How to come off with an electric needle

How to get off the electronic needleScandal with American exporters of microelectronics has revealed systemic risk in securing element base Russian producers

Third day of October in the U.S., it became clear to provide allegations of illegal export of microelectronics 11 immigrants from the former Soviet Union, two of whom have Russian citizenship. Following an investigation, the U.S. Commerce Department suspects in the illegal export of 165 companies and individuals (out of 119 Russian), in their now imposed export restrictions. Some of these companies are among the leading suppliers of electrical components for the Russian defense industry.

So Makar, South American authorities can block an important part of the supply of electrical components in Russia. And the lack of even a small part of the nomenclature used may stop production on the acres of Russian companies.

Virtually no one hesitates, that if you want the South American government can do it easily. Russian defense industry enterprises openly publish information about the competitions to supply components, which are specified in the product names (often American), lists of participants and favorites auctions. All component suppliers in sight.

But not all deliveries are similar risks. The biggest danger appears in the supply chain so called-independent distributors. For supplies that are carried out by authorized distributors, the danger is less. To understand this, it is necessary to make out the differences in patterns of distribution of components.

What's wrong with independence

Much of the supply of imported electrical components on the Russian the market is authorized distributors. These companies own cherished reputation not only in the market of consumers, and to an even greater extent in the market vendors — manufacturers of electrical components. The presence of a distribution agreement gives them the price advantages in the procurement, access to information and engineering support on the application components. Because usually, authorized distributors strictly follow the rules of export and commit themselves to supply only if they have all the necessary authorizations.

Another part of the component suppliers working in the independent distribution model. Independent it is called as the distributor does not have any obligations to the vendor. Are independent distributors can purchase components from the manufacturer directly, but because the cost of such purchases will be higher than the official distributor, they seek out the opportunity to purchase the components on the secondary market. The secondary market is formed by the sale of shares of the stock, unclaimed by other manufacturers of the equipment and the sale of shares in excess of supplies official distributors. Components may be overbought distributors and brokers are independent couple of times before they reach the end user and are installed in electrical equipment. Are independent distributors are turning to the free market to the same as the terms of production and delivery, are manufacturer suggested retail component is often not satisfied with the end customer. Then through brokers is a warehouse where the required components are available. Typically, brokers can not ensure compliance with all the rules on export component, as in this case, they lose all their dignity before the official distributor.

Company Arc Electronics (ARC), the main person involved in the case, was a common broker who commit repeated violations of export regulations. With the highest probability we can assume that the violations were within the boundaries of that over the years the work of hundreds of similar companies from various countries were considered to be non-hazardous. Brokers are independent distributors and often distort information about the end user. This happens including technological reasons. The broker may have customer base in hundreds of companies in the main-independent distributors and through distributors — two to three orders of huge base of consumers. Provide training to all permits for such number of end customers is a big technological discrepancy. Because as the end user specifies a dealer or creates a techno companies to imitate him.

Independent distribution model is often used to enter the market. If the distributor which is gaining a customer base, then when he achieves certain sales volumes, he is negotiating with the authorization of the manufacturers of components. Evenly fraction of authorized supply in sales of such increases, and the fraction of independent distribution decreases with time distributor goes into the category of authorized. Company APEX, whose staff also held on charges of illegal export, was part of the way and has gathered considerable linecard of distributorship agreements. But buying through a broker ARC still accounted for a significant portion of the total and were carrying proper risk.

Dangers for authorized deliveries occur at the moment due to the fact that the producers of the component, in response to the arrest of employees ARC scandal and the illegal export, reinsured and make their own decisions to restrict the supply. For example, one of the leading American manufacturers of electrical components sent to their Russian distributors notice of cancellation of certain quotas for scheduled deliveries. Were abolished quotas for companies related to the defense industry, despite the fact that the end use of the ordered component is not related to the creation of weapons.

Not only component manufacturers, and distributors of Western, reinsuring already reviewing contracts to supply all that is in them is smallest suspicion. This can lead to massive disruptions in the terms and agreements. Secondary wave of failures on the supply side of U.S. companies will probably even more dangerous than the decisions of American authorities to limit exports. A translation of procurement in Southeast Asia from the West does not solve the problems, because of the Asian market is full of counterfeit products. It is a choice between the bad old version — delay creation and very naughty — use of counterfeit parts.

Why are Americans so far looked at the illegal supply of chips in Russia through your fingers? Since companies such as ARC and APEX may supply components of the general and industrial purpose, which is not applicable for use in gallakticheskoy and military equipment onboard. Gallakticheskogo and military components of the mission is actually controlled by the piece. They are available in Russia, but a legitimate method to obtain the respective permits. Not so long ago, with great difficulty, it was agreed simplification of the supply of such components for peaceful space. By bolshennomu Unfortunately, this is also a legitimate supply chain can suffer.

To make a decision about how to get out of this situation, you need to carefully analyze the main challenges.

Common questions

The first problem of military equipment manufacturers do not care — how to construct the chain of supply, the dangers appear in it. When choosing a supplier they are interested in a certificate of "second supplier", which is issued by the Defense Ministry, and the best price at auction for the purchase. And the risks that emerge in the supply chain, even if someone else understands.

The second problem — the dependence of military equipment from manufacturers of imported electrical components constantly grows. This occurs despite the large amount of funding the electrical industry in the p
ast 5 years. The yearly volume of municipal investment in the sector is 10's billion. This compares with a year of investment in R & D and capital goods companies Xilinx, Intersil and International Rectifier combined. Meanwhile, the fifth part of the range produced by these companies, covers a large part of the needs of manufacturers of construction equipment in the Russian of imported components.

Solution of the first prepyadstviya of course: you have to change the approach to procurement in the industry. Increase the responsibility of companies — customers (equipment manufacturers) for the management of the entire supply chain components. When the consumer is responsible for the danger, he would insist on transparency for him throughout the supply chain. The transparency of the supply chain can not only create external danger and to take positive measures to reduce them, and fight the risk of corruption in the procurement services company. Corruption is likely to occur when the chain is broken when a source component is unrealistic to behold, to assess the initial cost estimate increase prices in the supply chain.

To solve the second problem is necessary, in-1's, recognize ineffective federal programs from motivated in electronics and redirect them to the solution of problems of fundamental important to the industry. In the short term you need to prepare answers to several questions: What is the nomenclature of the component (the number and the list of names) used in the manufacture of military and aerospace technology, which part of this nomenclature is done in Russia, which part of this nomenclature comes from abroad legally through transparent to the consumer and a supply of reliable, what part of the nomenclature may be imported in the short term translated into delivery through transparent and reliable channels.

The introduction of the rest of the range is the greatest danger to the Russian military-industrial complex. But it will be hundreds of names, not 10's of thousands. For each of these components need to find a possibility of substitution in the short term on the Russian analogue output. If such substitution is not possible, then you need to assess the possible redesign of the electrical module, to exclude component Frequency of the schema. Necessary to make the program from processing of all modules, where the components are used most at risk. By developing new modules with the introduction of Russian and affordable zabugornyh component to attract private sector corporations.

The result of this work will not only fundamentally reduce reliance on export control components in Russia, and a significant restructuring of the industry — the involvement of private companies in the Russian defense industry, rapid rotation of trained personnel in the direction of efficient companies. In addition, it will lead to the emergence of many innovations that the participation of private companies will be applied in the design and production of commercial products.

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