Counterfeiting is a major problem for the electronics industry. That much is well known and acknowledged by everyone with a stake in the market. The good news is that the industry has been taking steps to combat the problem with some success.
The ERAI is a global service organization that monitors, investigates, and reports issues affecting the supply chain. This year's conference was one of the best attended in years, and the general conclusion from participants I spoke with was that it was chock full of great information. Many attendees came hungry for knowledge on how to avoid counterfeits and set themselves apart from the "bad" distributors out there. This was very refreshing and disproves the theory that independent distributors simply don't care about the issue of counterfeiting.
Here are some of the highlights from the ERAI Conference and actions being contemplated or already introduced to help independent distributors fight the spread of counterfeit products:
Phil Zulueta, chairman of the G19 Counterfeit Electronic Components Committee, led the drafting of the AS5553 standard for detecting and avoiding counterfeit components. This standard was adopted by NASA in 2008 and by the US Department of Defense, and it became an SAE Standard in 2009. The new AS6081 standard is currently under way, specifically intended for independent distributors, and it's very similar to the AS5553 but contains prescriptive counterfeit parts avoidance requirements.
A dream team of representatives from the major players in the electronics industry has come together to support Zulueta in drafting this standard. Completion of the AS6081 standard is expected by the end of 2011 so that independent distributors will be able to have compliance verified through a third-party certification body, and OEMs with the AS5553 standard in place will be able to flow the requirement down to their distributors. The scope of the standard includes risk mitigation through a control plan, component testing and verification, and enhancing the process with counterfeit focus. More information on this standard is available on the SAE site.
Make it legal; counterfeit parts won't be returned.
One other informative speaker at the ERAI event was Keith Gregory, litigation partner at Greenberg & Bass LLP, and a long-standing general counsel for the ERAI, who is well versed in the legalities of the electronics industry. He told independents to put this wording in their purchasing terms and conditions: "Counterfeits parts have no value." It's a very simple statement, but it can be effective in voiding transactions where components are suspected to be counterfeit.
Many distributors want to do the right thing by confiscating the suspected counterfeit materials so that these don't end up back in the supply chain. However, without the proper wording in purchasing terms, the fear is that there could be legal ramifications for not fulfilling the payment side of a purchasing agreement. Gregory assured the ERAI conference participants that a company can legally confiscate the parts when there is a preponderance of evidence that they are fake and the proper wording is already included in the purchasing agreements. In a case when parts are quarantined, the burden of proof would then be on the seller of the components to prove that the parts are not, in fact, counterfeit, via testing at a third-party lab.
Moving beyond the visual testing standard.
Debra Eggeman, executive director of Independent Distributors of Electronics Association (IDEA), a non-profit organization for advancing industry ethics, establishing standards, and promoting education in the industry, was also in attendance with her team. She noted that the IDEA-STD-1010-A standard for visually inspecting components was first released in 2006 and has been widely adopted as industry standard for inspecting components.
The newest revision to this standard the IDEA-STD-1010-B was just released in June and includes some major redesign to coincide with changes in the industry. The update will address changes in techniques used by counterfeiters, the need to look beyond visual inspection, the use of test houses, making the standard more visual and less wordy, and the discussion of advanced inspection techniques.
In a subsequent blog, I will discuss and offer practical suggestions for detecting and helping the industry fight the problem of counterfeiting.
Thank you again for all of your fantastic feedback! Some excellent points have been made. Anybody with additional questions, I invite you to please join us this Thursday, July 28th, at 12:00 EST as I do a LIVE CHAT Dialogue with EBN users! Click the LIVE CHAT link on the front page to add it to your calendars. I look forward to answering any questions you may have. Thanks again for all of your feedback!
LIVE CHAT with Dawn Gluskin
What You Really Need to Know About the Open Market
"Not all non-franchised distributors are created equal. Many companies that play in the open (non-authorized) distribution market have gone to great lengths to ensure that the components they sell are counterfeit-free. In this Live Chat, Dawn Gluskin, founder and CEO of distributor SolTec Electronics, will talk about what differentiates these companies from unscrupulous open-market brokers."
We need something to minimize the risk from products being counterfeited and shut the door upon 99% of counterfeiters (hopefully) while as a layman without technical knowledge to differentiate real from fake.
So far, in hologram industry HGT Deep 3D hologram technology (http://www.hgt-global.com) can fulfil these requirements. As far as existing technology in the world, the counterfeiting risk on this type of hologram is Zero.
To apply a banknote technology on label form, the most advanced and traceability security features are to embed a security thread on the label (http://hgt-global.com/security_paper.html). The quantified risk is equal banknote being conterfeited.
My guess is the primary source for counterfiet parts comes from CHINA. They are one of the only counties that purchase re-claim/scrap elctronronis. They do have millions people keep working at very low wages.
MIL Specification parts are expensive and some have long lead times because Reliability Testing that is required.
Where do you think conterfiet parts or units come from?
There have beem stories about Jet Fighter engine rubber "O" rings being made from wind shield wiper rubber, made in CHINA, and sold in the US. (We need a HOT Line to call)
For more information on counterfiet parts goggle electronic counterfiet parts, other publications Military & Aerospace Electronics, SMT Weekly Newsletters, Calce/eNews.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.