A supply chain practice called design registration has dogged the electronics channel for decades. Distributors support their component suppliers by getting their parts designed in to an OEM end-product. In order to be compensated for that effort, distributors must "register" that design with the supplier. Once the OEM device reaches production, the distributor may receive preferential treatment from the supplier in the form of a protected margin or a preferred price.
Electronics distributors are sales-driven organizations that hire engineers to generate designs. Engineers may assist in booking business but do not directly generate component or system sales.
OEMs and EMS providers are under no obligation to buy parts from a distributor that assisted in a design. So, a registration does not guarantee compensation for a distributor. In some cases, suppliers pay a flat fee for design assistance.
Some distributors believe the registration process slows down order processing as engineers frequently small volumes of components for a design prototype. However, the industry at large fully supports the design registration process.
ECIA’s Global Industry Practices Committee (GIPC) has taken on the task of modernizing the channel’s design registration process. Assembling a group of Subject Matter Experts (SMEs) and industry stakeholders, representing the authorized component channel, to include semiconductors, electromechanical/interconnect and passives, the group will approach the project with a multi-phase initiative to assess the current state and what the future state might look like.
“The initiative was proposed by ECIA’s Manufacturers’ Council,” explained Don Elario, ECIA Vice President of Industry Practices, “it will bring representatives from all the component technology sectors together. In addition to participation from each of the three ECIA Councils, there is representation from GEDA (Global Electronics Distribution Association) and ERA (Electronics Representatives Association). This is a long-standing process in the industry and modernization is a likely next step.”
The first phase on the design registration project launched June 18th and will assess what works and what doesn’t work with the current process in all three technology areas. This will be accomplished through an anonymous, collective sampling of surveys and interviews with the key stakeholders. The deliverable from this phase will be a “Best Practice” document revealing the results of this fact-finding activity. A possible second phase to this project will be ideas for a future state to modernize the process using new and/or current technologies available in the world today.
“ERA is delighted to join representatives of ECIA and GEDA in this industry-wide initiative. We will be sharing the results of our own DREG study that was presented at our 2018 ERA Conference that may help in framing this initiative. Most manufacturers’ DREG programs rely on their reps to review and approve the registration. Thus, the reps are a key piece of any DREG program,” added Walter Tobin, ERA’s CEO.
“Component manufacturers understand the value of authorized distribution in supporting their customers’ design efforts, who invest time, resources, and capital to educate customers on manufacturers’ products. Manufacturers utilize design registration to help compensate distributors for those investments,” added David Loftus, ECIA’s CEO and President. “The industry has the opportunity to modernize the process. No single component manufacturer can do this – it must be an industry-level initiative to drive industry improvements that benefit customers and the entire supply chain. ECIA’s goal is to bring the channel together and find solutions to the challenges we all face today.”
For more information about this important initiative, please contact Don Elario. Delario@ecianow.org
The Electronic Components Industry Association (ECIA) is made up of the leading electronic component manufacturers, their manufacturer representatives and authorized distributors. ECIA members share a common goal of promoting and improving the business environment for the authorized sale of electronic components. Comprised of a broad array of leaders and professionals representing all phases of the electronics components supply chain, ECIA is where business optimization, product authentication and industry advocacy come together. ECIA members develop industry guidelines and technical standards, as well as generate critical business intelligence. For more information, visit www.ecianow.org or call 678-393-9990.