Smith & Associates: Counterfeiting a Growing Threat to Manufacturers

Proactive Measures Protect Supply Chains

HOUSTON – (June 12, 2012) – Manufacturers today face challenging conditions for their supply chains, from climate-induced disruptions to macro-economic shocks. Counterfeiters deliberately exploit resultant component shortages, looking for weaknesses on every point of the supply chain[i] in order to introduce unauthorized, defective, off-specification or otherwise non-conforming components. Counterfeiting is a constant threat to manufacturers, and has in fact increased dramatically in recent years. A recent IHS report revealed that from 2009 to 2011, incidents of counterfeit parts surfacing in the global supply chain increased approximately 400 percent[ii].

According to Smith & Associates, a trusted partner to many leading electronics manufacturers, proactive screening and testing measures, as well as industry-wide collaboration, are key to combating this problem. Neither franchised nor independent distributors are immune, and criminal efforts are growing increasingly sophisticated. In the event of unknowingly integrating counterfeit components into their end products, at best, manufacturers face financial losses. At worst, their products have potential to seriously harm end users. Even the Pentagon recently fell victim, installing counterfeit or suspect components into helicopters used by the Air Force and the Marines[iii].

Protecting the Supply Chain is Simple, but Requires Cooperation

In order to safeguard their supply chains, manufacturers must proactively collaborate with vendors, and third parties among others to ensure quality components along the entire supply chain. Manufacturers and distributors should not only follow industry standards and, when appropriate, have proper certifications, but they should also go beyond base guidelines and implement thorough and effective procedures as a routine. These processes and procedures should include[iv] but not be limited to the following:

  • Testing  components with specialized lab equipment operated by qualified personnel, so that invalid and nonconforming parts can be identified and removed
  • Reporting counterfeit or substandard components and sharing these reports across organizations; namely, with suppliers, competitors and customers, as well as with proper authorities
  • Permanently removing counterfeit and substandard components from the supply chain and disposing of them properly
  • Investigating how the components entered the supply chain and collaborating with proper parties to close the breach

Other necessary measures include employing continuous, meticulous vendor-screening programs, performance-tracking programs, employee counterfeit training, and thorough order tracking and tracing from arrival at the dock through departure. Of course, manufacturers must adopt industry standards and gain the proper certifications for anti-counterfeiting detection and handling, such as the International Organization for Standardization (ISO); Independent Distributors of Electronics Association (IDEA) certifications IDEA-QMS-9090-A, IDEA-ICE-3000, IDEA-STD-1010-A; and Components Technology Institute's (CTI) Counterfeit Components Avoidance Procedures, CCAP-101.

The Right Independent Distributor Accelerates the Process

The measures outlined here are recognized and successful anti-counterfeiting procedures, but also require a substantial investment of time, resources and knowledge.  Manufacturers needing on-demand expertise can collaborate with a certified independent distributor equipped with the right tools and expertise, including an anti-counterfeiting lab with leading-edge equipment, professionally trained, industry-certified personnel, a digitized database for all incoming products, and the ability to detect, quarantine, report, and properly dispose of all counterfeit or nonconforming parts.

“No company or industry is immune to counterfeiting,” said Kirk Wehby, vice president of Operations at Smith & Associates. “Only pre-audited suppliers with strong anti-counterfeiting technology in place can successfully minimize the risk of counterfeit components in a supply chain. Smith & Associates couples a comprehensive understanding of electronics markets, logistics and component inventory with the most advanced anti-counterfeiting technology and personnel available. This is a win for both our customers and for the manufacturing industry at large.”

For more information on Smith & Associates’ anti-counterfeiting efforts, and to learn more about how to combat counterfeiting in the electronics supply chain, please visit:

About Smith & Associates

Founded in Houston in 1984, Smith & Associates ( is a leader in the independent distribution of semiconductors and electronic components to electronics and high-tech manufacturers.  Smith offers shortage sourcing for commodity and obsolete parts, innovative purchasing and inventory management solutions, redistribution of excess inventory, and component stocking for warranty and repair programs.

A privately held company, Smith & Associates employs more than 350 people worldwide, with annual revenue in excess of US$500 million.  Smith's regional hubs in Houston, Hong Kong, and Amsterdam are ISO certified and IDEA compliant.  In addition, sales and purchasing offices are located in Silicon Valley, Barcelona, Guadalajara, New York, Shanghai, Shenzhen, Seoul, Singapore, Taipei, and Denver.  For more information or to reach a Smith representative 24 hours a day, please call: 1.800.HOUSTON or +1 713.430.3000

# # #

For more information, contact:

Mark Bollinger

Smith & Associates

V.P. of Marketing

Phone: +1 713.430.3000

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Ashley Wilkinson

BOCA Communications

Phone: 415-738-7718

Email: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

, “Room for Improvement: Anti-Counterfeiting Measures Critical Across the Supply Chain,” 23 April 2010. <>

[ii] IHS, Reports of Counterfeit Parts Quadruple Since 2009, Challenging US Defense Industry and National Security14 February 2012. <>

[iii] The Associated Press, “Lawmakers: Counterfeit Electronics Flood Pentagon Supply,” 7 November 2011. <>

[iv] ECN, “Navigating through Anti-Counterfeiting Tactics with Proactive Collaboration,” April 1, 2012.

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