Smith & Associates recently compiled the full report of responses from this year's annual Global Supply Chain Survey, which considers a number of core topics that shape the semiconductor and electronics industry, including: challenges and concerns, component demand trends, counterfeit vulnerability and mitigation strategies, sustainability, influential technologies, and the role of independent distributors.
Among the critical issues in our industry, as well as many others, is counterfeit vulnerability and mitigation of threats. Respondents to the survey were questioned about their views of different sector's vulnerability to counterfeiting and asked to rate the effectiveness of various counterfeit mitigation techniques.
We’re all in the same boat
The survey asked respondents to rate the vulnerability of different industry sectors (aerospace & defense, consumer electronics, industrial electronics & equipment, oil & gas and/or energy, automotive, and medical) that purchase components and electronic end-products. The responses did not point to any single industry sector identified as being "most vulnerable" and that all categories had higher ratings than "neutral" for vulnerability. When considering the overall ranking of vulnerability, combining "most vulnerable" and "somewhat vulnerable," respondents ranked consumer electronics followed by industrial electronics & equipment and oil & gas as those sectors more vulnerable than others to potential counterfeit exposure.
Breaking down respondents into company types (OEMs, EMS, CMs, ODMs, and distributors) for this question, it is distributors that consistently rate the vulnerability of industry sectors as more susceptible to counterfeit threats than do respondents from all other company types, regardless of the sector being evaluated. A drilldown into the data is available in the full report.
Evaluating counterfeit mitigation tools
A recognition of the broad threat that counterfeit components pose naturally leads to a look at how to mitigate these threats. Evaluating tools and methods for their effectiveness as an anti-counterfeiting measure enables us to understand what respondents view as important to their anti-counterfeiting strategies.
The survey identified two tools as the top-rated for effectiveness as anti-counterfeiting measures:
- Part Authenticity Testing (favored by CMs (75%) followed by EMS providers (67.5%) and distributors (66.67%)), and
- Standardized Certification & Accreditation Requirements (favored by distributors (66.66%) followed by EMS providers (65%) and OEM (62.50%))
The rating of Part Authenticity Testing follows directly with the 2013 survey results, which also rated this tool as the top choice for anti-counterfeiting measures, underscoring the importance of accredited testing laboratories and qualified service providers along the global supply chain for our industry.
Clearly, the ability to provide Part Authenticity Testing as a core anti-counterfeiting service and to hold industry accreditation standards is essential for distributors and should be considered a requirement when purchasing from a supplier and acts to separate out top level distributors in today's global supply chain. Those who are able to provide both Part Authenticity Testing and hold recognized industry standards, certifications, and accreditations are those distributors who are holding themselves to higher standards and ought to be separated out from others when concerns arise regarding distributors as the location of possible gaps through which counterfeiters can gain entry into our industry's supply chain.
Other counterfeit mitigation techniques and qualifications (e.g., RFID, DNA, flow down & traceability, regulatory mandates, reverse logistics, among others) were explored and rated by respondents to the survey. To explore these data and findings in more depth, by aggregate views and by company type, please download the full A 360 Degree View of the Supply Chain.
Mark Bollinger is Vice President, Marketing, Smith & Associates