MacroFab Engineering Podcast #318
MacroFab Engineering Podcast #318
Cody Endlich is back on the podcast to discuss the electronic component supply chain squeeze and what the future magic 8-ball says about the industry.
Parker is an Electrical Engineer with backgrounds in Embedded System Design and Digital Signal Processing. He got his start in 2005 by hacking Nintendo consoles into portable gaming units. The following year he designed and produced an Atari 2600 video mod to allow the Atari to display a crisp, RF fuzz free picture on newer TVs. Over a thousand Atari video mods where produced by Parker from 2006 to 2011 and the mod is still made by other enthusiasts in the Atari community.
In 2006, Parker enrolled at The University of Texas at Austin as a Petroleum Engineer. After realizing electronics was his passion he switched majors in 2007 to Electrical and Computer Engineering. Following his previous background in making the Atari 2600 video mod, Parker decided to take more board layout classes and circuit design classes. Other areas of study include robotics, microcontroller theory and design, FPGA development with VHDL and Verilog, and image and signal processing with DSPs. In 2010, Parker won a Ti sponsored Launchpad programming and design contest that was held by the IEEE CS chapter at the University. Parker graduated with a BS in Electrical and Computer Engineering in the Spring of 2012.
In the Summer of 2012, Parker was hired on as an Electrical Engineer at Dynamic Perception to design and prototype new electronic products. Here, Parker learned about full product development cycles and honed his board layout skills. Seeing the difficulties in managing operations and FCC/CE compliance testing, Parker thought there had to be a better way for small electronic companies to get their product out in customer's hands.
Parker also runs the blog, longhornengineer.com, where he posts his personal projects, technical guides, and appnotes about board layout design and components.
Stephen Kraig began his electronics career by building musical oriented circuits in 2003. Stephen is an avid guitar player and, in his down time, manufactures audio electronics including guitar amplifiers, pedals, and pro audio gear. Stephen graduated with a BS in Electrical Engineering from Texas A&M University.
Special thanks to whixr over at Tymkrs for the intro and outro!
Welcome to the macro fab engineering podcast a weekly show about all things engineering, DIY projects, manufacturing, industry news and strategic component sourcing. We are your hosts, electrical engineers, Steven Craig and Parker Dolman. This is episode 318.
And our guest this week is Cody endlich.
Cody has 10 years experience in electronic component distribution and commodities trade, and is currently the head of strategic sourcing at macro fed.
Thank you so much, Cody, for coming on to our podcast.
awesome to be here. Thank you for having me.
So Cody, tell us a little bit more about yourself.
Um, so I started in electronics components about 10 years ago on the distribution side, worked for smaller distributor here based out of Houston, and virion for a couple of years. And it was, it was a really interesting way to start on the sales side of, you know, the distribution side of the house, because, you know, generally when you're an account manager for a big distributor, your primary focus is just bringing on OEMs and cm customers, right and getting incoming RFQs and driving the, the, you know, the the traffic, but at very end, that was half of the job. And the other half was sourcing, you actually that responsibility fell onto the account count manager. So really early on, I learned a lot of the, you know, systems and proprietary software and platforms, developed a lot of really key strategic relationships, I guess you could say, globally, you know, Asia, Europe, South America, moved to Smith and Associates, where I was an account manager, and shortly after, you know, say probably about a year on the sales side, they pulled me over to purchasing it was the middle of it was 2017 2018. It was the height of the capacitor shortage. So yeah, so I showcased my skills, and I moved over to purchasing and help them out there. I've I've done a lot. I mean, I've opened, co opened LTL group in Katy, Texas, which is a smaller distributor of helped open action components in Clearwater, Florida. So I mean, it's kind of like where I've just been, you know, for the past few years until until I get into McAfee. So and I actually came to macro fab as a sales guy, as well. Yeah. Joined.
That's how you get your foot in the door, huh? Really? Yeah.
Right. Exactly. I guess it it was, you know, it just seemed like, I mean, because obviously, Microsoft was doing something wildly different than than everybody else was doing, which was kind of what I was looking for. But, you know, after coming on board and realizing, you know, the potential and how much growth, you know, there there was for the strategic sourcing side, or just, you know, the purchasing side of the house kind of offered to help and asked, you know, hey, do we have any projects that are, you know, in limbo, so to speak, or lying down because of, you know, parts, shortages, and I got overwhelmed with the response and pushed a couple of projects through to production. And it was like, you know, overnight, it was, it was
a whole new position for yourself. So
yeah, pretty much. Pretty much. Yeah. So
I do have a question for that on that though. Yes. Almost. It's like an interview, I
guess. Yeah, for sure.
But I guess technically, it is a podcast interview. So were you were you looking to be another like go back to sales or what was?
So to be honest with you, it was a really interesting time in my life, right? I mean, I don't know if you've guys, you know, you guys are engineers. And I mean, I don't know if you've ever ever dipped your toe into the sales game. But I mean, it's definitely that it is just, you know, it's a game. It's a roller coaster. It's, it's, it's it's tough and and electronic components or EMS, distribution, EMS, that whole space, it's very competitive, you know, and I guess you can kind of say I got to a point where I saw this. And it's like, you know, I'm, I'm hella good at finding parts. And I'm, I'm okay at talking to people. But I'm really, really, really, really, really good at finding parts. And so it was kind of just like a no brainer. It really worked out well, because this is what I love to do. Like, I don't know if it's, it's kind of like, How can I how can I explain this? So it's like I get to do you remember? You remember grandma's boy? Movie? Okay. What was the leather? The leather guy? The guy, the bad guy. He's the Creator. And he wanted robot legs, right? Yes, the guy with the robot legs. So I feel like I get to walk into my little lair every day with my robot legs and just sit down and I No kidding. I've just monitors up. Yeah, dome comes over. And there's like a bluish hue like an aura around me. And I just put on my headphones, I get lost in electronic music. And I just get to scour the Earth. Really though. It's it. That's, that's I love it. Like this is like what I would want to do if if I had to work for the rest of my life.
I really hope that the sound effects are part of it to the whole.
Oh, yeah. Every time somebody comes to my desk, I do the whole deleted. Oh, man. But yeah,
I haven't heard anyone talk about that movie in. I want to say, a decade now.
Maybe that was like that was like college house. We used to we used to watch that all together. Yes.
That was when that movie came out. Was that oh, wait.
Yeah, I was just gonna say 2022 Right now, in three years, that movie will be 20 years old. Oh, about no. Five.
It's an earlier than thought.
That was my freshman year of college. be too crazy.
So yeah.
So the last two years have been really, really fun. We're trying to get parts and source things. Right.
You know, okay, so it is like, so what what the industry tells us is last year was the most predominant gear for semiconductor sales ever was the highest year for semiconductor sales. Now, it's funny, because it's like, why, how can that be during a shortage? Well, I mean, it's wildly driven by price, right, because we're seeing a lot of 50 cent dollar, you know, ti parts, you know, standard standard training cost, you know, about 50 cents to a buck, they're being sold for $35 apiece, and people are cutting the purchase orders. So, in these crazy situations, I mean, you know, it's extremely lucrative for the for the distribution side, I guess it's lucrative for, you know, the OEM cm side, because they get to stay afloat, and they get to, you know, it's what's the the, you know, the other choice is being lined down, right. So
they make is already sold. Right? Yeah.
So it is, it's real crazy. It's, it's interesting to see how it works, right? Because there's so many different. And I guess what, you know, we could get into that, you know, how does it how does it all work? You know, like, how do people how do the parts move around the world, but it's really crazy when you start to dig into it. Yeah, it's been an interesting past couple of years. For sure.
Yeah. The it's an interesting mix of Sure. Like, like, it's not a complete lack of supply either. Like, there's still factories pumping out parts. It's just, the man is just outstripping everything.
Yeah. And a lot of it is connecting dots that people don't really know about. So I mean, the whole reason, like, let's just like, you have to look at it like this. Okay, so let's look at let's look at this, like, authorized and franchised, right, is the main tear, you've got your AF nets, arrows, digit keys. mousers. Right. Okay. Well, sub, you know, authorized and franchised. So you have, really what are stocking independent distributors, and there's always kind of this rush to just say, hey, look, we're going to brokers for these parts. We're going to brokers, brokers, I hate the term broker because of the negative connotation it carries in this industry, right? There has to be a staunch difference distinguished between them Say Smith and Associates, who is a $3 billion stocking distributor and say, ABC components who's a guy like out in Fresno, California somewhere working out of his house that made me realize I can sell? Yeah, there you go. Right. And not to say that these guys are, you know, fly by night, you know, maybe maybe they they serve as a select handful, you know, of customers that keep them in business, but they also get a lot of excess opportunities from those customers, right, you know, so maybe this guy, let's say, a guy manages and account for Lenovo. And, you know, not only is he selling them parts, you know, he talks to, you know, Karen, or whoever the inventory manager is, right, and he says, Hey, Karen, you know, send me a list of all your excess inventory. Well, the crazy thing is, these a lot of times these mega OEMs, you know, especially when you talk to, you know, computing OEMs to you know, server equipment, you know, the Cisco's the Arista networks of the world, these guys let Xeon processors go pennies on the dollar sometimes. And this is new material. In the box, it's all brand new, none of its used if it's refurbished. And these, you know, so there's, there's massive amounts of opportunity there to facilitate, especially in a in a in a shorted situation. And so that's kind of, you know, a sneak peek into, you know, some of these, some of the ways that these, you know, orders are, you know, filled in the seemingly downtimes it's like, you know, well, what's the magic that's really happening? Well, you have major companies like the Smith and Associates, the velocities of the world, that have and maintain these massive, massive accounts, these OEMs and seems that they have these wild relationships established to where on a monthly, weekly or even daily basis, anything that falls into an excess category for material, they shoot it to Smith, they shoot it to their guy at velocity, those things are blasted out, and then whatever somebody comes, you know, looking for it. Whenever a buyer at another OEM picks up the phone to say, Hey, I'm gonna call my, my sales guy over at Smith, well, nine times out of 10, Smith won't have stock of the part she's looking for, but they can find it. They know that they can call Velocity, because velocity has a relationship with Sony. And Sony uses this part. And they had allocation for 100,000. And they know they're only going to use 30,000 70,000 are available to the open market. Boom, there's your order. I mean, that's, that's, it's, it's, it's really interesting. It's really awesome. Yeah, it sounds like 40 chests every day. Right? It is,
it is one of those. You're when you have overage for contract manufacturing, that overage goes somewhere else.
Exactly. Right. And that's the big distinguishment is like, you have your OEM customers in your CM customers, like, the OEM customers are the ones that are gonna buy in volume, they're gonna hold stock, they're gonna, you know, CIOMS are buying project based if you know, overages. I mean, they're obviously you know, that that's kept to a min right, unless it's an overage that's called for the production run. You know, we don't see a lot of, you know, CMS holding massive amounts of you know, you're seeing me, sure you're seeing me and as influxes I mean, still even at that point, they're pretty lean operating. So
Well, yeah. Well, just keeping that kind of inventory on, on the books costs, tax money,
right. And so there, again, is why, you know, a lot of how a lot of these distributors make make money, you know, another side of their business is VMI, you know, vendor managed inventory, saying, hey, you know, this part is volatile, we don't feel comfortable that you can keep placing these 5000 piece orders on a monthly basis, cut us a purchase order for your EIU, or your estimated annual usage. And we'll just hold the parts here and do a controlled release. And I mean, there's so there's a ton of different ways to skin, the cat in this game. And I mean, the reason macro fab, I mean, is really doing something that nobody else is doing is because we have the strategic sourcing team that they have, you know, me and a couple of other folks that have experience on that side of the house. You know, we've kind of internalized the broker process for macro fab, which is really huge. So, traditionally, you can think like, anybody on our purchasing team, right, would see that a part is not in stock. And if I wasn't doing what I'm doing, they would be reaching out to a Smith and associates or someone at National Association of, you know, semiconductors or whatever, some distributor to say, hey, look, these are parts that we're lying down for, and they'll send them a list of about 10 parts. Well, like I said, I mean, there's a, this is being conservative, a 10% chance that I So out of those lists of parts, this guy might actually have stock on him, right? But he can go and find the stocking distributor. Well, what we've done, and what I've done for macro fab is we've we've gotten set up on, I mean, every platform, we need to be set up on where I've reached out and established us, with a, you know, a number of, you know, my personal, you know, suppliers and whatnot. And so we've internalized the broker process, you know, if something's out of stock at macro fab, we're not going to brokers, why would we, I can see the stocking distributor. So that's where we're going directly to. So it cuts us in a day where people are making, you know, 30 and 50%, gross profit margins on these parts, it's saving us wildly. And, you know, it saves us on our lead time to, you know, now these parts don't have to pass through somebody else and change hands and, you know, quality issue, and can we trust this guy, you know? So it's really, it's really, really cool, what we're, we're doing for our customers. And I mean, I'm seeing it on a daily basis, right. Like, I see how many projects are being pushed through to production, because hey, we found the parts let's go versus a 35 week lead time, or going back to the drawing board and redesigning,
so. It's pretty cool. 35 weeks on the low end to Oh,
man, I saw a 526 day 526 day lead time today.
Nice. Yeah, I saw 56 weeks on. And I'm like, Well, it's time to redesign that for
their handbuilding every one of them.
Yeah. Right.
Yeah, the, that reminds me of is the shortages on this is like going back before the podcast, we were talking about video games for a little bit. So this is what jogged my mind a bit about this is a video cards and like consoles, where people are using bots to buy parts on might not pirates, but can video game consoles and stuff and like resell them later. It would not surprised me if that was happening on like, let's say DigiKey and Mauser. And people are trying to scarf up 80 Mega 328 PS. Right? For sure. So,
um, later? Absolutely. Absolutely. It happens all the time. I mean, people and like, it's good business, to a point, right. Because I mean, it levels like, we need independent distributors, because they do level the playing field, and they facilitate during the shortages. Right. But so it is great business to have an established relationship with with, you know, an independent distributor, but at the same time, yeah, I mean, it's wildly, you know, it's taken advantage of tenfold, especially in a shortage situation. It's, yeah, it's, it's, it's amazing. I think we had. So I'll give you an example, I had 15,000 pieces of a part that I was a TI part that one of our customers was, was looking for, I had received a quote now now these these are normally dollar 50 cent parts. I had received a quote for $11. In November of last year, they said no way, we can't do that. You know, this is this is crazy. And I think they tried to source them through somebody somewhere else and try to anyway, that didn't go well. Kind of like we advised them. And four months later, they came back or three months later, they came back and said, hey, you know, this, like, a couple of weeks ago, they said, Hey, we you know, are these are these 15,000 pieces still an option? I was quoted on $226 apiece for what I could get for $11.03 months ago. And it's because they know they have the stock. Because no matter who the into and so that's kind of it brings up a really good point like, so it's like, you know, sometimes buyers will think oh, well, I'm just going to arm myself with all these distributors. And you know, we can outsmart the distribution channels, right, we can outsmart the Independent Distributors? Well, essentially, what happens is you end up driving the price up on yourself. So you're looking for this Atmel part, right? And you've sent it out to six different distributors. Well, guess what? They're all brokers. None of them have stock. So what do they do? And they're all going to each other. They're all going to even if they navigate a different channel, it's eventually going to lead to the stocking distributor that will pick up the phone. And this happens all the time. And now, exporters for if you're late to the party. Exactly. He'll say, Oh, hey, you guys are showing an Atmel part that I'm looking for. Oh, is it and then he'll read the part number back off to you. You're the sixth guy to call today. Now the price is x, you know, or whatever. So it's yeah, it's a funny game. Huh? It is,
we ran into an interesting situation at work where we had a codec on one of our products. And that codec, just poof, evaporated just can't find it anywhere. So we decided to redesign the board and put a second footprint on it for a comparable codec such that we could populate either one, whichever ones available, because we found one that might work that was available. So we go through the whole design exercise of redesigning the board, we get prototypes in all the while we have an open Pio for the for the original codec that hasn't been just evaporated. And we've been told by everyone don't expect it anytime soon, no lead times whatsoever. The second the prototypes of the new codec hit our desk, we just get a notification, your your stuff has shipped, shipped, we're charging you $14,000 They didn't even give us a lead time or anything like that. They just said, here's like, 2000 when we have the prototypes of the new board designs, it's just like, everything is crazy, right? Yeah. So
Steven, that happened to me. I ordered microcontrollers, direct from microchips. Okay, and they were and they were originally was like supposed to like November 21 turned into December 21. And then it said December like 24. And then the next thing I know is they're sitting on my front door at my house and you got 2000 units of $4 microcontrollers just sitting on my front door and I'm like, I didn't get a tracking number. It just showed up just in Taiwan you
go Yeah. And they're confident you'll take them right.
Oh, yeah, I had to cut them a check. Yeah.
Where did you source those? Like where did was it just from like a random directly from it was oh, direct?
Yeah. It's actually called microchip direct to Yeah, yeah. Well, yeah. You think they would at least send you like a notification you got shipped or whatever? No, it actually still says that the the haven't shipped but I have them in there salesperson called and said I had to pay
it's nice to know that they think you're good for it. I mean, I'm you are obviously but it's like they just trust you. Here you go.
Yeah, it was it was what that's like. It was like 6000 something dollars apart. And they just DHL just dropped it off my front door.
I didn't know. Yeah, they're shipping $6,000 to a residential address. Love it. Yeah, actually,
this box right here. There. Yeah. It's just wild. It's wild.
So for anyone who's listened to the episode last week, we we kind of spilled the beans right at the end of the episode. But one of the reasons why we brought Cody on is to talk about a new announcement that that McAfee has taken on so you want to go ahead and do your announcement Cody.
Yeah, sure. So, recently, well as of last week, macro fab is officially a member of era AI. So era AI is kind of a an unspoken supreme authority in the electronic components industry. Right. So they, they, they
are the man behind the curtain.
They are the people that have all of the background info on the man behind the curtain. So right so it's the person on the floorboards. Yes, exactly.
The era behind the curtain,
right? Yeah, no, they're under your nose the whole time. The so basically, they maintain a mega database for vendors and suppliers in the electronics industry. And they, you know, they provide reports and alerts for their members on you know, counterfeit detection. If you know if anybody has ever shipped counterfeit material. I mean, they blast it, they show you everything, you get the alert, it shows the supplier, it shows what they sold, it shows how many it's got pictures in there. If there was a test or a lab report, I mean, that's in there normally the customers information it's it's, it's a really, really great resource for anyone looking to be serious about mitigating counterfeit risk mitigation in their in their supply chain. Right. Definitely people honest. Absolutely. Yeah. And you know, they have other services like they provide an escrow service escrow service for us to you know, buy from Asia with confidence, right? If it's if it is a newer supplier claiming to have stock, you know, they're providing date codes, they're providing pictures, it looks decent. We'll run them through era AI to do a pre check to see are they an era member? Do they have any alerts, kind of like a credits, you know, a little little credit check. And then if we decide to move forward and place an order, er AI provides the escrow services so that the parts can be sent to a third party Test Lab, confirmed and original. And then once they pass testing era I handle handles the releasing of the funds through through escrow. So it's a safeguard for, for for both ends.
So there's actually it's kind of like that part of it does sound kind of like a Pay Pal, where they have the best interest of the customer, which is, in this case, macro fabs and make sure that their parts are legit. Absolutely.
Yep. Some more warm and fuzzy surface right there.
Yeah, again, it's not. So it's not something that's necessarily required, like, at a certain level, like an ISO certification, or ITAR as 91, you know, 9120, whatever. But it is a definite, you know, it's definitely a very prevalently recognized badge of quality and, you know, doing good business. So it's really exciting. And, you know, it could offer offer us some more opportunities. I mean, you know, companies like to see that.
So, I guess my question is, what does this mean for for McWrap? Customers?
Well, I mean, it's, it's, it's that warm and fuzzy, like we talked about, right? So it's the warm and fuzzy to know that, you know, not only are we saying that we're implementing, you know, solid QMS process, but I mean, we're essentially being held, we're signing up to be held to a higher standard, really, because if at any time we put out, you know, anything that's substandard, or if we were ever, you know, ever in a situation where God forbid, we, you know, had had a misstep quality speaking. I mean, we would we would be held to the same accountability as everybody else who is whose any era member now, they don't just report on companies that are a are era members, right? Because that would make sense. So there's tons of companies that you can look up any Rei to try to get an idea of, you know, if they've ever had any issues in the past, or just try to dig up as much information as possible, which is kind of like really what I suggest to a lot of the buyers. I mean, I, I try not to educate my customers. So much so on how this works, right? Because the last thing I really need is my customer trying to go out and figure out how to become a strategic sourcing individual in the middle of a shortage, too, right? Like, please don't go out and recreate my job. Like, I can't tell you how many times I've had a customer email me and say up found those parts that you couldn't find. We went ahead and place the order and I'm like, Oh, God, please tell me who you see you bought it from? And it's like, well, we found these guys on Google and you know, look at their website, and page Google. Oh, well, right. Or, or even, you know, a first pager with a wicked website, but I know the company I know what's going on. You know, it's not it's not a good situation. And photos, right? Well, the craziest thing is man, if you go to like Husky electronics, and this, I mean, we're just putting them up there. Husky electronics. Okay, that's a distributor
very than before.
Okay, here you go. So listen to this. There would you call Husky it used to actually say thank you for calling Husky electronics in the French Bulldog rescue network. So it was like so off the wall like what how is this combined, but they do have like a side humanitarian like business effort where they rescue French Bulldogs. But I mean, you look at like, prism, electronics, prism, electronics website, or Husky electronics websites. They're these real bear landing page websites. Well, hey, guess what? These guys have been in the business since the 70s. These guys hold stock. These guys are certified through the wazoo and are some of the most trusted distributors in the game. Now you go look at like my former employer. virion put in virion.com. Okay, so look@verizon.com and look at where we shouldn't go. I mean, oh, no, I mean, these these guys were a good, you know, independent distributor in the way but you know, the live action in the website. I mean, you know, it's moving. It's it's, you think, holy cow. What's going on? What are the These guys do on their broker, they, they hold no stock, they are ISO certified. And they are a good distributor, but they're a broker. And so you know, we're a buyer would look at this and see these guys and say hey, you know, these guys are really have someone something to offer, you know, who is Husky electronics? Well, they're a major player. And it's just crazy how when you're talking about something so technologically advanced, and so surrounded by all this sexy technology and as electronics, and it's like these good old boys from, you know, from wherever, just like, hey, we got your parts, but, you know, top quality, you know, storage of parts, I mean, top quality, you know, material handling, top notch when you're having to deal with a return or an RMA not that you'd ever, you know, have to I mean, these are just that that's, that's really what I guess to go back to your question, you know, what are we doing for our customers? It's like, hey, we you know, we have a ton of experience surrounding this. So our customers can go forth with the confidence that macro fab is putting their supply chain needs in the hands of individuals who are touching the parts, have the parts, we're not going to brokers, we're not shipping parts in from wherever shins in China, Ollie Express, we, you know, the, you know, I don't know if you know, sidebar conversations, or, you know, I think recently, I think recently, we had a customer that was vehement on, hey, we've got to get these parts from AliExpress. We have to get these parts from AliExpress. We bought the parts from all Express. What did all the Express? Do? They sent us the wrong parts?
Okay, so I and we didn't know until we started building it.
So here's my question, though, because then everybody backs up and says, Well, you know, Ali, Ali Baba, you know, Ali expressed, you know, that's not really their bad. They just sent the wrong part. My question is, okay, so are they going to send us the correct part? I haven't heard anything back yet. I don't think they have the correct part. You know, it's, it's, it's one thing to be the Asian Amazon, and to facilitate, you know, tons of different buys tons of different types of material across tons of different verticals. But when you're talking about putting on putting parts on boards to go into, I mean, a medical device, like, we can't play games here, like, what do we do it? Like, we have to it's, you know, it's come down to that. And that's the scary thing. I really, I recognize that, like, I wrote this as a LinkedIn posts not long ago, but it's so true. This shortage has purchasing managers from Fortune 500 companies on the phone with their broker, deciding whether or not to pull the trigger on some parts they found on ebay. Like, no BS. And so it's, it's kind of scary to see at the same time, it's really exciting. And it's fun. It's like, Hey, we're, you know, able to facilitate all these solutions for people during this, you know, they're in the shortage and look like a hero, when at the same time, it's like, Well, I'm glad we're doing it, because everybody that I keep seeing that just tries to grow a brain, reinvent the wheel and think their way out of the situation is being led down some pretty sketchy paths, you know? So,
the, because I build a bunch of pinball boards, Cody, and my OEM was, basically I'm like telling the OEMs like, I'm waiting for parts. And you're like, we found that part on blah, blah, blah, website. I'm like, that's not a real part. Sure, I can guarantee you that's not a real part.
Right? Yeah, I sent this to Joey the other day, there's videos like you can, if you look, go to YouTube and just look up counterfeit electronic components in Asia, there is a there's videos of people literally sitting on the floor, with massive boards stacked next to them just picking or sitting at a station desoldering you know, just picking parts pick by the hundreds and just, I mean, that is such big business. And it's gotten to a point to where for a fact I know this, my buddy let me know. He works for mega mega distributor, and said that their customer had was sent Toshiba parts. He sent His order of the parts to the customer. And they ended up bringing the rest of the order in from, you know, another distributor some sketchy distributor, they sent they got the parts in they went through testing the parts the only way that they knew that they were not real and I have to verify this again because everything exterior markings totally to code. They ended up sending the parts to Toshiba, Toshiba said we can guarantee We did not manufacture this part. But this parts specs the Fit form and function spec out to what above what, what our parts, like they're like industrial grade parts. So not only are they better or the counterfeits, they're better. Which is definitely not always the case, right? Like you jump in there and look at the membrane. Exactly, right. Like you look at the membrane on the inside of them. And it's like an NF T or something, right that like somebody's just having a habit a go with, you know, just just throwing stuff out there into the market. But another reason why it's so important for companies like Ara to, I had to do what they're doing, because they're they said, they have a massive, massive, massive database of parts. And they have a ranking system of what parts are highly counterfeited, how they're counterfeited, and they send these alerts out daily. Which is really great, because, you know, I'm on I kind of tiptoe on the dark side, too, right. So I see the, the guys behind the curtain, you know, putting out their offers. And I'm like, Ooh, it's a really odd time to be sending out an offer for TI parts that I know everybody is looking for. And you supposedly have 25,000 Like, you know,
dollar instead of, yeah.
Yeah. You start to kind of pick up on the signs. So
it's like when you go and try to buy a Adreno development board on eBay. And it's cheaper than the actual microcontroller. Yeah. There's a reason why. I Stephen got bit by counterfeit part recently.
Yeah, well, and you know, I was just doing a project here in my basement. So I just needed one part. And instead of shipping from one of the big distributors, I just went to Amazon because it's a it's just a jelly bean part that is available everywhere. And it was, it's probably 40 years old, this or the designers mature. So I just went to Amazon and found an Amazon Prime, I'll get it the next day. And then I can put it in my project. And it sort of worked like it. It was like half of the specs were dead on and half of them were just and I'm sitting here scratching my head is like have I designed this incorrectly? I've used this part 100 times and this one is just not acting right. I ended up sending it to Parker and Parker x rayed it against a good one. And lo and behold, God Jai was half price. Yeah. Which explains its functionality. But yeah, and I rolled the dice on that. I mean, it's an Amazon purchase, right, but I figured Jelly Bean part like that. That's the one that I that's really got me scratching my head because why counterfeits something that is a few cents. I don't like why not go for something where you could actually, you know, stand to make something more out of it. But yeah, he's a sucker like me, who would buy him?
I think on that Stephen is most people don't use those parts to the full capability. And so you can probably, if you can sketch by four bits, then you can make your your, you know, you got to think they're probably getting those parts for basically free. Right. So Right.
Yeah. And I was using it for probably 70 or 80% of its full capacity and, and the kind of fits were sir surely not up to the task.
I wonder I wonder what the part is. I wonder if I can find it out there.
Oh, it was cast a couple months ago. I can send that link to you Cody.
It was lm 317 Regular just just a jelly bean regularly. It's been used forever.
Wow. Do Is that is that is that the actual the actual part number?
Oh, I'm sure it has a longer part number but that's the that's the main portion of it.
I was gonna jump jump on and try to do it.
Part of the counterfeit somewhere or body probably throw away but no,
no. My drawer. Okay. Yeah. I'm trying to find
Oh yeah. Man from TI or Fairchild manufacturer shows Yeah, national Sami. Oh, man. Gotta come to the next time. Here. Yo,
this is yeah, this is counterfeit search and love it.
I got you some from 1990. I got to sub from 2001 What do you what I got some from 89. Look at this at 915 Datecode. I was two years old. Beautiful.
So Steven wanted to buy an LM 338. And okay, acting like an LM 317, which is basically a smaller version of that URL. Yeah,
that's right. Yeah. Gotcha. Yeah, it might have just been laser differently. Right? Yeah, I
think so because In the end,
because it was functioning, it did function,
but the die was definitely a lot smaller inside of it.
So this Okay, so this is a great example of a purchasing manager or a buyer who's worth their weight. And I shouldn't say that now who's worth a buyer is worth their weight in gold, someone who can go out and get true parts and get you a good price on them is, is unbelievable. And I've had the opportunity to work with a handful before where the relationship was great between engineering where they they did a fantastic job of building some walls where they're like, it is not your job to go find parts, it is your job to get me drawings and specifications. I go get parts, and I and it was men, I loved working with those people. And now I refresh opportunity. Like I have to do a little bit of that myself. And I'm like, it makes me appreciate you guys a lot.
So the bringing it back around, it was episode 276 of the macro vision podcast for listeners that want to listen to Steve and I discuss X raying these components.
So back on era AI, I guess, I guess it's a, it's a top to bottom system that you're a part of. So all the way from the manufacturer all the way down through the CM you guys. So you are utilizing era AI to, I guess check all of these things, but at the same time, you're living up to its standards as as well. Right.
Right, exactly. And then we'd like the additional services, like I mentioned, we get to use, you know, the, the vendor, you know, vendor info, you know, the vendor insider info, the escrow services, you know, the massive parts database. So it is it's kind of a menu of services. But yeah, essentially, it's allowing us to do this much more competently?
Probably, this is me, stretching, I guess, because I don't know the answer to this. But it probably also lets us help when we go and onboard more factories into our platform, because it sounds like E AR AI. Also, basically grade cm two.
Right. So they do have that information. I mean, I still need to dig in myself to see exactly, you know, to what level, you know, they, they, they go into, you know, dissecting different aspects of the business, but they definitely have information on everyone in terms of supply chain side of the house, the vendors and the in the component manufacturers. And so I mean, it's, it's a, it's a dire resource, for sure. Definitely.
Out of curiosity, are there like, what does it take to be a member of your API is are there audits? Do they kind of go through things with you?
So I mean, there's obviously, you know, we have to submit, you know, our QMS. And it's, it is a membership service. So, you know, you obviously have to pay an annual fee. And it's, yeah, I mean, it. There's no requirement in terms of like company size, or anything like that. You do have to be an OEM or a cm or distributor to join, but I think it's kind of open to anyone.
So when they when they identify an issue with a supplier or manufacturer or something, how does that how does that kind of get distributed to everyone? Is it is it just like Yelp of electronics, where it's like, you know, you know, F minus would not buy again, or how does that all work
out? Yeah, sure. So everybody will get so let's say when, when an incident happens, then the, the alert or the report is created. Once the report is created, they send out an alert, and when they send it via email, so you'll get an email in your inbox, and it'll say, you know, era AI, counterfeit alert. And so, you know, if I go into, like, right now, if I go into era ai.com, and I go and I log in, I'll just see, I'll show you, or I guess I can do a little search real quick, and I can tell you, so we'll do a company search and we'll go with a company that's very well known in the industry to have had issues in the past. So we're not telling tales outside of school here. It's all right. Harry Krantz corporation. So you have the Harry Krantz Corporation, which a lot of people feel you know differently about. But I mean, at the end of the day, the facts of the facts so Harry Krantz Corporation was a very very bulletproof very well respected distributor in the electronic components industry. i The story to me is kind of unclear. Like when that changed, I guess, the actual guy Harry Krantz turned it over to a sun or, you know, whatever happened, things kind of went south, well, went south was in a really big way. There were interest. So right now if I go and I pull up their their, their profile on era AI, they have since become a member since their incident. But I mean, so for instance, like when I go to expand this under alerts, from July of 2015 federal indictment is list is listed. And so, New York man admits to supplying falsely remarked computer chips used in military helicopters. Oh,
we actually talked about that,
Steven. Yeah, that rings a bell. Yeah,
that's crazy. That's a What a coincidence. So what a coincidence. So, so yeah, so it goes into court documentation. It goes, they go as far as the images of the parts. I mean, there's just a lot of information that you can that you can pull up in here. on anyone, and I mean, nine times out of 10 If I don't find that many are AI like they don't even just pop up like just to pop up. Then I I started
digging. Macros got five stars in there, right?
Ah, you know what, I don't even know if let's see, let's let's. Let's search old macro fab. Macro fab. It must be good. Because we're not. We're not we're not. Oh, are we coming? Let's see. It's thinking. It's thinking hard. It's gonna get it out. And it's the brain. I haven't gotten my brain. Wow, it is still thinking. Okay. It could not find my
pull up all the reports, right.
Bad No. Oh, hey, here we are. And yes, we are an EI Rei member. And no, we do not have any alerts. Our profile looks great. Awesome. So yeah, so I mean, that's another you know, it's another, it could be a revenue opportunity. I mean, you know, era is not a hidden thing. I mean, it's pretty well known. So I mean, there's a good possibility that an OEM may be perusing through the REI one day and come across. Come across macro fab, Parker, Dillman, you're you're you're listed in here. Yeah. Parker Domon. Oh, miscellaneous files? Oh, no, no, no.
I have another question on this, then. Yes. How does the reporting happen? So how does AI get their information?
So it's either it's, it's direct from the customer normally will, that's that's how it normally happens, right? Customer will reach out and directly to era AI and they'll submit the the alert and they'll give them all the information of what happened. AI does all the research and era back and Right, exactly. So that's why it was like saying they're kind of like a unspoken supreme authority, like law enforcement figure in the in the industry, right? Because, I mean, they do all this investigative work. They, you know, report all this to I mean, it's global. Right. So and it doesn't seem to go away. I know, they do keep a there it is distinguished on their alert or, you know, incident was was was resolved. You know, so let's say like the company, you know, accidentally sent what they thought were newer Federal parts, right, and it comes back that, you know, they refunded the money, the RMA process was smooth. Now, they're still going to have that mark. But it will be in a resolved status. And it does allow them to kind of regain their credibility, credibility and image blackmart forever. Right. Yeah. Because I mean, it's happened. I mean, there's, there's go to suppliers for macro fab that are on that, that are on era and have had alerts. I mean, they're from 1988. And I mean, these are companies that we've used for years and years and years and years and years and years and years. And they live at era AI, they're mega members of era AI. So it's just good to know that, you know, they're being held to the same standard as everyone else, you know, nobody's flying under the radar, nobody gets any special treatment. And nobody goes on unscathed. You know, it's really easy to burn yourself in this business. I mean, I'm not kidding, I can pick up the phone right now. And within five different guys have five different distributors, I could probably touch every major OEM in on Earth, and no problem. I mean, Lenovo, HP, Dell, Sony, everyone, everyone, Samsung, everyone. And I mean, that is just how it's so huge, right? But when you get down to the nitty gritty, the spiderweb starts to, you know, get to it gets tight, and you can burn your name pretty quickly in the business. And it's not just with customers, you know, other distributors aren't going to do business anymore. Right? Yeah. Which is a huge reliance diversity sales is a huge part of this, right? Because they have so many customers, they didn't you know, they have to do this the transaction has to end relationship has to exist. So it's very important to maintain a good reputation in the business
you ever anything else even or Cody?
And I don't like before this, to be honest, I was not aware of era AI. So I certainly have a lot more to go on myself for research, and I'm certainly going to share this with people at my work because this might be something we would be interested in, especially just with the difficulties in the last few years of forcing things. This, I'm sure could have helped a lot throughout that.
Yeah, it's just the it's just the tip of the iceberg, right? I mean, there's there's a lot of resources out there. You know, another great one, I you know, I like to tip toe on the line of not giving any of the you know, not giving not giving too much away but a really great resource that would be beneficial for people to look into is IHS I don't know if you guys are familiar with with IHS and the the mega database that IHS has, you know, I can see that being huge for engineers because the life first of all the amount of amassed information that IHI IHS has in the data they have on I mean everything, like any type of all the way down to raw components, and mechanical components for oil and gas industry, electronics industry. I mean, everything has a record at IHS, but where I could really see it playing for engineers is you know, say you have a bomb of you know, 50 line items go through and throw every last one of those into IHS, you had mentioned something we haven't talked about, I guess Parker, which is kind of something you had written about earlier was you know, what kind of steps can engineers take to you know, kind of like, get ahead or get in front of, I would throw a lot of my bomb material into IHS, you get some of the lifecycle information for parts through the major distributors that have nets and arrows and the digit keys. But you know, you got to IHS and you put in ti part, it's going to tell you the first time it was manufactured, it's going to give you all the different flavors of the park all the different data sheet data sheets associated with it. And it gives you crazy lifecycle information. You know it last time by dates saying hey, last day to buy these is this date, end of life notifications. That That stuff is just so essential, I think when you're on the design side of it, or you know, when you're in the design phase to say hey, let's make sure that we're not specking in parts that are eventually going to go Yeah, well, or they're already volatile in the market and they're already having supply issues. And I think that's kind of like where the the big focus is now right and I think macro fab even has a webinar coming out this week about it. But and that's maybe I was confusing what you wanted. to talk about and that but no, that would go. Yeah, I mean, IHS is very resourceful for sure.
Very cool. Yeah. So thank you. I think we're wrapping up now, right?
Yeah. coming on.
Yeah. Thanks so much for coming on the podcast. And this was really like Cody's, like, we remember era AI and like our Slack channel, and I'm like, you want to be on the podcast talk about it. So yeah, man, I Yeah,
yeah, well, I can nerd out on this stuff for hours. So you know, definitely if you guys ever want to know anything else, er, I appreciate you guys having
me if we had more time, Cody, because we're running up next to our hour. Sure. If if we can have you back on maybe next couple of weeks or so or have a chat about like the current supply chain situation like the future maybe the past like ever since I from my point of view, like it hasn't the supply chain problems of 2018 have continued till now. That is in different forms.
At the end of the day, the this is your takeaway, all of these other companies that are not Adnet arrow DigiKey and Mauser are billion dollar companies that have existed for 30 years for a reason like there's always been a supply chain problem you know, so yeah,
it's just one that you can if the supply chain can hide it
Yeah, right.
So that was the macro engineering podcast we're your hosts spark Dolman and Steven
Gregg later in one take it easy and thank you Cody, I guess
thank you yes, you our listener for downloading our podcast if you have a cool idea project or topic or you need Cody to find you a chip. Let Steven and I know Tweet us at Mac fab at Longhorn engineer or at N log N G. Cody does not have a Twitter account. So there's no app for them. Emails that podcast@macro.com And Cody, how can people get to you?
On LinkedIn I'm pretty disconnected. But I have a I have a pretty big following on LinkedIn. I have like 5000 followers so and a ton of connections. So I'm rocking rocketed on LinkedIn. Yeah.
And then also check out our Mac fat public Slack channel, it is Mac live.com/slack or check out our live stream that shows Tuesdays at six o'clock pm on Central Time, which is twitch.tv/macro Fab
Cody Endlich is back on the podcast to discuss the electronic component supply chain squeeze and what the future magic 8-ball says about the industry.