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Counterfeits: What About the Commercial Supply Chain?

While the military detects a good percentage of counterfeit parts coming into their sphere of purchases, the commercial side is still wide open. Counterfeiters view the commercial supply chain as much more attractive.

The commercial market is much larger and more diversified, the level of testing is lower, and product life cycles are much shorter. This gives counterfeit parts more time to hide and counterfeiters more time to sell their wares.

The notion of a commercial supply chain laden with counterfeit parts is truly sobering. Counterfeit parts have been found in servers, routers, storage hardware, and other electronics systems. These systems enable communications, transportation, power, and critical infrastructure to run our daily lives.

For example, here is a list of some of the electronic products under U.S. Food and Drug Administration (FDA) jurisdiction:

  • Television receivers 

  • Computer monitors 

  • X-ray machines (including medical, research, industrial, and educational)
  • Electron microscopes 

  • Black light sources 

  • Welding equipment 

  • Alarm systems 

  • Microwave ovens (devices that generate microwave power) 

  • All lasers (including low power lasers such as DVD and CD readers/writers/players) and other light emitting devices (Infrared and Ultraviolet) 
  • Ultrasonic instrument cleaners 

  • Ultrasound machines 

  • Ranging and detection equipment, such as laser levels 


Unfortunately, most solutions today only detect counterfeit components after they enter the supply chain, not before they enter the supply chain. Unethical suppliers need to be identified and shut down because they manage to stay in business today, and even proliferate,because there are no consequences for their actions. Better technologies are needed
to track parts as they move through the supply chain, so that data can be shared with the industry at large to discredit unethical suppliers. 


In addition to the important question of authenticity, today's electronics product labeling requires a variety of complex information with data integrated from a large number of data sources. Varied governmental labeling regulations and standards for new and existing markets, the need for speed due to new automation technologies in manufacturing, requirements for multiple languages, complex barcode data, and more—the real estate on a single label is populated with data from a variety of repositories. But many large companies are not managing this level of complexity with a reliable labeling strategy sophisticated enough to cover all these needs. It is understandable, then, that an attempt to serialize at the unit item level is putting the cart before the horse for many organizations. 


Also, for affordable and effectively manageable security measures to be implemented in the supply chain, the ability to allow approved electronics supply chain suppliers and distributors to participate through a streamlined labeling solution 
is required. This secure access by authorized supply chain participants is the “first line of defense” against counterfeiting and diversion. Standardization of barcode labeling solutions with approved suppliers and distributors can greatly
diminish the likelihood of obsolete or counterfeit components making their way into the supply chain. Enterprise labeling solutions allow for secure access by approved suppliers and partners, as well as offer many other benefits to manufacturers. These solutions prevent mislabeling through automation while offering support for regulatory data, multiple languages, and customer specific labeling requirements. In the end, labeling consistency and reliability are exponentially improved.

With serialization technology added to enterprise labeling solutions, an unprecedented degree of security in tracking electronics components can save billions of dollars and prevent other human and environmental disasters.

The complexity of today’s labeling requirements point to the fact that without the solid foundation of a good labeling strategy, customer dissatisfaction, returned shipments, counterfeits, and loss of business can accumulate, leading to significant erosion of revenue and profitability. Most importantly, the dangers of counterfeiting and diversion can include
a negative impact on human health or even contribute to loss of life.

The electronics industry is in an exciting phase of rapid expansion and change, and outdated labeling solutions are un-able to keep pace with these dynamics. Fortunately, enterprise labeling is one immediate way the electronics industry can take charge in response to this changing environment, be more responsive to the critical nature of the current labeling challenges, and improve the stability of global supply chains while concurrently stemming the dangerous rising tide of counterfeits. 

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