Allison Levine, StockPoint Electronics

NOVEMBER 2011. Editors at Military & Aerospace Electronics interview Allison Levine, president and chief executive officer of Stock-Point Electronics Inc. in Chatsworth, Calif., about parts obsolescence and counterfeiting. Stock-Point is a woman-owned stocking distributor of electronic components, supplying obsolete and end-of-life components to aerospace and defense customers since 1987.

Nov 14th, 2011

BIO:
NAME: Allison Levine
TITLE: President and CEO
CO.: Stock-Point Electronics Inc.
ROLE: Woman-owned stocking distributor of electronic components, supplying obsolete and end-of-life components to aerospace and defense customers since 1987.
CONTACT: www.stock-point.com

What is your role at Stock-Point Electronics?
We are a small business, so my role can vary day to day. Stock-Point started out as a one-woman operation in my upstairs bedroom almost 8 years ago, so day-to-day operations have been created and maintained by myself. We have been fortunate in this economy to experience growth; recently, I have been able to hire more management-level employees, delegate more of the day-to-day tasks, and focus more on building and business development.

How did you get into the aerospace and defense market?
When I was fresh out of high school, my parents said it was college time or I would have to get a job and start supporting myself. I thought I would take some time before college and work for a year or two. I discovered this market and there was no looking back. Since 1987, I have been in the independent distribution market focusing mainly on the support of obsolete components—hence, the aerospace and defense market.

How is it running a woman-owned business in a predominantly male industry?
It’s funny: Unless someone poses the question, I rarely think about the fact that I am in a “male-dominated” market. I suppose if you think about it, the world is really male-dominated. I think if we spent our time focusing on what we are not, then we would lose focus of what we are: business people who happen to be women.

Some might think that being a women in business opens doors, but the truth is the only door that is open is that for an introduction; the opportunity after that is the same for any company. Just because you’re a woman-owned company does not guarantee any business. Your company still must be worthy of the business and that is up to you to prove.

Personally, I have always felt like I was treated as an equal. I would say that if there are men who feel that women are not your equal, it’s time to pony up for change. Women are your equal and some surpass your abilities. It all boils down to the person, not the sex.

What would you say to women who want to follow in your footsteps, and who may be concerned about or intimated by entering this or another industry in which their gender is greatly outnumbered?
Is there an industry in which we are not outnumbered? I would say jump in and don’t give up. “No” is not in the dictionary of business.

Do you have any regrets or mistakes from which others can learn?
Regrets, never. Mistakes, always. There is no right or wrong to running your business; there is no book of yes or no. I think most people always question if they are making the right choice, but most of us do not voice it. Be open to learning and take others opinions as that; some are good and some are bad, but even the bad ones can help you make the right choices.

How great is the incidence of components obsolescence in the mil-aero industry today, and what are its effects?
Obsolescence of critical components has been a problem for many years. It is even more common now, as the life cycle for most components has shortened. Component obsolescence will never become an issue of the past. We will always be a step behind the technology that goes into our systems. In the mil-aero industry, we are usually many steps behind. Components go obsolete so quickly now, but most companies’ product lifespan is many years, especially in the mil-aero industry.

We have very detailed in-house end of life (EOL) and legacy support programs, which are a huge success for our mil-aero and medical customers. We take a customer’s entire bill of materials (BOM) on contract and support that product for a term they need, whether that be one year, five years, or more. We will procure all the components and keep this inventory in-house bonded under the contract. The release of shipments is designated by the customer and we drop ship anywhere in the world.

The demand for obsolete product can spark certain products to be counterfeited, and then enter the supply chain. If we see a high demand for certain products, the counterfeiters get knowledge of this and target these products.

Part obsolescence drives demand and this puts out a flag to counterfeiters. This threat is very real. Bad components can lead to defective products, and defective products in the hands of our service men and women is not an option. For the sake of public safety, we need to keep counterfeit components out of our airplanes.

How great is the incidence of counterfeit components in the mil-aero industry today?
It is a huge trend and it is growing. The scary part is: As we get better in our fight against counterfeit product, the counterfeiters get better at counterfeiting. Counterfeiting is a huge business; while legitimate businesses are losing money, even into the billions of dollars, the counterfeiters are making millions off the intellectual property (IP) of others.

China is at the forefront of the counterfeit problem. China has little to no regulation and most e-waste (electronic waste) ends up in that country. Counterfeiters are harvesting components from used equipment that should have been recycled responsibly.

If a company says they do not procure product from China, it does not mean that they are not at risk. You need to know where your supplier is procuring product from and that their quality management system (QMS) is effective. Bad product could end up in a company’s inventory, go undetected and unused for a time, and then get sold as excess inventory—and then it is back in the open market. In this case, it’s not an intentional push of counterfeit product, but the result is nonetheless the same—counterfeit parts are back in the market.

Responsible companies should treat all product procured from the open market as “high risk” if traceability to the original component manufacturer (OCM) is not available.

How can component counterfeiting be avoided or overcome?
I don’t think we will overcome this issue. There is too much money being made and too much greed. Companies can avoid it and limit their risk if they are buying from suppliers that have a detailed QMS and counterfeit-detection program.

Standards are being set for counterfeit detection, and companies must learn about these standards and incorporate them into their QMS. We are currently awaiting the release of the SAE G19 Counterfeit Electronic Parts Committee’s AS6081: “Counterfeit Electronic Parts Avoidance Protocol–Distributors,” along with the Independent Distributors of Electronics Association (IDEA) IDEA-STD-1010-B inspection procedures to incorporate into our QMS.

Companies purchasing product must also know who they are buying from, make site visits, and verify that the vendor has an adequate QMS in place. We are active members in industry agencies that keep detailed data and reports of suspect parts reported as being counterfeit, including suppliers that have been deemed as known or suspect counterfeiters. This information is incorporated into our in-house vendor management database. Unapproved vendors are kept in the database, so we can track their history, as are approved vendors.

How is Stock-Point helping to mitigate the risk of counterfeit components in the mil-aero market?
As for detailed receiving/inspection procedures, we start by examining the exterior box condition: all labels, logos, and bar codes. Interior packaging is next—including electrostatic discharge (ESD) and moisture sensitivity level (MSL) packaging, such as tubes, reels, trays, etc.—in accordance to the OCM data sheet. That data includes package measurements and weight, as well as part markings. We check lead condition, look for any signs of sanding or secondary coatings, and do acetone testing of the logos for permanency. At each step in our inspection process, photos document all our findings.

To escalate our incoming inspection procedures, we have an in-house counterfeit-detection lab. It includes x-ray inspection with a FocalSpot Advanced Verifier HR component inspection system (CIS) for component authentication. This technology provides high-resolution x-ray images with variable magnification, enabling us to examine all the internal structures of a component for proper verification.

I see this as a necessity because we have seen an increase in the amount of product being reported that has a mix of counterfeit chips and good chips. The counterfeiters are assuming that most will only verify a few random pieces out of a lot. With the non-destructive capability to x-ray all components, we can verify every single component.

For destructive analysis and microscopic inspection of the internal die and markings, we use a Nisene Technology JetEtch II Decapsulation machine. Further electrical or functionality testing is outsourced with the industry’s top-tier testing labs.

What would you say to suppliers of aerospace and defense components who think QMS and combating counterfeit parts is too expensive?
Necessity is the beast. I have been in this industry for over 24 years, so I have adapted to many changes. This is by far the most complicated and costly change.

If a company wants to be a viable supplier to those in the mil-aero industry—actually, I would include all industries we serve, including medical, commercial, telecom, and more—you must be willing to adapt to this change and make sure your customers know that what you ship is exactly what they ordered.

This is not a game, people’s lives could be at stake and billions of dollars are being lost.

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