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96 SMT Magazine • August 2015 just-in-time (JIT) delivery of product. However, what makes them the same when considering the risk they pose to your supply chain is the fact that neither is authorized by the OEM or the OCM of the electronic component or high- er assembly you are looking for. Getting up to Speed Independent distribution has been part of the supply chain for well over 50 years, and re- mains a self-regulating industry. Few, if any, in- dustries are invited to support the multi-billion-dollar industries of today, with little to no regu- lation. The reality is that the grey market is one of the best examples our economy has of true, unregulated capital- ism. The scenario of those di- rectly supporting the supply chain with product are also, in many cases, weeding out the bad actors leaving those that comply to an unwritten rule left to service the supply chain. Sound scary? Maybe, but most times the root of fear is due to a lack of understand- ing, and allowing one's mind to make decisions based off emotion, and not fact. You do not have to be a gradu- ate of the Wharton School to know what hap- pens to a business that makes decisions based on emotions rather than facts. Today, we have a prominent global trade organization—Independent Distributors of Electronics Association (IDEA), and we have an industry supply chain risk mitigation leader in Electronic Resellers Association International (ERAI). There are a handful of other industry re- sources, but I chose to mention IDEA and ERAI as they are considered the pioneers in bringing a sense of accountability and regulation to an industry in need of both. Despite the work of these organizations and others in this field (sure to be called out in fu- ture articles), it is still up to the individual ID or broker to chart their own course. An ID does not need to be a member of any of the afore- mentioned organizations, nor are they required to be certified to any industry standards. Reg- ulations are driven by the industries the ID or broker serves. This is an important fact for sup- ply chain managers to understand. As with any industry, not all IDs are created equal. In gen- eral, an ID's customer base will use the services of an ID for less than 1% of their total spend. This number fluctuates depending on the in- dustries that make up an ID's customer base, but it is a point worth mentioning, because at the end of the day, this remains a key driver in the decision-making process of an ID, with regard to investment in standards and certifications. As mentioned earlier, IDs typically enter the supply chain when the authorized dis- tribution channels are unable to support the supply chain's needs. A large population of IDs do not have agreements in place that provide a constant revenue streams for a defined period, which is yet another factor in the ID's decision with to regard the decision to allo - cate resources towards achiev- ing and implementing industry based standards or government accreditations. This creates supply chain risk mitigation issues not only for the end-user, but also for other IDs, as it impacts the building and monitoring of the ID's AVL, which in turn effects QC flow-downs, etc. Back to the Present So where do we go from here? In my next column, I will discuss the government and in- dustry's influence on the independent distribu- tor, as it pertains to tiers of IDs based on the risk to the supply chain, as well as some best practices to incorporate when procuring parts from the grey market. SMT SuPPLY CHAIN RISk MITIGATION APPLICATIONS FOR THE GREY MARkET continues Stephan Halper is the Coo and principal of Secure components. To contact the author, click here. 50 sHAdes oF tHe Grey mArket the scenario of those directly supporting the supply chain with product are also, in many cases, weeding out the bad actors leaving those that comply to an unwritten rule left to service the supply chain. " "