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.
I totally agree with these comments. Manufacturers will only produce something when demand for it exists in the market. As Adeniji mentioned, lower prices are the major reason why counterfeit products are in demand and hence are being produced. Despite the legal restrictions, manufacturers will eventually find a way to make and sell counterfeit products.
Perhaps what companies can do is to start catering to the segment of the market which wants lower priced products and goes for counterfeits. Companies can produce a lower-end (may be slightly inferior in quality) product and sell it at a cheaper price to compete with counterfeit manufacturers. This is one way to drive them out of the market.
Some of the comments being made sound like people don't understand counterfiet parts. These are counterfiet electronic componets not purses or golf clubs. These componets have the same marking or company logo's as the orginal manufacturer. If the components are from a non approved manufacturer or have a non approved manufacturers logo they should not be be purchased, these units should meet the MIL Specification DWG marking requirements, period, no questions asked.
Somebody said, manufactures should manfacturer a cheaper part to put the countfieter out of business, this person doesn't know what he is talking about! If the customer wanted a COTS part, they would have ordered one. Manufacterers already manufacturer commerial parts that meet MIL Spec. less the reliability Testing.
There should be a HOT Line to report counterfiet parts!!! This would be a start to put the counterfieter out business.
Every product that are certified meeting the specifications and that are approved to be produced and marketed have assigned recognition codes. In order to limit or eradicate the counterfeits, there must be a task force who will keep eye on such a product and have a data bank where the consumer will be able to report their experiences. This will allow the task force filter the genuine from counterfeit. Though it is very unlikely that adulterated materials will seize from existing but it can be limited.
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.
While no one really can accurately predict the future, we can take guidance from another Drucker saying which is the best way to predict the future is to create it.
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.