electronic parts hurts the Russian market the most for 3 reasons. 1. First, the vast majority of Russian electronic equipment manufacturers belong to a highrisk group, i. e. produces complex equipment in small batches on a contract basis and have specic procurement process. The chart shows the market segmentation by customer groups. 2. Second, the lack of skilled manpower planning departments aggravates the difculties to supply such production. 3. Third, the fact that many of the distributors do not follow the ethics code and although there is an exchange of recommendations between customers, it is still practically impossible to sort out the honest suppliers. WAYS TO OPPOSE COUNTERFEITING The electronics manufacturers may not totally eliminate their purchases on the open market because million-dollar contracts cannot wait for a couple of parts from ofcial distributors. However, if a manufacturer sources all the purchases by unofcial channels, the risk of purchasing bogus parts
Graphic 1
oscow: Counterfeit parts supply hurts primarily high mix low volume (HMLV) manufacturers who produce expensive and complex equipment in small batches on a contract basis. Having an unsteady purchasing process, the components range of such companies amounts to thousands of names, and procurement volume is estimated at tens and sometimes hundreds of units.
increases signicantly. In order to reduce the risk, the manufacturers should primarily work with ofcial, or franchise, distributors and dealers leaving independent distributors as a backup. A signicant tool against counterfeiting is to improve professional skills of the workers who are responsible not only for supplying but also for manufacturing planning. Procient work planning allows cutting an amount of emergencies in the procurement process. As a rst step, the Analytical Center of Modern Electronics conducts workshops such as Supply and inventory management of electronic equipment manufacturing and Electronic equipment manufacturing planning. The most difcult issue is how to select honest electronic components distributors. No distributors working on the open market can warrant their parts to be genuine. An honest distributor would inform the customer about risks which can arise. However, a dishonest one would hide the risks taken or simply mislead the customer.
The most difcult issue is how to select honest electronic components distributors
The recently founded Association of Suppliers of Electronic Components (ASPEC www. aspecrf.org) suggested an ethic code for the distributors. Signing the code, a distributor accepts the responsibility for counterfeiting and disinformation. Even though the code does not have a legal effect, this document helps to identify the companies which seek the civilized market relations.
Electronic components manufacturers put such companies at the end of a list of their clients as the least valuable and abandon them when there are shortages. Consequently, these companies often use independent distributors. In doing this, they encounter many dishonest suppliers who take advantage of the open market. This is an urgent issue not only for
The lack of skilled manpower planning departments aggravates the difculties to supply such production
ASPEC and the Analytical Center of Modern Electronics are going to conduct a seminar devoted to counterfeit components control. We would be glad to accept any recommendations for the experts to perform on the seminar.
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FBDi have just published an Environment and Compliance Compass in German and English
by Wolfram Ziehfuss Executive Director FBDi e.V.
www.fbdi.de
now better understand and meet the requirements, including for the rst time English-speaking companies.
members is 450 plus VAT, for nonmembers 850 plus VAT. Included are all updates until January 1, 2013. Purchasers of version 1.0 of the FBDi Compass can receive a new version free of charge. Contact fbdi-eng@ lorenzoni.de Multiple search modes possible The FBDi Compass can be used in various ways. Fundamentally all the sections are logically sequenced with links to one another. Section 1 Impact Analysis delivers information specic to the stakeholder and leads the user directly to the relevant regulations for their product. It is presented in ow chart format. Each step ends with a reference to the next appropriate section. Section 2 Classication Album indicates in which product category a product belongs. Sample images help the user verify they have assigned a product to the correct category. Once the appropriate category for a product is known. Section 3 Required Data summarizes all the necessary data, so that the steps required for the specic regulations can be determined. This makes the FBDi Compass a valuable navigation aid for dealing with EU directives for device manufacturers, suppliers, and customers across all industries.
EID NEWS
DISTRIBUTION
TTI, a global distributor of passive, interconnect, relay & switch and discrete components, is spearheading a focus on the lighting market with a new 48-page lighting guide. Detailing a wide range of passive, opto, connector and sensing products used in applications such as street lamps, security and surveillance systems, domestic, architectural, retail and entertainment illumination products and displays and signs, the new lighting guide showcases components from 20 suppliers, including LED franchise, Kingbright, recently added to TTIs franchise portfolio. RS Components is celebrating the second anniversary of DesignSpark, its free-to-access online design environment. DesignSpark PCB, the companys free PCB software design tool, is also two years old this month. DesignSpark has more than 90,000 registered members. RS has also signed a global franchise agreement with ON Semiconductor, a supplier of high performance silicon solutions for energy efcient electronics. RS has also signed a worldwide distribution agreement with HiWave Technologies, a provider of high efciency audio amplier ICs, full frequency range speaker drivers and bendingwave haptic touch devices. RS Component has also been named the best performing distributor in the EMEA region by electronics packaging specialist Schroff, part of the Pentair Technical Products Group. RS has also received an award for Outstanding Sales Performance from Amphenol Socapex, part of Amphenol, an interconnect manufacturer. Digi-Key announced the addition of the Omron Electronic Components ber optic data modules and minimodules.
Source: Electronics Industry Digest
summarizes over 180,000 pages of often difcult to understand directives in fewer than 150 pages
he FBDi Compass offers all manufacturers and suppliers along the supply chain across all industries a clear aid with which to navigate EU-level directives and legislation pertaining to electronic components. Version 2.0 of the FBDi Compass includes regulations concerning WEEE2 and RoHS2. Also new are revised, clearly-designed ow charts and a complete English version. With the new version, I believe that FBDi is now offering valuable procedural guidelines to help our members reduce risk. Product bans of electronic devices need not be a result of increased market surveillance in EU member states.
To keep the requirements understandable and executable for manufacturers and suppliers outside the EU, the FBDi Compass includes the necessary minimum of data. It also ensures that all economic stakeholders in the supply chain speak the same language in terms of the applicable EU regulations - which data, as necessary and required by product, must be fullled to meet certain statutory obligations, regardless of delivery format. This is of great assistance to small and midsized companies.
The FBDi Environment and Compliance Compass provides clarity in dealing with issues of conformity with relevant EU laws
The FBDi Environment and Compliance Compass provides clarity in dealing with issues of conformity with relevant EU laws, currently greater than 33 in number. The FBDi Compass summarizes over 180,000 pages of often difcult to understand directives in fewer than 150 pages and explains their use through ow charts and notes. Those not conversant in EU regulations can
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xcellence, innovation and visibility were key words during S.E.E. 2012. Debate on the challenges of Swedish electronics industry initiated the event. Hakan Ekengren, undersecretary of the Ministry of Enterprise, Energy and Communications, inaugurated S.E.E. 2012 and participated after that in a panel debate on the most important challenges of the Swedish electronics industry.
Proximity to the customers was pointed out as one of the most important reasons for keeping the production in Sweden
INTERNATIONALLY RENOWNED SPEAKERS
S.E.E. presented a rich seminar program with interesting speakers during all on three stages all three days. The Ericsson Group was there, describing the challenges ahead when it comes to the sharp growth of trafc in data networks. Mikael Ostling, professor and Dean at KTH, held a seminar on the exciting eld of nanotechnology and its future prospects, including in sustainability. Nanoelectronics gives us new possibilities to build a sustainable society and reduce energy consumption, which results in higher protability and a better environment, said Mikael Ostling.
The other participants in the panel were executives from the industry and government; Bo Wass, CEO, Autoliv Electronics and Anders Felling, CEO, Westermo Data Communications AB, Mikael Joki, CEO Eskilstuna Elektronikpartner AB and Gerd Levin Nygren, CEO, Hanza Electronics and Jonas Wallberg, chief strategist of IKT, Vinnova.
A SUCCESS
S.E.E. 2012 was held April 17-19 in Kista (Stockholm), the worlds third biggest ICT cluster. S.E.E attracted over 200 exhibitors and more than 4.600 visitors. The comments on site were positive and enthusiastic both from exhibitors and visitors. The success was the result of the dedicated work and joint effort made by the Swedish Electronics Trade Association in power of its member companies, in planning and making best possible preparations. We are already looking forward to next S.E.E. in April 2014 at Kista Exhibition Center, Stockholm, Sweden. www.see-event.se
Excellence, innovation
It is through business between companies that prosperity grows, said Hakan Ekengren, and presented some of the governments plans for creating a more favorable and innovative business climate. He was also pleased about the EU work for improved terms of payment, a major issue for companies.
IDEA NEWSLETTER
INTERNATIONAL DISTRIBUTION OF ELECTRONICS ASSOCIATION EDITOR IN CHIEF: Gary Kibblewhite EDITORS: Adam Fletcher (UK); Robin Gray (USA); Rajoo Goel (India) George Kell (Russia); Franco Musiari (Italy); Lena Norder (Svezia); Kevin Jurrius (South Africa); Wolfram Ziehfuss (Germany); Amy Wang (China); PUBLISHER: Silvio Baronchelli
INTERNATIONAL PROMOTION BY: CONSORZIO ELETTRIMPEX
PUBLISHED BY: Tecnoimprese Scarl - Via C. Flaminio, 19 - 20134 Milan - Italy PRINTED BY: Servizi Tipograci Carlo Colombo - Rome
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