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Your Integrated Supplier Solution

FAQs

Customer: We have local suppliers for almost all the U.S. and foreign items we need. Why should we consider working with Iberel?

There are significant differences between the U.S. supplier base and the supplier base abroad for the same items. With the right U.S. partner, these differences can be exploited to the customer’s advantage.
Generally speaking, prices are lower in the US . sometimes much lower. Some items have only one supplier, but many have multiple resellers. Lead times can be shorter. Being located in the U.S., we are able to tap into these market differences and offer our customers a myriad of options through which they can lower their total product cost of ownership and improve their operational efficiency. Iberel offers opportunities that simply do not exist within your local supplier base. However, these can be taken advantage of only if you switch your purchases away from local suppliers. If this is possible, with a little effort and patience, we will be able to identify many areas where you can benefit from working with us.

Customer: What is Iberel’s level of expertise?

As a corporation, we’ve been helping customers solve problems and reduce their costs for more than 25 years. We work with a customer base that includes front-end and back-end semiconductor facilities, as well as factories making aerospace, medical, electrontube, instrumentation, and other electronics. The broad needs of these customers have enabled us to sharpen our
expertise in the purchase of everything from chemicals, metals, machines, spare parts, electronic components, custom items,
repairs, surplus items, and many others. Our high level of expertise has made us an invaluable asset to our customers.

Customer: Do you focus on any particular area:

We are qualified to purchase just about any product, including metals, electronic components (active and passive), spare parts, custom items, instruments, machines, chemicals, surplus, refurbished or used products, etc., etc. Because our customers are heavily concentrated in semiconductor, electron-tube, aerospace, and medical manufacturing, we have an excellent understanding of their needs, the products they use and their supplier base.

Customer: How is Iberel able to offer a lower cost-of-ownership than our local suppliers?

There are various market forces that individually or in combination enable us to offer transactional advantages that the customer usually cannot get on his own.Generally speaking, prices are lower in the U.S. Supplier options are also more numerous. Lead times can be better. In combination, they offer cost reduction opportunities a customer located outside the U.S. often is not aware of. But the biggest reason why we can make a big difference is the typical OEM’s marketing strategy.
Your local suppliers are either subsidiaries of the manufacturer or are local companies acting as representatives of the manufacturer. Whether a subsidiary or a representative, both are profit oriented and are often given exclusivity over their territory by the manufacturer. This leads these companies to view themselves as the only legitimate suppliers in their territories of each manufacturer’s products. Armed with a contractual right to establish the prices for their specific markets, they regularly adopt a monopolistic mindset, resulting in prices that are higher, and often much higher, than those charged for the same products in the U,S.
Being located in the U.S. enables us to take advantage of market differences that are not available to the customer abroad.

Customer: If the local supplier charges high prices or we do not want to work with him, we can always go directly to the manufacturer.

In some cases you can, but in some cases you can’t or, it is not cost effective. If the manufacturer has an exclusive representative for your country, the terms of their agreement obligate him to protect the local rep, your local supplier. You are free to contact him. However, because of where you are located, he is likely to decline to quote you and will ask you to contact the local rep. If he does send you a quotation, it will likely be one with prices that include a percentage for the local supplier. Sometimes the prices quoted are those the local supplier gives them to quote. So, bypassing the local supplier by going directly to the manufacturer usually does not yield the results one hoped for. In fact, it can serve to mislead the customer as to the competitiveness of the local supplier.

Customer: How so?

A quotation received from the OEM will likely include compensation for the local supplier. Because the prices quoted will be the same as or higher than those quoted by the local supplier, the customer can mistakenly conclude that the local supplier is indeed competitive and that he has nothing to gain by bypassing him (some OEM’s will intentionally collude with their local reps to create this impression with the customer). The opposite, of course, is more likely to be true.

Customer: Don’t manufacturers monitor the prices their foreign representatives charge?

A quotation received from the OEM will likely include compensation for the local supplier. Because the prices quoted will be the same as or higher than those quoted by the local supplier, the customer can mistakenly conclude that the local supplier is indeed competitive and that he has nothing to gain by bypassing him (some OEM’s will intentionally collude with their local reps to create this impression with the customer). The opposite, of course, is more likely to be true.

Customer: If the manufacturer has an exclusive representative in our territory, can Iberel legally sell to us?

We do not have an agreement with the manufacturer nor with his representative. We purchase all the items in the U.S. We take title to them in the U.S. And we pay for them in US$ in the U.S. So, when we purchase a product from a manufacturer or any supplier, the purchase is in essence a domestic transaction (processed within the U.S.). If the representative learns that we sold products into his territory, he will very likely complain to the manufacturer. Because the representation contract gives the representative exclusivity over its territory, many OEM’s feel an obligation to support him. This can result in the OEM telling us that he will no longer sell to us or, quoting us export prices (which are significantly higher than domestic ones, thus diminishing our competitiveness) as a way of protecting the rep. (For this reason, we strongly recommend that customers never reveal to the OEM’s or to their local suppliers that they are purchasing products through us.) However, if the OEM wants to defend his decision to sell to us, he very easily can. He can state that he sold his products to a U.S. company, shipped them to a U.S. address and was paid in accordance with his terms and conditions in the U.S. The transaction, therefore, can be classified as domestic in nature and, as such, did not violate their agreement. Furthermore, Iberel takes title to all products it sells, meaning it owns them when they leave the U.S. Because we do not have an agreement with the local representative, nor with the manufacturer, there is no agreement to violate.

Customer: But doesn’t Iberel also have to add on a fee, thereby bringing its prices in line with those of the representative?

Yes. But the differences between U.S. prices and those abroad can be so large that even with our processing fees, the prices we quote can be very competitive.

Customer: Why is that?

The reason we can be very competitive is that most manufacturers have 2 price tables: One for the U.S. market and a higher one for the export market. In those cases when the manufacturer in the U.S. sends a quotation to a foreign client, approximately 70% of the time it is quoting export prices. These are usually significantly higher than U.S.-market prices.
Second, manufacturers – regardless of whether they are US or foreign based, use a myriad of strategies to sell their products within the U.S. market. Some sell direct and do not offer discounts; some sell direct and offer discounts; some sell direct and also through distributors located all over the country; others sell only through distributors all over the country. When products are sold through distributors, many offer discounts as well.
Third, many products used by the OEM’s are available in the US market directly from their actual manufacturers (OPM). This enables us to move away from the OEM and switch to the much lower cost product manufacturer.
In short, the customer abroad has usually only one local supplier option. Iberel, due to its location, may have one or many. But, even when it has only one, the price can still be much lower than abroad.
As a way of improving our competitiveness, it is our job to identify and pursue the most cost-effective way to purchase each product. If we succeed, we will be much more cost competitive than the local supplier.

Customer: In many cases we benefit from technical and maintenance support given by the local supplier. Iberel does not offer such support.

Switching from a local supplier, in whole or in part, is a strategic decision that only you, the customer, can make. To determine cost-effectiveness, an analysis may be needed to determine the value of the support received from the local supplier. It must consider not only the cost of the items and services received from him but also whether these can be replaced, in part or in whole, by internal customer expertise and by other lower-cost suppliers.
It may also be possible to transfer some of the business away from the rep and still continue giving him business that cannot be transferred to others. This last option allows the customer to take advantage of both worlds – keep working with the local rep in those areas it is not prudent to switch away from him on and transfer business to other suppliers that the rep is not needed for.

Customer: In which other areas can we expect Iberel to help us reduce our cost-of-ownership?

There are many, most again dependent on each customer’s supply-chain and cost-reduction strategy and the degree to which he pursues his strategy. Some are tangible; others intangible.
Iberel offers a One-Stop location through which to source many items. Some customers use us to purchase only items they cannot purchase anywhere else. Others use us to purchase all types of items. Yet others use us as their exclusive central purchasing office in the U.S.
The benefits to the customer will be in the form of lower prices, shorter down-time, lower order processing costs, lower staff costs, lower communications costs, reduced need for office and warehouse space, lower banking fees, better use of corporate staff, higher return on investment, etc.Cost reductions in these areas can stretch throughout the organization and offer the customer convenience and flexibility that he is not likely to experience otherwise. However, a customer strategy that uses the product’s actual cost as the sole component of his benchmark will not optimize cost reduction. It will lead to the placement of too many orders, and the creation of many new vendors, resulting in an increase in the customer’s fixed costs in purchasing and throughout his organization.
A customer strategy that focuses on purchasing from local suppliers also deprives him of the many benefits offered by others. For example: A local supplier that sees himself has having no competition has no reason to moderate his prices. However, if he understands that he has competition, he is more likely to charge lower prices and be more attentive to the customer’s needs as a way of maximizing his business. This is an intangible component of our collaboration with the customer. We know it exists, is of great benefit to the customer, but cannot place a precise value on it.
For the customer who uses statistically-based methodology to track a product’s total cost of ownership, he will find it easy to make a statistically significant evaluation of all the benefits Iberel offers and will be better able to justify taking full advantage of them.
For the customer who does not monitor costs as closely, he may not fully understand, and may even doubt the value that Iberel is capable of offering. He will operate convinced that he is doing the best possible job at cost reduction, when the opposite may very well be true.

Customer: Can Iberel work with all companies in the USA?

We can work with most. Some companies, due to their marketing strategy or conflicts with agents in specific markets do not want to work with us. However, this is a small percentage, which means we should be able to source most of the items the customer needs. Currently, we have accounts with approximately 3500 vendors, including large and small companies and a database of approximately 50,000 items.

Customer: What about non-American companies, such as Asian or European ones?

Many foreign companies, especially the Japanese and many European, have offices in the U.S. Working with them is no different for us than working with a U.S.-based firm. In those cases where the company does not have a U.S. office, we’ve been able to purchase their products directly from them in the country they are domiciled in. It is worth noting that because of the size and competitiveness of the U.S. market, many foreign companies sell at prices in the US that are often lower than they sell for in other countries.

Customer: Can Iberel always benefit from US domestic prices?

No. Some companies, especially those with representatives in the market the customer is located in, when they know we’re going to export, will protect those reps by quoting us prices that are higher than those practiced in the US market.
Because of this possible conflict, it is extremely important that the customer not reveal to the local rep, or to the OEM, that he is purchasing products through Iberel. Once one of them knows, we are likely to be penalized with higher prices or with the OEM refusing to do business with us.

Customer: What about installation, training and after-sale support?

If you need in-house installation, training and after sale support and the local representative offers them, we recommend that you purchase the product through him (unless he is outrageously expensive). If he is too expensive, we can pursue a number of other options. If there is no representative, we can negotiate all these services as part of the purchase contract. Over the years, we have been very successful at helping our customers resolve technical issues. Very rarely has an issue been so complex that it required on-site intervention or the return of the product to the manufacturer.

Customer: What about warranty support?

If the product is purchased through us, the warranty is usually valid in the US. In the event of a malfunction, we will support the customer in his efforts to correct it. Initially, we will try to correct it by obtaining details on the nature of the malfunction and asking the manufacturer to suggest corrective measures. If this does not work, other options will be pursued including returning the product to the manufacturer in the U.S. It is important to note that many local representatives do not have the technical capability to repair the product themselves and, when it malfunctions, have to return it to the U.S. as well. This means they have no real advantage over us when it comes to warranty support, but can be significantly higher priced.

Customer: Are you able to source surplus, refurbished, and used items, including machines, sub-sections, spare parts, etc.

Yes. There is a tremendous supply of these items on the market, especially those used in semiconductor factories. We purchase them on a regular basis. It is worth noting, however, that because these products are purchased on the secondary markets, their exact condition is often not ascertainable, which implies that they sometimes carry a higher risk than when they’re purchased from the OEM. If the risk associated with them can be lowered to a level acceptable to the customer, their prices are often so low that great savings are possible.

Customer: How do you lower risk with surplus, used and repaired items?

We lower risk by 1) working only with vendors we believe to be reliable; 2) making an educated guess as to the likely reliability of the product; 3) negotiating a warranty period – for as long as possible, for each product; 4) on a need-to basis, confirming operation through the running and evaluation of performance tests; 5) on a need-to basis, do an on-site inspection. If we do not feel confident about the supplier, or about the functionality of the product, we will quote it to the customer only if we found no other product. However, in such cases, we alert the customer to the higher level of risk associated with the product.

Customer: What about the repair, recalibration and recertification of items?

This is something we do on a regular basis as well. There are repair companies in the US for just about every type of machine or instrument. Sometimes they’re the actual OEM. Many specialize in specific tools and are owned by technicians trained by the OEM. Consequently, extending the life of products by having them repaired is a great way of increasing the return on investment on the original expenditure.
The U.S. market also offers advantages that often do not exist abroad. A product that cannot be repaired or that few companies can repair abroad may be easily repaired in the US, often at a lower repair cost.

Customer: Are there any other areas where we may benefit from working with you?

Yes, there are, quite a few. Some are almost as important as lowering the prices of purchased items. They can also be used to benefit one or more customer facility. One example is contract administration. Contracts can be negotiated by the customer or by us for one facility or for various. We have the expertise to control releases against the contract and to ship anywhere, regardless of the number of facilities serviced by the contract. This enables the customer, if he so chooses, to bypass the manufacturer’s foreign distribution network, thus raising his negotiating leverage. The benefits we offer are limited only by the customer’s willingness to take advantage of them and his willingness to work closely with us.

Customer: Are there any other issues that can keep us from working together?

U.S. law carefully regulates all items exported from the U.S. As a way of complying with these laws, it is sometimes necessary for the manufacturers and/or us to know the enduse, end user and the product’s ultimate destination. This is information that, usually for competitive reasons, customers are sometimes reluctant about sharing or do not want to give. Sometimes manufacturers obtain information from us on the grounds that they need to comply with export laws, but, upon realizing the product is going to a market where they have an exclusive agent, then refuse to sell to us as a way of protecting that agent. This can happen with a first-time vendor, as well as with companies that have been working with us for years. When this occurs, it is likely we will not be able to sell the product to the customer for an indefinite period of time.

Customer: Do you need any support from us?

Yes. Local reps are very good at scaring and intimidating engineers, managers and buyers involved with the products they sell. Many will not hesitate to threaten to withdraw their support if products are not purchased through them. Others will not hesitate to go up the managerial ladder when they feel they are being bypassed. This can lead to an environment where the customer’s staff fears being blamed and possibly losing their jobs. This is the worst possible scenario for a manufacturer. It discourages his staff from pursuing any costreduction option that carries any job-security risk. For this reason, it is extremely important that any cost-reduction strategy that involves bypassing the local supplier be well understood by all, including all levels of management, engineering, maintenance, planning and purchasing, and that management understands that, in the event of a problem where the rep withholds support or decides to throw his weight around, there will be no finger-pointing and will fully support its in-house staff. Without the various managerial levels being on board, cost reduction will not be pursued as vigorously as it could. The rep will be content but the customer’s operation is likely to be less competitive.
Iberel’s success is also heavily dependent on a solid understanding of how we work and on very close collaboration with our customers. It is important that we understand your objectives and that you understand that as the local agent works for the OEM, we work for you; our focus is in helping you. This, in essence, makes us the opposite of the local rep and is bound to create occasional friction between us and the manufacturer and between you and the rep or between you and the manufacturer. Mutual support of each others’ efforts is critical to success. Any company intent on cost reduction must regularly review its relationship with each local agent and determine if the level of support it is getting warrants his overall cost and level of service he offers.
The more statistically-based is the customer’s strategy, the more likely he is to understand and be able to correctly monetize the benefits we bring him.
Ours is a true partnership. When taken full advantage of, it will result in significant benefits to the customer.

Customer: Do you have any suggestions for us?

Yes. There can be many, depending on the specifics of each situation. One in particular stands out – one that very few companies have implemented.
The traditional power balance between manufacturer and customer, especially when dealing with foreign clients, heavily favors the manufacturer and his foreign reseller. The foreign reseller typically has an exclusive over his market territory. This exclusive often renders the manufacturer powerless to correct the excesses or inefficiencies of the reseller. This means that the foreign customer must often tolerate high prices and put up with less than optimal service. But, the customer is still the customer. And he must be prepared to take back his rights. Every customer interested in reducing costs must be prepared to confront this imbalance and till it as much as possible in its favor.
One possibility is that a clause is written into the contract stating that the client has the right, at his sole discretion, to work directly with the manufacturer or to use the services of an intermediary other than that manufacturer’s agent. The clause must also state that in the event the services of the local agent are not used, no commission or margin (or any other form of rep compensation) will be added by the manufacturer to the prices quoted the customer. The clause should further state that the prices quoted the customer must be no higher than those the manufacturer offers its best domestic (US-market) customers.
In cases where the local vendor charges high prices or offers poor service or both, and a representative-separation clause was not entered into the purchase contract, the client must be prepared to confront the manufacturer directly and insist that he allow the agent to be bypassed.
Customers regularly fail to exercise enough leverage with manufacturers. They allow themselves to be forced into relationships with local suppliers which often fail to maximize benefits to the customer. Please consult us on additional suggestions.

Our Mission
 
To continuously contribute to our clients’ success through:
  • Innovative contributions to the reduction of their total cost of ownership
  • Raising their awareness to new and effective approaches to purchasing; and
  • Cutting-edge customer service.