Development of a Methodology to Determine Risk of Counterfeit Use, Part 1
Counterfeit components have become a multi-million dollar, yet undesirable, part of the electronics industry. The profitability of the counterfeit industry rests in large part on its ability to recognize supply constraints and quickly respond, effectively taking advantage of a complex and vulnerable supply chain. Factors such as product obsolescence, long life cycles, economic downturn and recovery, local disruptions in manufacturing due to natural disasters, and lack of proper IP legislation all represent opportunities for the counterfeit component industry to flourish. Electronic counterfeits affect every segment of the market, including consumer goods, networking and communications, medical, automotive, and aerospace and defense. In manufacturing, the use of undetected counterfeits can lead to increased scrap rates, early field failures, and increased rework rates; while this presents a major problem impacting profitability, the use of counterfeit components in high reliability applications can have far more serious consequences with severe or lethal outcomes.
The independent distributor level has typically been seen as the weak link in the supply chain where counterfeits are most likely to be introduced. With the emergence of new legislation and through the efforts of different industry entities, new standards and guidelines are now available for suppliers to establish and maintain product traceability and to establish receiving inspection and detection protocols. There is no substitute for a healthy supply chain, and distributors play an essential role in the dynamics of the system. At the same time, there is an increased awareness of the need for proper management of electronic waste. Regardless of the nature of the counterfeits, whether cloned, skimmed, or re-branded, counterfeits are dangerous and too expensive to be ignored.
The work presented here by the iNEMI Counterfeit Components Project takes a comprehensive view of the problem by surveying the possible points of entry in the supply chain and assessing the impact of counterfeit components on the industry at various points of use. We then propose a risk assessment calculator that can be used to quantify the risks of procuring counterfeit parts. This calculator is aimed at all segments of the supply chain and will be of interest to component manufacturers, product designers, distributors, loss estimators, industry groups and end users.
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