REPORT FOREWORD
THE VALUE DELIVERED BY AUTHORIZED CHANNELPARTNERS FOR ELECTRONIC COMPONENTS

The Value Delivered by Authorized Channel Partners for Electronic Components

Forewordby Dale Ford, ECIA Chief Analyst

This new ECIA study "The Value Delivered by Authorized Channel Partners for Electronic Components"
delivers a model and value analysis of authorized distribution for electronics component manufacturers.
The original analysis performed over 20 years ago focused on proving the value of the services electroniccomponent distributors provide. The ECIA Board of Directors recently decided that it would be beneficial
to publish an update to this research that reflected the significant changes in the industry since thepublication of the original study. ECIA selected a team of professors and graduate students from Texas
A&M University’s Global Supply Chain Laboratory to conduct research and publish a new report. They
were selected for this project based on their ability to bring an independent perspective to the topic, theanalytical capability they have developed with a highly recognized program dedicated to supply chain
research, and their previous experience as team conducting the original study.
In addition to updating the original analysis, this new analysis quantifies benefits delivered through areas
such as value-added services (VAS) and the digitization of sales processes. It shows how authorized
distributors and manufacturer representatives deliver value through a customer centric approach,demand creation, and strategies for generating, managing, and sustaining growth.
The nature and value of the manufacturer / distributor relationship continues to change. Multiple customer
case studies conducted in this new research that revolve around existing customers, new customers andEMS/ODM customers reveal the diverse range of value and solutions delivered by authorized distributors
and manufacturer representatives.
While not included in the original study, this new analysis shows how Manufacturer Representatives
provide value through engineering solutions, sales, marketing, and customer support services likecustomer intimacy within a geographical area, ease and speed of new product introduction, innovative
demand creation and lead generation, digital marketing and data analytics, customer support, outsourceof sales role, product demo and training platforms, etc.

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The Value Delivered by Authorized Channel Partners for Electronic Components

Important Note on Avoiding Use of Non-Authorized Sales Channels
This study does not address the critical difference between the use of authorized distributors compared tobrokers, independent distributors, and other non-authorized sources. ECIA has addressed the vital
importance of only purchasing through authorized distributors in many other publications. Please note thestrong caution below about the hazards associated with the non-authorized channel.
Manufacturers will only provide full support on their products purchased through manufacturer-authorized
distributors and sales offices, including quality, reliability, failure analysis, and applications support. A
manufacturer cannot determine the origin or legitimacy of products procured through brokers or other nonauthorized sources. They cannot provide warranty coverage or any quality, reliability, failure analysis,applications, or other support on such products. A manufacturer will neither accept returns nor provide
credit on products that have been purchased from brokers or other non-authorized sources.
Recent articles in semiconductor industry publications have reported the availability of used, damaged,and counterfeit products on the broker market. The leading reason that customers experience IC failures
is because the products have been purchased from non-authorized sources. Non-authorized sources
often sell products which may have been improperly handled/stored or may be counterfeits. For moredetails, please see the SIA Anti-Counterfeiting Task Force Whitepaper. Therefore, to ensure you arereceiving unused, authentic manufacturer products, and to take full advantage of the reliability levels
required for these products, please ensure all purchases are made through authorized distributors andsales offices.

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The Value Delivered by Authorized Channel Partners for Electronic Components

FIVE KEY TAKEAWAYS FROM THIS REPORT
1. Distributors play a vital role in the supply chain by bridging the gap between manufacturers andcustomers. They provide various values such as product and services expertise, inventory
management, cost savings through bulk buying power, logistics support, market and businessintelligence, sales support, technical support and training, marketing support, risk management,and innovation.
2. Independent manufacturers' representatives offer expertise, market knowledge, sales support,
customer service, relationship building, cost-effectiveness, regional expertise, technical support,
and brand representation to manufacturers and customers.
3. The authorized channel partnership model generally outperforms the direct selling model in termsof cost efficiency for all but the largest, most predictable customers. It allows manufacturers tofocus on core competencies, achieve economies of scale, and lower unit costs, resulting inincreased profit margins.
4. The specific dynamics of each scenario and the type of channel partner play a significant role indetermining the degree of cost savings achieved through the authorized channel partnershipmodel. Factors such as product volume, distributor type (broadline, specialized, high service), andtraditional vs. optimized processes impact the cost-effectiveness of the model.
5. Accurate data, market research, and collaboration between manufacturers and authorized channel
partners are crucial for maximizing the benefits of the authorized channel partnership model.
Reliable data ensures that cost analysis reflects real-world scenarios and industry trends, while
collaboration minimizes channel conflict and optimizes operations.

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