There are a lot of great moments in the original Pirates of the Caribbean movie, but one of them has stuck in my mind recently regarding business practices. In the Pirates: Black Pearl movie our plucky heroine, who is about to be captured, invokes the “Pirate’s Code” and demands to talk to the Black Pearl’s captain. Aside from the words “pirate” and “code” being used together, there’s another problem with the concept: The captain doesn’t keep his promise to free the heroine. The code, he says, is really more of a guideline.
If you spend any time searching for electronics industry standards, you’ll find a lot of examples of flexible codes. One is in regard to annual and quarterly earnings reports. There are laws (SEC) and practices (GAAP) applied to public companies, of course, but companies have a lot of latitude when it comes to summarizing results for the public. For example, companies may report sales or income with no comparison to anything; sales compared with the prior quarter; sales compared with the prior year; just the percentage change year over year without the sales numbers; the sales numbers with no percentage change; I’ve even seen one that highlights the company’s gross profit margin and nothing else. In other words, the verbiage accompanying the results data is more of a guideline. You have to read the balance sheets to get the whole story.
For the record, analysts and most corporations regard the year-over-year numbers as the best indicator of a company’s performance.
Rochester Electronics, which is authorized to sell and manufacture obsolete components, alerted me to another problem. Anything in the electronics industry that is regulated or restricted – hazardous materials; government purchasing; export and import limitations, etc. – require a “Certificate of Compliance (or Conformance)”, also known as a CoC or CofC. One would think such a document would be standardized by whichever body requires proof that a company is doing something correctly. Nope. In fact, buyers may actually receive shipments of components that carry a CoC from an authorized or trusted distributor attesting to the authenticity of the parts when in reality, the shipment is a mix of authentic parts and gray-market-sourced devices.
There are a number of reasons for this but one I have discovered: in many recommended CoC templates, there’s only one line or field to list the seller of the components. In most cases that should be sufficient, but with obsolete or EOL parts, the devices may pass through numerous buyers and sellers before reaching the end-product. Or authentic parts may be mixed with bogus parts and then sold as a single shipment. So the CoC may mean nothing at all.
The more cynical among us – by this I mean myself – would think of the CoC documents as CYA documents. Hopefully, you won’t need a translation but in effect, these are documents that show you did the minimum amount of work so that if someone up the line comes back to you, your ‘A’ is covered.
Which brings me to the next great moment in Pirates. Orlando Bloom (honest commoner) is in a swordfight with Johnny Depp (scalawag pirate). Apparently, swordfights also have codes. Depp pulls a fast one on Bloom and Bloom says: “You cheated!” Depp replies “Pirate.” In other words, “Dude, what did you expect?”
There’s a big difference between channels in the supply chain and there are many honest companies outside of the authorized channel. Then there are the less-honest sources. So what I’d recommend for buyers that may not know where their parts are from: Remember, a CoC is not a code, it’s merely a guideline. If you get involved with suspect sources and end up getting burned -- Dude, what did you expect?