What are the dangers lurking behind a well-designed website or a friendly email? Unfortunately we don't always know until a problem causing irreversible damage occurs.
In an effort to limit your exposure to potential problems in this ever-changing and somewhat volatile global electronics supply chain, it is imperative that any and all steps possible are taken to verify the legitimacy of the organization you are considering doing business with.
Modern technology has brought the days of the old-fashioned "gentlemen's agreement" to an end. Human-to-human contact is scarce in this industry leaving it very easy for someone to hide behind a computer. However, if used to its potential, modern technology can also make it a little easier for us to do ourdue diligence to vet our customers and suppliers.
While onsite inspections are ideal, they can be costly and are not always feasible. As such, we have to rely upon other sources to help us. Sadly, there is no fool-proof way to guarantee a successful transaction; however, there are relatively simple steps that can be implemented into your vetting process to minimize the risks of doing business with an unknown source.
ERAI is an excellent resource to see if any alerts are linked to your potential customer or supplier. Members can search company profiles in the ERAI website or call our office directly.
While references are typically requested as a normal procedure, they are not always verified. Invest the time to contact trade references and see what others say about the company's performance history.
Secretary of State websites:
Secretary of States' websites provide you with corporate information belonging to each company that is registered in that state. With the exception of a few, this information is available free of charge. Often times the records will divulge the date of incorporation,officers, registered agents, etc. The ERAI website has links to all Secretary of State websites including the UK and Hong Kong.
In addition to verifying the address, Google Earth can often times show a satellite picture of the location that can show you if their "3000 foot warehouse" is actually a house or strip mall.
The UPS Store website:
If you have reason to be suspicious of a company's address, you can go to the UPS Store location search (http://www.theupsstore.com/Pages/index.aspx
)and input the address to make sure they are not using this as their shipping address.
Online searches arealso an option. By simply inputting the company name and/or address, phone number, etc. into your web browser, you can find multiple resources for information, including if a company is using a“virtual” office. Bear in mind, you can't believe everything you read. Websites including online trading portal comment sections can be useful;however, they are not always accurate. Do your best to verify the information you read...good or bad.
Pay attention to their self-proclaimed accolades. It's better to resort to the "if it sounds too good to be true…" theory than to find out later you have been fooled. If they claim to be an authorized distributor, it's easy enough to go to the OCM's website as they often times will identify their distributors. ISO certifications, ASA certifications, etc.can most often be verified online through registrars.
If you stumbleacross an organization that is misrepresenting information (e.g. false certifications, falsely claiming to be an ERAI Member, etc), let us know. Email us at firstname.lastname@example.org.
If you have any additional methods your company uses to safeguard against fraudulent or problematic companies or individuals, please share them with us. The more information you share with ERAI, the more information is available to your fellow ERAI Members.