Smith Market Blog

Knowledge and Visibility Combat the Counterfeit Threat


The risk of counterfeit parts and products is no stranger to the semiconductor and electronics industry.  However, as much as counterfeiters continue to increase in sophistication, the leaders in our industry continue to be at the cutting edge of detecting and removing such product from our supply chains.  At the core of successful anti-counterfeit strategies is the seemingly simple mantra of "know thy supplier."

Diversification and globalization are critical to success in today's electronics market, but these trends strain the ability of manufacturers to know all they need to know.  In spite of this challenge, our industry is well-known for its international reach and reliance on a vast supply chain to manufacture, compile, and distribute the electronics demanded by the global marketplace.

To reduce logistics costs and facilitate collaboration during design and manufacturing, our supply chains adopted limited-sourcing strategies, and both the regional and localized concentration of facilities.  These strategies helped keep many costs in check, and many Original Equipment Manufacturers (OEMs) pushed the oversight of component production and sourcing to their supply chain partners, rather than having the direct connection with so many different vendors globally.

In the wake of 2011's tragic, natural disasters, our industry was again reminded of the risk side of limited-sourcing supplier agglomeration, when massive disruptions and shortages hit most in the industry, at significant cost in revenue, margins, and entire product lines.  Suddenly, the need to quickly and reliably source components revealed gaps in procurement strategies, when the downside of globalization entailed that distance and unfamiliarity with new vendors increased  risk in receiving counterfeit or non-conforming components.

Due to the resultant supply chain disruptions, manufacturers, large and small, have been forced to increasingly diversify their supplier base to mitigate risk from disruptions and from loss of vendors, whether by financial or disaster loss. Fighting counterfeits requires constant vigilance, and means having a supplier who is able to continuously and vigorously screen both vendors and components through leading-edge, industry certified (e.g., ISO and IDEA), on-site vendor auditing and in-house laboratory component inspection processes.  While all layers of the supply chain must take an active role in preventing and combating counterfeiting, it is the leading global electronics distributors who have the reach and visibility into the many global supply chain suppliers, and thus must be the primary champions of the mantra: "know thy vendor" to safeguard quality components.

The latest MarketWatch Quarterly, which was sent to subscribers yesterday (publically available in mid-April or free subscription here), details and comments on the changes to our industry's supply chain structure, the new strategies being incorporated to safeguard supply and fight counterfeiting.  Learn more about Smith & Associates' diligent and long-standing work in anti-counterfeiting through our SmithSecure quality services as well as our customized procurement and supply chain services.

Lisa Ann Cairns, Ph.D.
Written on Friday, 30 March 2012 08:16 by Lisa Ann Cairns, Ph.D.

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