Counterfeiting is a blot on the electronics industry, but as discussed in the first part of this blog, the tougher legislation proposed by the US Congress addresses the problem but will not eradicate the challenge manufacturers face. (See: Some Problems Can't Be Penalized Away, Part 1.)
Here's why. First, the pending legislation is written around trafficking in military goods and services and does not address commercially used components. Therefore, even if the pending legislation were to successfully stop "military part counterfeiters" dead in their tracks, it would not affect counterfeiters engaged in other goods. I'll concede that this legislation could eliminate some sources in the US that sell counterfeit components to the military, but even that won't make the fundamental problem go away.
That fundamental problem is that most counterfeit components are manufactured outside US jurisdiction. It will be difficult if not impossible to enforce the penalties on these sources. Without a way to stop counterfeiting at the source, there's not much chance that counterfeits will go away simply because of the threat of fines and prison sentences.
Which brings me to my second point. In the best of outcomes -- military part counterfeiters stopped dead in their tracks, that is -- the fundamental process of fake parts entering and coursing through the veins of our supply chain would not be altered in any way. Counterfeiting is an opportunistic criminal activity. If there's demand for a component, a source, and a supply chain on-ramp, you've got an infrastructure and an inherent process ready to enable illegal trafficking. Just add some motivated crooks.
The reality is that when parts become scarce, as they do as products approach or pass end-of-life, for example, sourcing becomes more and more difficult. Government buyers are currently allowed to purchase from virtually any source. Sophisticated counterfeiters capitalize on this, convincingly faking both components and their accompanying traceability. For these unethical suppliers, the fact that the components they supply could have a disastrous impact probably isn't their biggest concern.
Allow me to jump back for a moment to the DUI law analogy I made in the first part of this blog. According to the National Highway and Safety Administration's Website, nearly 12,000 people die in the US each year because of drunk driving. The site goes on to equate that statistic with being equal to 21 jumbo jets crashing each year.
Interestingly, when I compared the structural similarities of S. 1228 and Georgia's DUI penalties (other states' laws may be written differently), I noticed one striking difference in Georgia's law that bears pointing out: A fourth drunk driving conviction in Georgia is a felony if it occurs within 10 years of previous convictions, and while the law includes heavy fines and possible imprisonment, it also stipulates the felon may be ordered to install an Ignition Interlock device on all vehicles owned and operated by the offender.
That is not a fine; that is a process change. The offender is materially prevented from further driving while under the influence. As judges increasingly impose this type of penalty, drivers will not be able to contribute to DUI death toll statistics. Can you see where I'm headed with this?
I agree when you say that it's more than just penalties here, it's also about the process. From the reading and research I've found, part of what makes counterfeitting realtively "easy" is how e-waste is taken care of (or not taken care of).
Waste available from technology-heavy countries creates an endless supply for counterfeit operations to harvest from. A PCTech article I recently read quotes the rate of e-waste growth at 40 million tons yearly. China and USA produce about 2.3 million tonnes and 3 million tonnes of electronic waste, respectively.
Yes, of course there needs to be more transparency and accountability on the production end of the supply chain, who sources are, who will be accountable for counterfeits in the supply chain..
The process also needs to address what happens to the waste, after it's desposed of to make sure it doesn't just go back into the supply chain to begin with.
As long as counterfeiting is as lucrative as it is, there will be people who figure the amount of money they can make, before they're caught... outweighs the risk of getting caught. It would be interesting to see if more money could be put into the idea of "cradle to cradle" manufacturing, rather than "cradle to grave, to couterfeit."
If the laws can be made to make it mandatary for the purchase department to keep trace of the supply of each component then the problem of counterfeit parts can be tackled by legal means. The end user should be able to trace back the whole supply chain of a component used in his product write upto the manufacturer ( with the name of the manufacturer, production lot no and date ). The whole supply chain should be legally held responsible if at any stage in the life time of the component it is found that the component was a counterfeit.
Government buyers are currently allowed to purchase from virtually any source.
@Daniel I totally agree with you that we need process change. Government buyers should be forced to buy from geniune distributors like Arrow, Avnet etc. And these distrubutors should be held responsible if they provide any counterfiet parts.
There are many ways to ensure you get original part. However, purchase department often takes another way to procure parts and get into trouble of getting fake parts. If proper proccedure is followed with due deligencce, most of problem can be resolved without need of strong laws.
Strong relationships between suppliers and customers is essential. In the event counterfeit parts turn up, channels of communications are open and issues are easier to resolve.
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.
Archived Dialogues
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.
Euro-Crisis: What It Means for High-Tech Firms Join EBN Editor in Chief Bolaji Ojo and Contributing Editor Jennifer Baljko on Thursday, July 12, at 10:00 a.m. EDT for a Live Chat on high-tech and Europe's economic difficulties.
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.
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