Navigating the myriad of choices procurement professionals face when seeking parts can be daunting. In this Executive Perspectives episode, Colin Strother, Executive Vice President of Rochester Electronics, offers insight into forming business relationships and strategies to implement to avoid counterfeit issues.
This interview was edited and formatted for clarity.
Tyler Fussner, Managing Editor, Supply Chain Connect
Colin, thank you for joining us.
Colin Strother, Executive Vice President, Rochester Electronics
Hey, thank you, Tyler. It’s a pleasure to be with you today.
If you could please introduce yourself to our audience and tell us a little bit about Rochester Electronics.
My name is Colin Strother, Executive Vice President of Rochester Electronics. I’ve been in the semiconductor industry for over 30 years, the last 16 with Rochester, both in the UK and here in the U.S. since 2014. I’m responsible globally for sales, marketing, supply development, product and technology, supply chain operations and business applications.
Rochester is a privately owned family operated business. We were founded in 1981 by our founder and CEO, Mr. Curt Gerrish. Curt identified a need in the market for an authorized source of supply of EOL devices. And as I said, he founded the company. For over 40 years in partnership with over 70 leading semiconductor manufacturers, we have provided a continuous source of critical semiconductors, both active components to solve supply chain disruption and EOL semiconductors to meet long term customer needs.
Excellent. Colin, I really wanted to hear your perspective and the Rochester perspective on the counterfeit issue that the industry faces, specifically how distributors, manufacturers and purchasers all converge and address this problem. I think Rochester is in a unique position, being both a manufacturer and a distributor. So, I would love to hear a little bit more about the manufacturing side of Rochester electronics.
I’ll split them into two parts if I may, one—anti-counterfeit—and two—related to product be it distribution or manufacturing.
From an anti-counterfeit perspective, our position has always been twofold. One: education. And two: advocacy. From an education perspective, I think it’s fair to say that few companies have championed the anti-counterfeit cause more than Rochester. In 2006, we launched the comprehensive anti-counterfeit awareness campaign with our supply partners to expose counterfeit and substandard products in the supply chain. We initiated the formation of the Semiconductor Industry Association’s Anti-Counterfeiting Task Force; we actively promote best procurement practices, combating counterfeit and substandard products; and we work collaboratively with Customs and Border Protection, the DOJ and other legal entities.
From an advocacy standpoint, we firmly believe to avoid any counterfeit product and avoid any risk, it really is as simple as buying from an authorized source of supply, such as Rochester Electronics. However, today, it becomes more confusing because in the marketplace there’s a variety of companies. Once it was authorized distribution and independent distribution. Today you have what’s known as hybrid distribution. And that’s companies that maybe have some authorizations, or they may have franchise authorizations in certain geographies, or only for certain products. So, it’s really important that customers understand the difference between fully authorized, independent and hybrid so that they can make the best educated purchasing decision.
Rochester will continue to do the best to educate on the dangers and the risk associated. We’ll continue to work with agencies on the detection and prevention [of counterfeit products]. But ultimately, customers are able to buy from companies that are 100% authorized by the original manufacturer for all of the products that they carry, in all geographies in the world—we really do firmly believe that’s the best way of avoiding the risk associated with counterfeit product.
The second point you mentioned there, Tyler, was that Rochester is both a manufacturer and a distributor, but ultimately, Rochester’s mission is to drive customer success. And we achieve this by offering product solutions. Whether it’s our in-stock inventory from the original manufacturer, whether it’s Rochester-manufactured products under license from the original manufacturer, or whether it’s in house turnkey services, such as wafer processing, assembly, or test that we provide customers and our suppliers to enable them to provide the product. So, ultimately, our goal is to provide the broadest and deepest product offer to the customer. Everything we do is sold to the original manufacturer’s part number. Every part that we manufacture is tested to every parameter of the original manufacturer’s technical datasheet.
To customers, it’s important that they understand that there’s been a change from the original manufacturer’s part, or a part that Rochester manufacturers, and we provide the information that’s required. But ultimately, we’re supplying the original manufacturer’s part number to customers who are able to put that part—with confidence—in their end application, without the need to do any software changes, requalification, recertification; and that includes customers across a variety of Hi-Rel industries, including customers that we serve in the civil aerospace market.
When it comes to the manufacturing element, there’s a lot of talk today about in-house manufacturing, onshore manufacturing. And something that is worthwhile mentioning is that Rochester has been and continues to be an in-house, onshore manufacturer. And we have been since the 1990s.
The reason we got into manufacturing originally was because Intel approached us in the 90s. We were, as we are today, a franchise distributor of Intel. Intel wished to get out of their military product line, but they had customers that they wished to continue to serve. They needed a partner, domestically, who could continue production for them. And one of the key elements was the critical nature of these devices and the secure IP requirements.
So, Rochester built up our manufacturing capabilities and transferred over the entire production line from Intel. That included any work-in-progress; that included wafer and die; that included the test equipment, the test programs, the packages, the lead frames, the tooling for the packages and lead frames, and even to the extent that we hired a number of engineers from Intel to continue the production line. Decades later, we still continue to manufacture those devices in-house. And really, since then, over the decades that have followed, we really built up our manufacturing capability. And we now are able to provide an ongoing source of supply of Rochester-manufactured product under license across a range of technologies and manufacturers.
Colin, it sounds like the decades of manufacturing experience are invaluable to Rochester and the insights you must have been able to glean and learn from being able to onshore and bring in all that manufacturing expertise, I’m sure it’s also helped you on the distribution side of the business. Why I wanted to understand that is because from the purchaser’s perspective, if you’re looking to combat the counterfeit issue, maybe you start looking at authorized distributors or licensed manufacturers. And if they look at someone like Rochester, who falls into both of those categories, it seems like a sure bet to understand exactly what you’re getting when you’re dealing with an authorized distributor or licensed manufacturer.
But what exactly does that authorization mean? What does that mean from the perspective of the purchaser? Are there certain standards or certifications that they should be looking for when they’re trying to source products?
That’s a really good point, Tyler. And something I’d like to reiterate in terms of the decades of manufacturing experience. Clearly, this is complex semiconductor products in-house and onshore that requires a significant investment in capabilities. That’s facilities; its equipment; and its highly experienced, specialized engineering resources. And we find ourselves very fortunate today. Clearly there’s a movement to onshore semiconductor manufacturing. And in the news, there’s reported shortages of skilled workers domestically.
Because we’ve been looking to recruit this talent over the past few decades, we find ourselves in a very, very fortunate position that we already have all of this in-house. The reality is that because we are making typically legacy products that are EOL, we rely on that legacy knowledge that no longer exists elsewhere. So, when I also talk about counterfeit products and the binary nature of buying from an authorized source, I want to touch on manufactured products. Rochester’s parts, we meet every parameter of the original manufacturer’s technical data sheet. We label the part with the original manufacturer’s part number. You can only do that if the part is copy-exact. We have customers where Rochester supplies manufactured product where we have fabricated silicone into Hi-Rel applications, such as civil aviation, that negates the end-customer having to do any additional recertification, flight testing or requalification. Whilst the actual component will cost more, because we’re making smaller quantities than in the production environment and it is a highly specialized engagement, the value that we provide to our customers in that area to keep their legacy programs, which span decades, going, is invaluable.
Your other question: how can you ensure that you’re buying from a 100% authorized source of supply? It’s really difficult and even confuses me at times. I may look online at a company; they may display suppliers’ logos, which makes you think that they are franchised. It’s only when you dig into it deeper, it may say “can source” or “can supply.”
Additionally, you see websites where some companies have a level of franchise authorization, but it’s only on a small range of products. They may also offer from the same manufacturers, or different, recertified products. They may also offer products for which they hold no franchises. An example might be they may have some connector, EMECH, franchise and offer semiconductor; or some semiconductor franchises and offer connectors and EMECH. They may have a franchise and they may market globally, but they may not hold that franchise in all of the world’s markets.
There’s two ways that you need to look at this. One is: what are the standards that they have? But even that can be confusing. What are the quality systems that they have? (Which I’ll touch on in a minute). Go to the original manufacturer’s website; look at distributors; look at who’s authorized; and look at which regions they are authorized in. And at that point, you are making every best effort you possibly can to ensure the company is representing themselves fairly and you have the confidence to buy from that company accordingly.
But just wanted to touch on quality systems for a moment, if I may, Tyler. Rochester has invested heavily in IATF 16949, which is the automotive standard. Very few companies—I’m actually not familiar with any other companies in distribution—currently have that standard. The reason we did it was twofold. One: Because we are a manufacturer and a distributor, we required it to be able to manufacture a product that would be adopted by the automotive industry—Rochester-manufactured product. And the other reason we did it: As a as a quality management system, it’s very, very thorough. And it really makes you look at every aspect of your business. As a quality management system, it touches manufacturing; it touches supply chain; it touches finance; it touches HR; it goes right up to the goals that are set at the business plan of ownership.
That’s another thing to look up. All standards are not equal. What standards do people have? All authorizations are not equal. What do they truly have?
There’s a lot to take into account from a purchasing perspective. There are certainly different levels to qualifications and standards. It makes you think; you have to do your homework and understand who exactly you’re getting into business with and the qualifications and the authorizations that they have for certain lines.
Yeah. We talked about counterfeit semiconductor products, but the complexity of counterfeiting is truly astonishing. In its basic form, we’re thinking of, perhaps, parts that have been stripped from circuit boards over a pot of molten solder in the street or parts that have been remarked or parts that have no silicone. And I’ve been to some of the infamous semiconductor malls. And I’ve seen all of this. But I’ve also been in parts of the world where I’ve literally been in a store and I could have bought a counterfeit iPhone. I was able to pick it up; I was able to connect to the store Wi-Fi; I was able to find my way to changing the language setting to English. It looked and felt like an iPhone. But it wasn’t. It was a counterfeit device running Android with some software overlay.
The reality is, to make something of that complexity it has to run down the same automated assembly lines and skilled operators as an original device. What really struck me at that moment is that we can’t stop it. And people will become more complex. And people who maybe don’t have the full authorization or don’t offer 100% fully traceable products that original manufacturer who maybe do offer recertified products, who maybe do sell products over franchise—that’s inevitable. Because what they’re doing is they’re making best efforts to market what they have and make it represented in a certain way.
What Rochester does is hold to our original founding principles as a 100% authorized source of supply, be it as an authorized distributor and subsequently as a licensed manufacturer, and it’s 100% binary. I think that Rochester’s unique nature may need a little bit of an explanation, but I think in today’s marketplace, the semiconductor marketplace is established. It’s fully established. I’ve worked for some of the other major companies. Rochester has been in business since 1981. If you look at the websites of the major semiconductor manufacturers, and you look at who is fully authorized, you’ll see a correlation. And it’s generally a handful of companies.
I do understand that customers sometimes need to go without that, particularly when there are some shortages. Rochester doesn’t have every part for every manufacturer, or the capability to make every part from every manufacturer. But if you make the decision to start with the few [fully authorized distributors], I think that’s the best place to be.
Yeah, it’s a complicated and complex issue, especially when, like you said, you can get down to a product that’s almost a mirror image of what would be an original product. It really makes you think and understand that you have to make the right decision as to where you’re getting these products from because at the surface level it can look like the real deal.
It comes back to something that you raised; it can be as simple as leaving it to a binary decision. It’s either doing business with a 100% authorized source or not.
Exactly. One of the things that has always been a concern to me is latent defects. From my engineering days as a contract manufacturer, ESD precautions were very, very prevalent. How have products been handled? Full traceability in the supply chain is critical, because a 100% authorized distributor receiving factory direct product, there’s integrity in the whole supply chain.
Once that integrity is broken, the component may not be counterfeit, but how has it been handled? It may have been handled without ESD precautions. That may not show itself initially. Over time, will there be a latent defect that will show itself when the product is in use in the application? If it was a more consumer-based application, the consequences may be relatively minor; the TV remote would stop working or the washing machine wouldn’t switch on. But in a safety-critical application, or in an energy application where it’s in the drill head, for example, the cost of failure is enormous.
So again, 100% authorized factory direct supply chain security is binary in my mind. Just buying a part that you believe came from an authorized source—it isn’t enough. You need that full chain of custody end to end.
Having that transparency and that insight into the procurement process from the purchasing end is vital. You do want to know exactly how that product got to your hands or how it got to your ability to design that in for your end use.
It leads into something I wanted to ask you; from a purchaser who has selected an authorized channel for procurement, what are some technologies or services that they should be on the lookout for that would help them best engage with such channels of procurement? Maybe you can speak to some technologies or strategies that Rochester implements to help provide that trust and transparency in addressing customer needs.
Our success for over 40 years has been built on authenticity, trust and meeting the customers where they are at. Reacting quickly to their demands, but also proactively trying to provide valuable product and service solutions with the semiconductor manufacturers we represent and partner with. Today, we meet our customers globally, online and in person. I’m a great believer in understanding a customer’s needs and building relationships.
We continue to invest globally in physical resources. In the last month, I signed three new leases which expanded existing facilities and will add resources in several new countries in the second half of 2023 to expand our global footprint. However, it’s our digital transformation journey that really excites me, in addition, as we look to provide online local language, web support and product content across all of the major geographies.
Another thing that I think is of interest is that everyone’s talking about AI at the moment. But I’m thinking about trusted AI which safeguards sensitive customer data, only using what is consensually provided. But how can we use that to deliver enhanced and personalized contents, services, globally, in real time, and in a variety of local languages? Customers today, you’ve got to meet them where they’re at, how they want to be met. And that can be in a variety of different modes.
I was with a customer recently in Brazil. They wanted to meet in person so we could better understand their needs and what challenges they had so that we get to exchange information ongoing, because they wanted Rochester to highlight potential solutions before they identified the problem so that they were not reacting. They want to pick up the phone and talk to their inside salesperson in Portuguese during working hours. They want to go online and look at our product and information. They want to go online and download a copy of their invoice or upload a bill of material.
Customers today, they don’t necessarily want one way of interacting. They want a variety of ways of interacting. And we want to be interacting in a proactive manner and having the physical conversation and also the digital conversation—tying it both together. But there has to be relevancy here. Because customers are busy and you don’t want to bother them. What you want to do is continually provide them value to enable their success.
I think it’s very important to have a wide range of choices to connect and engage with a provider, not only to be able to engage in the way that you prefer to but if the last few years have taught us anything, it’s having the ability to pivot. Maybe some changes have come up where you’re going to have to engage in a way differently than you had before. It’s good to understand when you’re looking to purchase and engage with a provider that there are options out there; there are different avenues and different technologies being implemented to help boost engagement to really help shore up that engagement and offer a wide variety of choices.
A couple of things in closing. One was to talk again about our education and our advocacy. We continue to educate in terms of anti-counterfeit and recommended purchasing practices. And we remain staunch advocates of you’re either 100% authorized or you’re not. And today, there is blending. When you look at companies who are effectively hybrid, they are selling franchise products, recertified products, products that they may not have the franchise for, that to me is the biggest danger, because it’s not one or the other.
Where has the product come from? How has it been handled? Is it 100% authorized, in my geography, for the products I’m purchasing or not? It’s binary. It’s digital. It’s one or zero. I would recommend customers take that onboard in their purchasing decisions.
Another thing I’d like to mention is that Rochester may be thought of primarily for end-of-life product. However, from a technology standpoint, we leave no stone unturned in our drive to deliver customer success. Whether this is through factory automation, warehouse management, trusted AI, our focus is resolute on people, processes and technology to drive the business outcome. And the business outcome never changes at Rochester Electronics—it’s customer success. We’re here to deliver customer success. It’s part of our mission statement from 1981 and it’s our guiding principle.
The last thing I’d like to say is thank you to all of our customers. Thank you to our supply partners. Thank you to everyone that engages with Rochester. We very much appreciate that opportunity.