Verical Launches Electronic Components Marketplace

Online, October 7, 2009 (Newswire.com) - Online Marketplace Introduces a Pedigree Scoring System to Fight Major Risks to the High Tech Supply Chain

• The economic rebound is catching many supply chains unprepared to meet demand.
• The resulting shortages are forcing buyers to turn to grey markets for parts needs.
• The counterfeit threat is escalating as methods are becoming increasingly sophisticated.

SAN FRANCISCO - October 7, 2009 - Verical, Inc., the Electronic Components Marketplace, today announced the production launch of its online trading platform for global high tech manufacturers and distributors of electronic components. Countering major risks to the high tech supply chain, the Verical Marketplace uses information and technology to create a unique pedigree scoring system for component parts available in its catalog at www.verical.com.

As the economy rebounds, buyers and sellers are growing more and more vulnerable to the risks of inventory excess and shortages that drive grey market activity and increasingly sophisticated counterfeit methods. In either a rebounding or floundering market, the Verical Marketplace optimizes transactions within the industrial supply chain for sellers faced with disposing of excess inventory and buyers faced with shortage purchasing.

Market opportunity: of the $600 billion annual market for electronic components, the time-critical segment is an estimated $22 billion, approximately $12 billion of which is serviced by unauthorized distributors, and 13 percent of which is counterfeit, according to the trade association IPC. The U.S. Department of Defense found that 15 percent of the shortage parts in its supply chain were fakes, with the number growing at a compound annual growth rate of 25 percent from 2005-2008.

"Today, the electronic component secondary market is fraught with risk and inefficiencies - buyers have no visibility into the true source of their components; they can only guess at a part's authenticity or warranty, and have incomplete information about what the part really is and what a fair price is," explained Stephen P. Kaufman, senior lecturer of Business Administration at Harvard Business School, and former chairman and CEO of giant distributor Arrow Electronics. "At the same time, sellers have to worry about not getting a decent price for their surplus inventory, protecting their brands, and the hassle of not having a single place in which to sell their parts. There is a significant opportunity to upgrade the entire supply chain by addressing the current flaws of the secondary market, and Verical is addressing this challenge head on."

Growing exponentially since its beta introduction in January, the Verical Marketplace currently serves 3,200+ buyers from small electronics firms to global high tech manufacturers, with 27,000+ unique part numbers from 230+ manufacturers, including IDT, Molex, NXP Semiconductors, Texas Instruments, and Tyco Electronics.

Verical Redefines the Electronic Components Marketplace

To redefine the electronic components marketplace, Verical relies on a deep leadership team in supply chain software that includes industry veterans from Solectron, Agile Software, Dept. of Homeland Security, Classic Components, and Lockheed-Martin. Company president, CEO and co-founder Josef T. Ruef has over 16 years of experience with the secondary market, specifically in developing anti-counterfeiting best practices. John P. Brown, Verical's vice president of marketing and strategy and company co-founder, has a wide range of experience in operations and the management of information-sharing networks between organizations. Additionally, VP of supply chain and operations Chris Cookson brings more than 20 years of supply chain and consulting experience; VP of sales and community development Bill Aston brings 20 years in enterprise supply chain software; and VP of Engineering Jes Lefcourt has 15 years in software management.

"The secondary market is being exploited by fraudsters and profiteers," said Ruef. "Our deep experience with systemic failures in the secondary market led us to build the Verical Marketplace as an extension of the primary market. We believe 'information' and 'traceability' are the keys to retaining component part value for sound decision-making and confident transactions. By providing buyers and sellers with the pedigree scoring of component parts, a measure of each part's traceability, we are uniquely positioned to complement franchise distribution as a trustworthy source of inventory when traditional sources cannot fulfill demand."

Unlike third party auction houses and consignment sales, the Verical Marketplace permits only authorized channels and original owners of component parts to sell pedigreed inventory. Its innovative pedigree system assigns a score to each component part based on how far back Verical is able trace its chain of custody. The higher the pedigree score, the further up the supply chain the component is traceable. The end result is sellers can monetize unused assets at a greater return on their inventory investment, and buyers can manage their purchase risk and expedite their shortage fulfillment.

"For sellers, writing off excess inventory equals lost revenue. Typically, sellers of excess inventory get 4-8 percent return. Today in the Verical Marketplace, they're getting 8-10 times that with the average seller recovering 60 percent of the historical cost," noted Cookson.

Buyer Benefits Seller Benefits
Rich Component Part Information
Critical information to make better decisions faster, including fully transparent view of pricing, availability, restriction of hazardous substances (RoHS) status, delivery information, and more Maximize Surplus Inventory Revenue
Sell excess and slow moving inventory as an alternative to write offs and realize a higher and faster return on historical cost to improve seller's cash flow
Fast Easy Search
Web 2.0 technology and processes to enable the most dynamic, quick-filtering search tools to give buyers the information they need, when they need it Anonymity
An anonymous marketplace to protect the seller's brand
Trusted Sources
Hand-picked, trusted suppliers - the industry's leading manufacturers and distributors - to ensure buyers get fully traceable parts with associated pedigrees, helping them mitigate the counterfeit threat Pricing Control
Seller-controlled prices, so the sellers set the prices to be paid for their components - not a third party
Automated Fulfillment and Proactive Expediting
Components delivered by world class, third-party logistics provider partners Grey Market Protection
Protection against grey market risks through controlled marketplace that only permits the most trusted names in every segment of the high tech industry OEM, EMS, distribution and component manufacturers to participate

The Verical Marketplace is available today at www.verical.com or call 415.281.3866. For more information on Verical, Inc., please visit Company Overview or Newsroom. For additional perspectives, please visit and subscribe to the Verical blog, The Electronic Components Source at http://blog.verical.com/, and follow Verical on Twitter at @Verical.

Additional Resources

Counterfeit White Paper: "The Real Solution to Fake Parts: Securing Supply Chains through Data Transparency and Better Market Design" (October 2009); http://bit.ly/counterfeitwhitepaper

Newsroom: https://www.verical.com/about/resources/newsroom.html

Industry Insights: presentations, articles, websites; https://www.verical.com/about/resources/industry.html

Blog: "The Electronic Components Source" http://blog.verical.com/

Twitter: @Verical

About Verical

Verical is the creator of the Verical Marketplace, an online trading platform for electronic components that reduces the risk of chronic inventory surpluses and shortages. For sellers, Verical works with component manufacturers, OEMs and contract manufacturers to monetize excess inventory at substantially higher yields. For buyers, Verical provides small electronics firms to global high-tech manufacturers with a unique pedigree scoring system that hastens sound shortage purchasing. Founded in 2007, Verical is a San Francisco-based start up backed by Valhalla Partners. The company is experiencing rapid growth with over 27,000 unique part numbers available today in the Verical Marketplace at www.verical.com.

###

All brand names and product names are trademarks or registered trademarks of their respective companies.

Tags: counterfeit electronic components, counterfeit inspection methods, distribution, economic recovery, electronic component catalog, electronic components, excess inventory, online catalog, shortage purchasing, shortages, supply chain integrity, supply chain security

Media Contact:

Susan D'Elia, media relations for Verical
TECHMarket Communications
650.344.1260
[email protected]