Do you get frustrated when you see people hashing and rehashing a problem without ever coming up with a way to fix it, when you can see an obvious solution? I know I do. Sometimes when I'm watching the news out of Washington, I even get so annoyed that I find myself wanting to invoke my grandmother's fix for everything: "Give ‘em to me for one day. I'll make sure it never happens again!"
Well, I can't help but think that there's a parallel when it comes to solving the problem of counterfeit parts. This issue has become very high profile -- and for good reasons. Now, it seems to me that many companies are reacting out of fear instead of making a wise, thought-out decisions about where and how they acquire components.
From my perspective, it's a lot like the fearful reactions of banks and lenders in 2008 -- and the result then was that credit screeched to a halt. It seems to me that something similar could happen with parts acquisition, and that wouldn't be in anybody's best interest.
Let's look at a few examples where this is happening and a few "wise"-practices.
Because of the new anti-counterfeit legislation, many companies have said, "We will not use brokers or independent distributors." With all of the noise and confusion surrounding the issue of counterfeit parts, I can understand why they are saying this. However, that's a lot like throwing out the baby with the bath water. Reputable brokers and independent distributors play valuable and necessary roles in the supply chain. Refusing to work with them because some unscrupulous vendors are exploiting the situation is causing the whole industry to suffer.
There is a real solution: Follow the steps that many independent distributors have been following for years. These companies did not react out of fear or panic. They took a cautious and methodical approach to mitigate risk.
Organizations like the Independent Distributors of Electronics Association (IDEA) and ERAI Inc., saw this issue coming years before the masses started talking about it. In fact, these organizations and their members helped sound the alarm that created awareness of the risk. Beyond that, they encouraged member companies to self-police and helped to create standards to prevent substandard parts from entering their clients' supply chains.
Take a look at some fear-based responses and suggested wise-practices that could be implemented instead:
We are going to require testing on 100 percent of parts that are not from distribution or acquired direct from suppliers:
Require testing in accordance with the standard sampling profiles already in place in IDEA and military testing standards.
We are going to jump on every new testing method -- electron microscopy, for example -- even if it is not fully vetted:
While it is important to take advantage of new testing techniques, it is more important not to rush to use something that is not 100 percent founded or not yet part of any external standards body such as ASE or ISO.
We will not source parts from anyone but the factory/franchise:
One to 5 percent of an approved vendors list (AVL) has parts that cannot be procured from factory/franchise distribution. Companies need to be able to source these parts from alternative channels to meet their clients' needs.
Brokers and independents are causing the problem:
Brokers and independents are not causing the problem. Criminals are!
A wise strategy is the way companies that are not reacting out of fear are solving the counterfeit parts problem. Here's what they are doing:
Selecting their preferred independent distributors from the role books of IDEA and ERAI.
Implementing a program to assure "purchasing discipline" in their organization.
Establishing an internal system to make sure proper procedures are followed.
Completing regular audits (desktop and on-site) of their preferred independents.
Asking their preferred independents to come in and train on what to look for.
Asking for increased screening and testing where appropriate and requiring documentation.
Becoming part of the solution by minimizing e-waste and using a preferred independent to help recapitalize and dispose of stranded material.
Removing vendors from their preferred lists when they cannot or do not adhere to the requirements they have put in place.
Clearly, the counterfeit parts problem cannot be resolved in a day or a week. However, if everyone takes a step back, looks at the whole issue, and implements wise solutions to minimize risk, I believe it can be addressed without bringing the industry to its knees. What do you think?
This is a great discussion and is a snapshot of the kind of thing buyers face every day. I'm not sure anything is risk-free. (Otherwise, there wouldn't be a cottage industry of risk analysis firms cropping up everywhere.) The decision to buy from an authorized or independent distributor ultimately lies with the buyer. I'm not sure eliminating choice --i.e., wiping out the independent market -- serves the purchasing community. I do know from experience that past efforts to do so have failed. Raising the awareness of this risk at least gives buyers the best chnace to make informed decisions.
My statement was to use Authorized First, then Independents and I was talking about semiconductor components. Your scenarios conveniently don't have part numbers so that makes it difficult to figure out if an authorized source has the parts you referred to. If you would like to provide part numbers, I could look into it further.
"None of these situations are likely to be in the authorized channel." Did you look as a statement of fact or is this your hypothesis?
"Can you honestly fault a client for serving thier company's interests?" is an interesting way to view not going with Authorized First. I view going with Authorized First completely in any customer's best interest.
Authorized First is the lowest risk approach for any component purchase - period. Every other option is higher risk at some level. Independents are going to be able to supply parts that the Authorized channel cannot, but when an Authorized version is available, I am saying that is the one that should be purchased.
I dont dispute your arguement that is safer to buy from authorized. However, you cannot be a participant in the global electronics industry and think that is a viable solution to only use authorized. How would your proposed solution work in these scenarios:
-A military client needs Celeron Processors to repair field units.
-A municipality needs old thru hole parts to repair street light boards.
-A company who still runs DOS needs floppy drives from time to time.
How in a world where resources are tight can you honestly fault a client for serving thier company's interests? None of these situations are likely to be in the authorized channel. A little know secret is that most Please reply with how "authorized" can fix these three scenarios! Oh yeah, these are just the ones that came in this week!
Exactly! Now take that 8-pin device and ramp it on up to a 300+ pin bga package containing a processor or fpga of some kind. Nobody is going to convince me that DC measurements and visual inspection are adequate. It's still a risk. While testing being proposed/executed to thwart counterfeit doesn't include quality metrics common in the design world (AC testing, fault coverage, mtbf, etc...), it has become a "least common testing we can get away with" and/or "let's not pay too much for testing" process. In my opinion, the bare minimum gets done by the reputable independents when it comes to test and not much gets done more than that.
Testing and validation is hard work and costs money. Arguably, validation takes longer and is more complicated than design. There's very little validation going on with visual and DC testing that gets to the heart of long-term reliability. Whle everyone these days is focused on the silicon (justable for now), the packaging is not far behind. Material analysis of packaging to include die attach, mold compound, bond wires, etc...is coming.
I stand by what I said earlier, get your parts from authorized first and then independents. Anything else is compromise and a level of risk depending on your broker.
Hooray for you! As a Component Engineer, I appreciate the implication for thoroughness in the testing process before concluding a 100% confidence level. Because an 8 pin SOIC can contain anything from hex inverter logic to mixed-signal analog devices, the functional verification would have to be on my check list before achieving a 50% confidence level. A visual inspection for lead-frame integrity and surface examine for ink permanance and signs of ablation or black-topping, would only take my confidence level up to about 80%. I would want to check for speed gradients, coplanarity, outside packaging integrity, and lot and date code, logo, and part number markings against the manufacturer's artwork and datasheet. Now I am at 95% confidence. But, I want the reel unwound and samples taken from 4 or five different places in the reel to make sure that I don't have a counterfeit reel with genuine parts on the first and last 100 parts, with the balance of 2800 tape and reeled parts being bogus. Now I am at 99% confidence and only time will tell if the long-term reliability indicates that these parts were not "recycled" through the supply chain with half of their lives used up in other products. There is always the possibility that a legit factory ran an illicit third shift without the proper Quality Assurance measures employed during the normal work day. 99% is good. 100% is better. Don't forget. The counterfeiters produce counterfeit reels, rails,waffle packs, antistatic and humidity packages, tapes, bags, and labels.
I keep hearing all sorts of suggestions for avoiding obtaining/using counterfeit parts, but only a few are proposing truly effective means of avoiding getting only "good" parts for use in thier product. Some have proposed various means of doing this such as putting the blame on the independent suppliers and not taking responsibility for the problem themselves. The military uses a program called GIDEP (Government Industry Data Exchange Progam) wherein any poblems with parts which are destined for military usage are reported to a central entity - GIDEP - and the problem, along with actions taken to solve the problem are reported to everyone within the GIDEP community. Names are named and their corrective actions are reported.
Now if a similar type of entity could be established by someone such as ERAI, then over a period of time, the counterfeiters could be identified and eliminated in an effective way. Denying the source materials the counterfeiters have - scrapped electronic materials - would go a long way towards cutting down on the availability of counterfeit parts, but not totally eliminating the problem. I believe that the suggstions given here would also help to solve this problem, but only a centralized entity such as GIDEP would be the most effective means of severely reducing the problem effectively.
We all need to pull together and have a centrallized place where people could tell others about their experiences with the counterfeitters and to name names and how they solved their problems with the named counterfeit part suppliers. This would be a long process, but would be truly effective in severely rducing the number of counterfeiters and those within the supply chain who do not take responsibility for assuring that the parts they supply are "good" parts.
We have a big problem with counterfeit components but it seams no one is ready to really take responsibility for it.
i've not heard about IDEA before now, but i believe the use of registered bodies will help alot in this issue. since IDEA stands as an association for Independent Distributors, then they are in the best position to stand up for Independent distributors and brokers.
All independent distributors and brokers should be accountable in this issue. I don't see why a distributor or broker cannot take responsibility for counterfeit products.
If all dealers in components sales are registered, then a system for reporting counterfeit parts gotten from a distributor should be put in place, where customers can report cases, and i believe there are ways to prove where these components came from aren't there?
While I appreciate your passion for Authorized, there is a class of Independents that should be beside the authorized sources – not behind them. Why? Because, like you mentioned their customers know "that they can trust" the independents. They haven't come across issues, IF Independents were as sketchy as you make them seem they wouldn't be around after so long – price alone cannot make up for shoddy parts and the like.
What about independent distributors who get their parts from Authorized distributors? Are willing to meet specific demands of customers that Authorized Distributors aren't (or do it for cheaper)?
The market decides where the money will be spent. People will buy from companies who will best suit their needs and that of their customers. If a hospital requires product to be obtained from a company certified with the Medical Electronics ISO-13485 that hospital won't be able to go to every authorized distributor, but will be able to go to certain independent distributors.
Very true. I mean, that's what a lot of ID's do, as far as I know. They order from people based on ALL three of those things. Quality, Pricing, and Availibility. If it doesn't pass quality standards, it doesn't matter how low the price is.
I think the big problem in the thinking of people who promote Authorized Distributors over ID's and Brokers, is that they aren't aware of the focus on quality that many ID's have.
Having been homeschooled, I'm often stereotyped as someone who sat around watching PBS and going shopping. In reality, my family had standardized tests, and a strict regement of classes. I had more homework than my public school friends, and was graded tougher (because she only had two students and knew our strengths and weaknesess).
In the same way that I had to overcome the stereotypes associated with homeschooling (throughout college and even in my carieer), I think ID's and Brokers will be able to shed the imagine and a new stereotype will arise that will be quite flattering to the new class of Independent Distributors.
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.
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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.
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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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