Counterfeiting is very similar to identity theft. They both involve the misrepresentation of facts and the faking of a valuable image or property. Also, in many cases of counterfeiting and identity theft the victims are never aware of the dangers until vital operations have been compromised. In fact, many electronics companies believe their supply chain are so secure they don’t think counterfeiters can inject fake components into the system. The price of this overconfidence can often be terrible for the enterprise and consumers.
Counterfeiting is a major problem for all segments of the global economy. It is even worse in the electronics industry although most companies that have been impacted would never publicly admit it. Counterfeiters operate a global, multi-billion dollar and highly-lucrative business that continues to draw new players despite the best efforts of governments and enterprises. Those involved target every segment of the economy, bringing out products in sensitive areas such as pharmaceutical and electronics, where the failure of medications or critical operational systems can result in massive losses of lives and properties.
Recent technological advances, design innovations – and markings – as well as mandatory online verifications built into products in heavily targeted industry sectors have made it easier for electronics manufacturers to quickly discover and extract fake parts from the supply chain. But because hundreds of millions of varied components are shipped annually companies often don’t report all suspected parts – partly because these are often termed “suspect”; Verification may not be carried out promptly or it may even be waived if the shipper makes restitution and recalls the batch.
Paradoxically, the same innovative solutions that are used to identify suspicious components have also been used by counterfeiters to produce items that so closely resemble the original that separating fake parts from genuine ones now requires the use of expensive and highly sophisticated tools. Few companies in today’s high-pressure electronics industry can devote the time for component verification or acquire the verification tools to keep the supply chain clean.
The industry may have to go back to – or restore– basic anti-counterfeit tools that have worked very well in the past and which remain quite viable today. You may be surprised how simple some of these tools are. The best of them is not even a tool. It’s just a systemic action that emphasizes the importance of component traceability from production through delivery to assembly and all the way to end-of-life disposal. “This means knowing the father and the mother of the components,” said Lindsley Ruth, Group CEO of United Kingdom-based Electrocomponents plc.
Ruth said in an interview conducted earlier this year while he was a vice president at Future Electronics Inc. that this strategy worked very well for the Montreal, Canada, electronics component distributor. “It’s a very simple system but it is quite effective,” Ruth said. “We make sure we know the history of the components before it ends up in our warehouse. Components coming from a supplier or returned by a purchaser, whether OEM or contract manufacturer, get verified this way. If we can’t confirm the component’s origin it doesn’t get a pass and we won’t stock it.”
Of course, there are many other tools that a distributor or component supplier can use to determine the genuineness of a component. However, many of these involve a battery of tests that can range from the simple to the most complex. If a company has in place a system of verification that compels every shipper to vouch for the components they are sending to a customer or distributor the supply chain would be better protected. The next step for many companies is the random testing of components, which Ruth said his former company did regularly. A shipper whose product fails the random test may get all its parts pulled out of inventory and lose its A-rating. The loss of “face” comes with a hefty financial penalty.
Rather than take the chance of being blackballed by a major distributor most suppliers and OEMs/EMS companies returning components would rather get the pedigree of their products right. They don’t always succeed but when done right this approach is cheap and yet very effective. Can your company vouch for all the products in its warehouse? If there are doubts then it’s time to implement the pedigree test. You may be surprised where the parts have been and by their true origin.
Bolaji Ojo is editor-in-chief and publisher of Electronics Purchasing Strategies. The views expressed in this blog are those of the author alone who promises to base his sometimes biased, possibly ignorant, occasionally irrelevant but absolutely stimulating thoughts on the subjective interpretation of verifiable facts alone. Any comments should be sent to the author at email@example.com.