The global aviation and military markets have become even more vulnerable to counterfeiting challenges today as companies channel higher portions of their product development resources to the consumer electronics segment, leaving lower volume sectors to utilize unsafe channels for filling urgent and difficult component procurement needs, industry sources said.
The dangers from fake or substandard parts facing the military and aviation supply chain have surged in recent years as suppliers realize profits from serving the sector often don’t justify the investment. This has resulted in a sharp drop off in the number of components designed specifically for the military and aviation markets, forcing OEMs in the segment to utilize parts originally intended for consumer applications. Many of these components are often not tested for either the long lifespan or the tough requirements of military and aviation equipment, according to Dan Deisz, director of design engineering, Rochester Electronics, during a presentation last week at the first ES-Live exhibition in Boston.
With many of today’s electronics components manufacturers and designers – especially in the semiconductor sector – focusing more on the consumer segment because of the higher volume demand and increased sales opportunities, other industry sectors that have lower volume potentials are suffering and aren’t getting the attention they used to receive in the past. The result is that fewer components are being designed nowadays for military and aviation applications, forcing OEMs in the sector to use components developed for consumer and industrial markets.
“There’s no way semiconductor designers today are paying that much attention to the military and aviation market because the payoff is not as high as in the consumer electronics market,” Deisz said, during a presentation last week at the first ES-Live exhibition in Boston. “They see the military market only as an adjacent market. None of the long-term markets are getting new semiconductor products designed specifically for them because they can’t drive high revenue streams.”
It’s a problem that won’t go away anytime soon. Obsolescence and EOL management issues are piling up fast for the so called aero-mil (aeronautics and military) markets. Components and processors used in the computing world, for example, are turning up in aircraft and other aviation devices that are often in service for anywhere from 30 to 50 years, long after the original component manufacturer (OCM) would have discontinued support for the parts.
In fact, the literature and other specs for some of these products might not even be available at the supplier anymore. Sourcing from broker channels are inevitably the only options available to procurement specialists at end-users, which has in the past resulted in dangers for even the U.S. military service. (See: DoD Sets Tough Counterfeit Prevention Rules & Counterfeits Thwarted in Three Cases).
Is Consumer the Achilles Heel?
There are no doubts the electronics industry is driven nowadays by a heavy reliance on products that have quick payoffs, short design timeline and limited life cycles. Many of the semiconductor processor designs, graphics ICs and even memory applications in use today have been designed primarily for the consumer electronics market where volume shipment can run into the hundreds of millions, as in the mobile handset and tablet PC segment. Meanwhile shipments to the military and aviation industries are typically very low although end-equipment here can be in use for decades.
With fewer components being designed specifically for their markets, aviation and military OEMs are sourcing more parts from the products originally designed for the consumer electronics market, deepening the chances that counterfeiters would get involved once these items go into end-of-life status. Here’s where the danger comes in for the industry, according to Robin Gray, chief operations officer at the Electronics Component Industry Association (ECIA).
“The Defense Federal Acquisition Regulation Supplement (DFARS) requirement for compliance with anti-counterfeiting requirements is definitely a response by the military to the increasing vulnerability of the supply chain to counterfeits,” Gray said at the ES-Live event referenced above. “Counterfeiting has become a major challenge for the defense market.”
It’s a problem in the aviation market, too, as it is for every other market where end-equipment have extended usable lives that extend well beyond those of the components designed into them. In many of these markets OEMs have limited recourse when products having a shelf life of about five years are designed into equipment that remain in service for 15 or more years. In the military aviation market, for instance, many aircraft built in the 1960s and 1970s are still in operation today, decades after some of the components designed into them have been discontinued by suppliers.
Procurement experts serving these markets typically resort to the broker channels for continued supply of these components, said Paul Elefonte, executive vice president, DMS/EOL solutions, at Crestwood Technology Group. Another option available at a great cost to OEMs in the aviation and military market is to redesign the equipment or enter into equally expensive replacement programs with franchise distributors and suppliers who may have bought the rights to service the products, he said.
Elefonte said companies should prepare ahead for these challenges by implementing policies that would ensure continuity of supply, including long-term procurement and service contracts with the original supplier of the components. By planning ahead, they could sharply reduce the likelihood of sourcing counterfeit parts. At times, though, companies in the military and aviation markets may have no other option but to engage with certain brokers for discontinued parts.
In such instances, OEMs should prequalify the broker, conduct annual on-site audits, institute test and inspection programs, get contract manufacturers and sub-contractors involved and plug any loopholes for fake parts to be sneaked in at distribution partners. “You have to make sure the supplier is actually franchised for the parts you are buying by checking on the manufacturer’s website,” Elefonte said. He suggests the following additional steps:
- Validate direct line of trace from original component manufacturer (OCM) to supplier
- Validate return of parts and add contractual language that you are to be notified anytime a returned material is supplied
- Get alerts when a franchise supplier is brokering parts from or into the open market
- Demand supplier submit to contractual language guaranteeing payment of the cost of testing and authentication
- Find out whether a supplier is employing below par test houses.
- Do not trust electrical testing performed by the supplier. Instead, demand all electrical testing be done at trusted test houses
ECIA Says ‘Get Involved’
The ECIA, too, is ramping up its anti-counterfeiting activities and asking suppliers, OEMs/EMS providers and distributors to coordinate their detection and avoidance efforts to combat what is proving to be a difficult problem for the entire market.
In a separate presentation at the ES-Live event, the ECIA’s Gray identified many of the challenges facing the industry arising from the growing number of reported incidents of fake parts in the electronics supply chain. Anti-counterfeiting efforts are being negatively impacted by issues that the industry hasn’t resolved, including end-of-life challenges that often push some companies into the broker market where they are exposed to fake parts, he said.
Gray identified additional challenges facing anti-counterfeiters as including spiraling cost of avoidance and detection, packaging verification, handling and storage, the lack of verification standards and documentation. No single supplier, customer or regulatory authority can alone resolve these issues, he noted.
“Counterfeit avoidance is a task for suppliers too, not just for buyers and distributors,” Gray said. “To make it easy for everyone OCMs should publish the lists of their authorized distributors and EOL materials. They should keep customers and distributors up to date on their technology roadmaps and buyers too should manage obsolescence issue from design all the way to the product’s end of life.”