Revolutionizing Electronics Distribution: How Innovation Drives Market Disruption

Every once in a while, a company comes along with an innovative technology to completely disrupt an industry. That’s the case with Sourceability and the electronics distribution industry. Founded on July 15, 2015, in Doral, Florida, Sourceability became a global supplier in just six months. Today, it has 13 offices and 6 representations offices in the United States, , Israel, China, Germany, India, Italy, Mexico, Singapore, Slovakia, Sweden, Taiwan, and the Netherlands. It is ranked 22^nd on the 2020 Top 50 Electronics Distributors List, according to Source Today, with 2019 revenue over $167 million. (Source)

This begs the obvious question: How could a startup do so much, so fast?

Figure 1: A global e-commerce marketplace for electronic components, Sourcengine brings 2,600 traceable sources into one place for buyers. Buyers can search over 550 million parts and obtain a quote with the push of a button.

The man with a vision

Electronics distribution has been around for many years. Its basic function is to supply components and subsystems to those who need them. The industry has become very competitive and profit margin has been eroding over the years. Component sourcing is tedious and time-consuming. For example, trying to get a quote for a new project may take days of buyers and suppliers going back and forth.

Jens Gamperl, president and CEO of Sourceability and an industry veteran, understood that regional distributors have limitations. International Electronics Manufacturing Services (EMS), such as Foxconn and Sanmina, wanted worldwide sourcing capability. He had the vision to create an international supply chain company with a solid team and innovative technology to make the buyer’s job easier. He wanted to provide the best solution and services to manufacturers and EMS worldwide. With his connection in the industry, he started to build a strong team with extensive industry experience.

Along with an investment team, Jens acquired an eight-person distributor with $10 million in sales in 2015. He realized the importance of providing quality component sourcing with good logistics support. He was determined to build the company with the core values needed to serve the industry:

• Genuine, quality sourcing with ISO 9001 and 14001 compliance to help the industry work together
• End-to-end logistics support to make the buyer’s job easier
• Worldwide sourcing capability covering all the clients’ manufacturing sites
• An innovative digital exchange platform to make buying and selling easier

Digital supply chain advantages

A digital supply chain enables buyers and sellers to trade cost-effectively in real time. To realize this vision, Jens has invested in an automated platform called Sourcengine.

A global e-commerce marketplace for electronic components, Sourcengine brings 2,600 traceable sources into one place for buyers. Buyers can search over 550 million parts and obtain a quote with the push of a button. Once a specific part number is entered, depending on availability, up to 12 suppliers including factory direct will potentially present a price quotation within a few seconds. Additionally, if no matching parts are available, alternative recommendations will be provided. On the supply side, vendors can present their products to the marketplace, especially those components with different shapes and forms, which buyers may not know exist. This platform is very efficient and saves buyers a great deal of time in searching for components.

Many Fortune 500 companies have developed their own enterprise resource planning (ERP) systems. To enable these companies to benefit from both their ERP systems and the Sourcengine platform, Sourcengine can be integrated into the companies’ ERPs. Integration of the two has been so successful that it has been reported that after these Fortune 500 companies test Sourcengine, they require their partners to use it, too.

The power of the BOM tool

The responsibility of a buyer working for a manufacturer or EMS is to get a timely quotation from reliable suppliers. Given the same component specifications, the buyer is to achieve the most cost-effective price possible. While tedious, the importance of this process cannot be overlooked because it directly impacts product profit margins. Multiple steps are involved:

• Once the project is approved by management, the R&D engineer will develop the design, schematics, and the bill of materials (BOM).
• To calculate the cost of the product, the BOM will be given to a buyer to get quotations based on the projected volume to determine the cost of the product. But this is easier said than done.
• Usually, the buyer will go to one or two approved distributors to get a quotation.
• After a quotation is received back from a distributor, the engineer will calculate the cost of the new product.
• Once the prototype of the product is complete, alpha and beta tests will take place. If modifications need to be made, a new BOM will be created, and a new price quote will be obtained. This cycle will repeat until the final product is ready to be released to production.

By using Sourcengine, the buyers can upload the BOM list. With the push of a button, within 10 seconds, the buyer will receive quotations from multiple sources, including factory-direct quotes. The buyer can specify various criteria for the BOM, such as target pricing, specific brand, and manufacturing location. Additionally, if a certain part is not available, the BOM Tool will suggest an alternative part from a different supplier for the buyer to consider.

Critically, each part number is traceable based on manufacturer’s name, factory location, lot number, and/or date codes to comply with ISO 9001 and 14001 requirements. The BOM Tool not only helps buyers source parts on a global basis in real time, it ultimately minimizes waste and adds profit margin to the product line.

Going the extra mile

It is easier to be a distributor of components by just processing the orders. Sourceability has decided to go the extra mile by migrating its mission to giving clients a full range of digital services to digitalize the supply chain and dissociate itself from being a distributor. This not only includes on-time delivery of components but the best support services possible. To ensure quality, Sourceability takes the extra step of testing all the components coming through its facilities. Testing resources include high-power microscopy and heated chemical test (HCT). Cutting-edge equipment and methods also include the Creative Electron TruView Prime X inspection system, RoHS testing with X-ray fluorescence (XRF) equipment, RPS Cadence Steam Aging System, and others. They are used to deliver authentic components conforming to the required standards. Many of the tests that have typically been done by customers can now be done by Sourceability. Additionally, stress and burn-in tests are available based on clients’ requirements.

A stringent receiving inspection process is conducted every day to provide clients with inspection reports, inspector and distribution center certifications, and other customizable reports. True partnerships are formed with clients to achieve mutual quality goals.

Figure 2: Sourceability provides extra services beyond logistic support. To ensure quality, all the components coming through its facilities will be tested with state-of-the-art equipment.

A dream for tomorrow

Covid-19 has disrupted the industry in ways never seen before. Because Sourcengine is easy to use and there is no cost to use the basic system, it has attracted many users. When the pandemic first started, many buyers were looking for personal protective equipment (PPE) and asked for quotations and availability. As a result, Sourcengine could see the demand increase quickly. This insight enabled the company, a distributor of 3M products, to alert 3M to increase its production forecast very early. From April to May 2020, Sourceability was able to ship over 10 million PPEs. Sourcengine has proved to not only serve buyers’ needs but help suppliers improve forecasting and production management. In the future, additional artificial intelligence will be added to make Sourcengine even more useful.

More and more workers, including buyers, have been working from home due to the pandemic. Therefore, the post-Covid-19 era may see workers continue to work from home. Sourcengine provides easy access for buyers to do their jobs using laptops and other handheld devices at home.

Why can’t others develop a similar e-commerce platform? Even though the concept seems to be straightforward, the initial investment of $10 million has proved to be a major barrier to entry. Now that the Sourcengine platform is available on the market, users appreciate its efficiency and ease of use.

Five years have gone by quickly. When asked about what the next five years would look like, Jens responded with a new vision. He wants to provide more advanced digitized solutions for the industry. Most importantly, he wants to be the world’s No. 1 digital facilitator with technology and to support it with his experienced team to make the buyer’s job even easier.