Counterfeit components are a $100 billion industry. Counterfeits are now estimated to comprise between five and 25 percent of all available parts. As the marketplace for engineers has become increasingly fast-moving and competitive, many purchasing professionals and distributors have cut corners to accommodate faster product turnaround schedules. This is has allowed gray market electronics to become increasingly lucrative.
Counterfeit components are not just an issue for the electronics industry. They are a huge disservice to customers. The inferior quality of gray market products negatively impacts the solutions with which they are integrated. Unfortunately, counterfeit components can pass initial tests and make their way into consumer products, automobiles, military technology and medical instruments, to name a few. At Newark element14, we’ve developed a series of strategies to help increase traceability, improve supply chain operations and educate customers on the risks associated with purchasing counterfeit components.
Consider the following five tips for combating counterfeit components:
1. Be wary of low prices. If the costs of components you are purchasing are well below the average cost of the same components in the market, use caution. This is often the first major warning sign that you are buying from a source that cannot be trusted. Compare costs across suppliers and distributors to be better informed of industry standards.
2. Look for value-added services. Entities that offer counterfeit parts are not likely to do anything other than buy and resell. Beyond supplying electronic components, check to see that a vendor offers additional value-added services like customization, kitting, re-reeling, instrumentation or calibration on the parts they sell. High-service distributors will offer those types of services.
3. Check for traceability. Pay close attention to supply chain authenticity when purchasing components. Ensure the distributor you choose offers high levels of traceability through their entire network of supply chain operations including certificates of compliance and that they are an authorized distributor. At Newark element14, our customers are given visibility into their components’ journey from start to finish, and we’ve got the capability and accountability to serve as the design partner for engineers through a product’s lifecycle.
4. Meet face-to-face. Despite an increasingly global, digital distribution business, being physically close to customers is still incredibly important, and smart distributors recognize the value in this principle. Does your supplier and/or distributor offer opportunities for face-to-face contact with their regional sales teams? If so, take advantage. First-hand insight into a supplier or distributor’s operations not only prevents counterfeit electronics from infiltrating the market, but also builds strong working relationships with key partners and guarantees the engineer’s design needs are clearly met.
5. Look to your peers. Equally important to face-to-face distributor accountability is the support of a peer-based group, like the one at our online community, element14. Looking to fellow buyers in the industry to make connections, discuss design issues and share experiences working with various distributors can all better inform your own procurement strategy. Through peer-based groups buyers can also make recommendations, warn against unreliable sources and refer customers to trusted organizations and resources that all stop counterfeiting in its tracks.
Counterfeit components are a complex issue, and stemming the flow of gray market products into the electronic components industry is much easier said than done. There are many proposed solutions beyond this article alone, such as government regulation or RFID tagging of all merchandise, which will only become more important to consider as distributors expand their services into growing verticals like wireless technology, sensors and the Internet of Things. Buyers are, however, a key first source to implementing change. The next time you purchase any components, remember that by following these five simple tips you are doing your part to help combat counterfeits.
Richard Halliday is global product director at Newark element14.