Since the dawn of commerce, thieves have existed alongside it. In the electronics industry, counterfeiters are becoming increasingly sophisticated. Supply chain professionals must step up their efforts to counteract these bad actors. Without a change in approach, the situation will not improve.
Gary Beckstedt, VP of Quality and Warehouse Operations, Flip Electronics further discusses.
Historically, counterfeit electronic parts were crude. Counterfeiters would blacktop entirely different parts and pass them off as valuable commodities. Old parts were sold as new, and standard commercial parts were marketed as industrial grade. These counterfeiters relied on deceiving customers just long enough to clear the payment.
Today, the differences between some counterfeit and genuine parts are almost indistinguishable, and the volume of fake components in the supply chain has increased. In 2021, there were 101 wire fraud cases reported to the ERAI, up from 70 in 2020 and just 17 five years ago. With these more sophisticated fakes and increased fraud, the risk of incorporating counterfeit parts into products, potentially leading to catastrophic failures, has risen.
A common recommendation is to ‘only buy authorised or franchised parts’. However, given the current substantial shortages, this might not always be feasible. Here are three key strategies to mitigate counterfeit components:
Educate yourself on counterfeiting standards
The industry has developed numerous standards regarding counterfeit parts. Buyers must understand the scope and focus of these standards. Over two dozen standards address various industries and supply chain areas. When requesting your distributor to test according to a particular standard, ensure you understand the specifics and the rationale behind it.
Understand your terms and conditions
Thoroughly read and comprehend your organisation’s contract terms and conditions. Standard contracts often include specific parameters (such as requiring a part to be no more than 18 months old, even if it has been end-of-life for four years). Such terms might be unreasonable for hard-to-find parts. Lack of awareness of your own policies can undermine your organisation’s credibility, leading suppliers and customers to question other standards and requirements.
Focus on relationships
Building trusted relationships can significantly mitigate counterfeit risks. While emails are often ignored and messages can get lost in translation, personal communication remains crucial. Knowing your supplier helps establish trust, which is vital in counterfeit mitigation. Also, cultivate relationships with your in-house engineers to collaborate creatively on managing hard-to-find part scenarios.
Counterfeiters prey on those seeking quick solutions. Taking the time to understand the situation and seek reliable solutions can prevent risky purchases from unknown suppliers. Ultimately, this diligence will save time and keep you ahead of counterfeiters.
