Prabhakar,
In my experience, the part's cost part of the top level product cost is not that significant. Think of the added labor for board level assembly, test, handling, sub-assembly build and test, final build, burn-in, test, packaging, and shipping. All of these cost are easily accrued within a three month time period, however, even if you get reimbursed for the part cost that caused the whole product to go afoul, how much real money cannot be recovered for all of the other good components that cannot be shipped until the boards are troubleshot, more labor, and now slightly less reliable because of hand resolder...if possible, and other additional problems to other components causing a cascading or systemic failure? I don't think the cost of one part could ever one close to the cost of all the other problems that could arise as a result of a counterfeit slipping into the high-speed, high-volume production operation. I guess your suggestion is better than nothing, but I believe a pre-assembly authentication program wold be much more beneficial to all concerned. The technologies being introduced now, will greatly lower the cost for countering the counterfeiters and hit the where it counts....in their accounting.
Barbara,
The Gray Market, also known as "brokers" can have a huge web presence and be a one man operation. One can go to their websites and see hundreds of thousands of part numbers listed in simple text format, ( first clue), no links, ( second clue) and "Call for pricing"' (third clue). Call them for inventory status and the response is, "the parts are in our X-coast warehouse." or, "How much do you want to pay?" Now, if you want to buy from these sources, they say, "Give me a day and I will get back to you." And as soon as you hang up the phone, they are calling their overseas contacts who are getting the parts from a little place in Asia, called "Whoknowswhere Province" and if you purchase from this "distributor", be prepared to pay C.O.D because that is the only way he will do business, just before he changes his name, his office, and his phone number. The Gray Market isn't always this bad, but be advised, some Gray marketeers are darker than other Gray marketeers. It's enough to give some poor purchasing guy grey hair! Did I mention my hair was grey at 30?
With the popularity of e-commerce, the online traders usually make sure that the seller and buyers get some kind of gurantee of service. This, maybe, can be used in electronic parts. The only problem is that finding out the fake parts from genuine parts can take a longer time.
I completely agree with you, it is just not a China problem anymore, it is from all over the world. Our supplier base gets smaller every year since we are so picky on who we add to it.
Yes, I know America II very well (I worked there for ten years) and Smith & Ass. does a great job with working with their customers as well.
I do believe that the MFG's should do more in helping franchise/independants fight counterfeit components. Did you know there has been more cases of counterfeiting hitting the franchise market as well? These are parts that are suppose to be coming straight from the factories.
I believe the MFG's should do more with working with suppliers to combat this issue instead of just telling everyone it's not their problem.
@cameron: Thanks for your feedback. I just want to note for all that there have been no charges brought in the case of Epic. I think it will be up to the authorities to determine whether or not the company or its principals did anything wrong (and to the buyers who purchase from the company). I've been covering the industry for 20 years, and there are many independent distributors in the market that do the best job they can for their customers and go the extra mile to avoid suspect components. If they didn't, we would not have businesses such as America II, Smith and many smaller companies that have been around for decades and continue to grow. One of the points I'd like to emphsize is that the issue of counterfeiting is not an Asia problem. It's unfortunate, but no matter where you buy components from, you have to do your diligence first.
@cameron: Thanks for your feedback. I just want to note for all that there have been no charges brought in the case of Epic. I think it will be up to the authorities to determine whether or not the company or its principals did anything wrong (and to the buyers who purchase from the company). I've been covering the industry for 20 years, and there are many independent distributors in the market that do the best job they can for their customers and go the extra mile to avoid suspect components. If they didn't, we would not have businesses such as America II, Smith and many smaller companies that have been around for decades and continue to grow. One of the points I'd like to emphsize is that the issue of counterfeiting is not an Asia problem. It's unfortunate, but no matter where you buy components from, you have to do your diligence first.
One of the measures against the counterfeiters making quick buck and later disappearing could be to have some kind of bank guarantee valid for say three months after delivery. If the component is found fake then the bank guaranatee should be invoked to claim the damages.
This ofcourse requires some kind discipline by the purchasing party to make sure the bought parts get tested during this time span. If the purchase r is just buying in panic and stocking the item for future use then by the time the part actually gets used the bank gurantee will have become void and the distributor also may have vanished.
That is a great article that you wrote. Peter Picone has been around for a while and has had a few companies that I have seen over the years. Allegedly he has been know for shipping refurbished or counterfeit parts to customers and other brokers for years.
Being an independant distributor myself (for the last 19 years) I have stayed away from buying parts from him for this reason. If you mess with the U.S. military and try to do what other brokers have done (not saying that he is) like a Vision Tech Electronics you are going to get in trouble for it.
Testing and die verification as well as decapulization before shipping parts to a customer is key in making sure the product is good.
On a side note we all know that independant distributors or "brokers" play a very unique role in keeping the supply chain running and also keep buyers out of hot water when franchise or the MFG decides to push product out and cause severe leadtimes for customers.
Franchise sales people don't want to hear that the buyer placed the order with a "broker" instead of with them because the lead time from the franchise was so long. This is just the cat and mouse game that is the electronic component industry.
Over the years I have worked for some very large "brokers" and the key to it all is good customer service and shipping quality parts everytime. Things will happen from time to time but it's how you fix issues that keeps the customer happy.
As far as Epic Int'l and Peter Picone goes, if you have a rumor that has been around for years that you sell bad parts, well do I need to say anymore?
There are a number of tools available to the industry from companies in all segments of the supply chain. Pointing them out to readers is a service we'd like to provide. We ask that the critique of these tools and the companies that provide them be constructive, ple
Your self aggrandizing comments not withstanding it is obvious that you and/or your so called "purchasing team" (most likely consisting of you, yourself and you) have not bothered to try this magnificent productivity tool. I am concerned that even if you would bother yourself, your manifest lack of objectivity would limit your ability to comprehend the extent of its immense usefulness to components purchasing professionals.
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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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