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Educated Buyers Can Stem the Flow of Counterfeit Parts

April 16, 2014
Buyers are on the front lines of the war against counterfeit components and will play an even larger role as suppliers expand into new verticals such as wireless, sensors, and the Internet of Things.

Counterfeit components are a $100 billion problem. Our customers work in increasingly high-pressure situations to turn products around faster than ever. The marketplace for engineers continues to get more competitive, and one of the biggest issues facing the electronics industry at large is the proliferation of counterfeit and gray-market electronics.

Not only do counterfeit electronics cut into industry margins, but they also do a disservice to customers. The inferior quality can negatively affect the products with which they are integrated. Counterfeit components that pass initial tests make their way into consumer products, medical devices, automobiles, and military technology – to name a few. At Newark element14, we have joined with other leading suppliers and the Electronic Components Industry Association (ECIA) to develop strategies to increase traceability, improve supply chain operations, and educate customers on the risks involved with counterfeit and gray-market components. Beyond the traditional measures such as part authenticity testing, standardized certification, and accreditation consider the following to help counteract counterfeit.

The Costs of Cutting Corners

Counterfeits are estimated to now comprise between 5% and 25% of all available parts, according to the ECIA. In the midst of pressures for fast product turnaround, purchasing professionals and their suppliers sometimes cut corners to accommodate their schedules. Buyers are a key first source in stemming the flow of counterfeit parts into the electronics industry. Therefore, there are a few important factors to consider before choosing a supplier.

First, recognize situations in which the cost of components being purchased are well below the average cost of the same components elsewhere. This is often a major warning sign you are buying from a source that cannot be trusted. Second, pay close attention to supply chain authenticity. Ensure that suppliers have high levels of traceability throughout their entire supply chain operations. Authorized distributors such as Newark element14 offer visibility into the components’ journey from start to finish, even acting as a consistent presence for engineers through the entire lifecycle of a product’s development. Moreover, added customer services like customization, kitting, re-reeling, instrumentation, and calibration are critical differentiators that counterfeit suppliers will not offer.

Putting a Face on Reliability

Supplier traceability is not the only critical measure to counteracting counterfeit. Face-to-face contact with experienced salespeople offers added insight into suppliers’ operations. First-hand knowledge of supplier operations not only prevents gray-market electronics from permeating the industry, but also has the added bonus of ensuring customers’ needs are met and a strong working relationship endures. In an increasingly global, prolific, and digital distribution business, being physically close to customers is still incredibly important.

Looking to Your Peers

Although face-to-face supplier accountability is crucial, the safeguards of a peer-based group cannot be denied. Oftentimes this takes the form of an online community. For example, Newark element14’s own online community, element14, has more than 230,000 registered users. Both buyers and engineers are given a space to make connections, discuss design issues, and share their experiences making purchases. Buyers can make recommendations, warn against unreliable sources, and refer customers to trusted suppliers all in an open, global forum.

Needless to say, counterfeit components are a complex issue. There are many proposed solutions beyond the ones that have been presented here—RFID tagging, government regulation, and so forth.  As suppliers continue to expand into other verticals, such as wireless technology, sensors, and the Internet of Things, purchasing professionals will have an even bigger role to play in counteracting counterfeit.

Richard Halliday is director of product management for Newark element14, a division of Premier Farnell, plc. He is responsible for product and product operations for North America, which includes the entire product life cycle, from new investments through end-of-life. He also is in charge of Premier Farnell’s electromechanical proposition.  Halliday has been in the electronics industry for 17 years, including time in manufacturing in addition to his experience in high-service distribution.

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