Do Legislators Understand the Electronics Supply Chain?

Stopping counterfeiting is a goal shared by everyone in the electronics supply chain except for those benefiting from the illegal activity. However, threats of fines can't do the job of ridding the industry of the practice. I believe that changes in processes can. This requires that our senators and other lawmakers understand a bit more about the supply chain and the many ways parts enter the chain — and that is the area around which new process-changing legislation could be written to attack the whole problem with greater effectiveness.

The most important thing that legislators can do at this point is to ask the private sector. The answer to solving counterfeiting may turn out to be fairly simple, and those of us who are in the trenches probably have many insights that could really make a difference. (See: Some Problems Can’t Be Penalized Away, Part 1 and Some Problems Can’t Be Penalized Away, Part 2.)

From the way I see it, there may be a number of process changers that could work specifically for military counterfeits. Here's one that can be jump-started with a simple flip of an executive pen: Write into law that government component procurement must be handled through certified sources — suppliers that have the processes, equipment, and resources to verify and guarantee authenticity of the parts they sell. Purchasing agencies and companies can find these sources through organizations such as the Independent Distributors of Electronics Association (IDEA).

The independent distribution organizations that are members of this association adhere to high quality and ethical standards and are committed to ensuring that customers only receive quality parts and services. Check the IDEA site for specifics. It bears mentioning that independent distributors are accepted into membership in IDEA only after they meet all requirements and are confirmed by the IDEA board of directors. I'm sure there are other ways to effectively alter the purchasing process. What are your suggestions?

For me, the bottom line is this: Legislation may help, but there's more to be done. There's a need for process change. Agencies need to commit to procuring components only through certified sources. And responsible, ethical distributors that aren't already certified need to step up and put in place the equipment, processes, and resources to meet the requirements for certification. Startups and others that want to get certified but can't afford the costs involved could perhaps receive underwriting from yet unformed government agencies.

What are your thoughts? How much impact will the legislation, S. 1228: Combating Military Counterfeits Act of 2011, have on eliminating counterfeit components in the supply chain? Does certification help or is there a better way? I welcome your comments and opinions. And I urge you to write your congressional representatives to make your voice heard.

7 comments on “Do Legislators Understand the Electronics Supply Chain?

  1. ddeisz
    September 13, 2011

    Authorized Distribution should be used FIRST when looking for parts for military and hi-rel systems. Authorized is the lowest risk above all when it comes to counterfeit. I would suggest looking at for the TRUE AUTHORIZED SOURCES FIRST before looking to IDEA. This is the solution recommended by all semiconductor companies and the first place anyone should look in the supply chain, especially for millitary and hi-rel systems.

    Perhaps the first thing Legislators should understand is that buying from Authorized FIRST before going to Independent Distribution should be required and will eliminate a good percentage of counterfeit by itself. Only once the Authorized Sources have been exhausted should the Independent channel be consulted for military and hi-rel systems. Once using Independent Sources, military and hi-rel systems should have 100% component test (on a tester, powered up) and not just the predominantly visual checking being done today being done by the Independent Sources.

    Dan Deisz

    Rochester Electronics

  2. jhowarth
    September 13, 2011

    At the request of the Naval /air Warfare Systems Command, the US Department of commerce Bureau of Industry and Security's (BIS) Office of Technology Evaluation (OTE) conducted a survey on counterfeit electronics in the US supply chain.

    This 2010 survey summarized 240 pages of analysis this way: “Buy parts directly from OCMs and authorized distributors, rather than from parts brokers, independent distributors, or the gray market.”

  3. jbond
    September 13, 2011

    I think the legislation is a step in the right direction, but don't think it is going to be enough to end counterfeiting. The legislators need to fully understand the process and specific organizations that are in place to help curb fakes. As long as the government doesn't rely on price alone, and chooses suppliers who are members of organizations designed to stop counterfeiting, there will always be criminals looking to make a buck. Unfortunately this time it comes from our tax dollars and at the possible expense of our defense.

  4. Ariella
    September 13, 2011

    Startups and others that want to get certified but can't afford the costs involved could perhaps receive underwriting from yet unformed government agencies.”  I'm wondering where the funds are supposed to come from for this. If whole agencies have to be formed, there would be quite a bit of cost for that component alone, but, on the upside, some jobs would be created.

  5. paul.pacini
    September 13, 2011

    @ Ariella

    You bring up great points, but I have to wonder if those start-up and operation costs wouldn't be offset by a reduced cost of business not having to deal with counterfeit parts? If companies are losing money through engineering costs, product failures, etc. might the extra expense (sorry bean counters, back off on this one) would be justified?

  6. Ariella
    September 13, 2011

    I don't know, but it seems to me that the money would not quite flow in that way. I mean the ones who are losing money through counterfeit parts are not likely to volunteer to subsidize a government agency that will provide funds for companies that get certified.

  7. garyk
    September 13, 2011

    The Govenment can't get envolved it will take for ever, they have bigger problems.

    According to the 2010 survey reported by jhowarth the buyers must buy diectly form OCM's, OEM's and authorized Disributors, not brokers, independent distributors or gray market. It has already beem evalauted, what more can be done, police your self, report the offenders.

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