Smith Market Blog

Counterfeit Mitigation Essentials: Vendor Rating and Quality Management Systems


The issue of counterfeiting is never absent from discussion in any industry, as criminals do not adhere to boundaries, obviously. Rather, counterfeiting is a crime and particularly one of opportunity and risk versus reward. In the semiconductor and electronics industry, we are keenly aware of the presence of counterfeit products in our industry's supply chains and the negative impact and even possibility of fatal accidents and injury that these parts pose to end-users.

Issues and awareness

Counterfeit mitigation strategies are, therefore, essential to all of us in the semiconductor and electronics industry, just as they are to all industries (re: "The Essential Toolkit for Fighting Counterfeits," SMT Magazine, pp.77ff). Recently, the important discussion of counterfeit mitigation was again raised, this time in IEEE Spectrum. In this article, we are again reminded of the prevalence and dangers of counterfeit electronic components, particularly for the military and aerospace industries. As Smith's VP Mark Bollinger discussed earlier this year in an interview with Jeff Reinke of Product Design & Development, the issues around how counterfeit parts penetrate in the military and aerospace industries. As Bollinger explained,

[…] in this market segment, there are instances of sub-contracting to companies who are more interested in ensuring "winning the bid" and may not have the professional and technical expertise to understand the pitfalls and exposure to counterfeiters in the semiconductor and electronics industry. As a result, while it may seem to be quite easy to secure a component in the market, understanding the vetting and auditing process, and having the technical knowledge and experience as well as industry accredited testing facilities to verify and validate components purchased is a capability that requires long-standing expertise and daily, hands-on relationships and knowledge of the semiconductor and electronics industry.

Demand certified quality

Yet the risk for receiving counterfeit components is not limited to military aerospace, rather, there has been more awareness around the issues faced by these industries. The successful mitigation of these risks is, however, shared across the wider supply chain. To distill the issue for brevity's sake, mitigating the risk of counterfeit product and implementing successful solutions are intimately connected and fall back on a simple mantra that Smith has offered before, "Know thy supplier."

At the core of successful anti-counterfeiting solutions, collaboration between suppliers and contractors is mandatory. Firstly, the significant risk associated with receiving counterfeit product, regardless of the distribution channel followed, necessitates that one must have in place business processes and procedures for a complete Vendor Rating System (VRS). As discussed in this collaborative Supply Chain Brain (SCB) article:

Standards management certification offers an essential set of procedures that are the starting point for supplier best practices. Requiring and then auditing a supplier's certifications becomes all the more important when separating the wheat from the chaff. Due diligence is essential and should be performed regardless of whether the supplier is a Franchised Distributor (FD) or Independent Distributor (ID). First, one must understand what the different certifications and standards entail and what they offer when evaluating suppliers' anti-counterfeiting capabilities and QMS.

Beyond the critical vetting of suppliers, and their VRS to ensure quality sourcing, it essential to require that suppliers hold industry recognized standards and certifications regarding their testing laboratories and facilities, such as ISO 17025, in addition to ISO 9001, among others. As Bob Chesla of Rockwell Automation reminds us in the SCB article, Quality Management Systems (QMS) are intimately tied to counterfeit mitigation:

This [ISO 9001] certification indicates that a business conforms to a basic level of quality. It requires management of every process in an organization that impacts quality with the added benefits of increased quality awareness, consistency in operations, and process improvements. To have a QMS verified and certified by an independent third party confirms that procedures are in place to cover major processes and that they are being implemented and are effective.

Considering the IEEE article, trust needn't be placed blindly, nor be the modus operandi for sourcing electronic components in today's global marketplace. Similarly, assuming counterfeiters limit themselves is equally false; they are opportunists and no sector or channel is immune to criminal behavior, unfortunately.

Rather, the successful counterfeit mitigation strategies for today's complex global supply chain requires developing a VRS rubric or checklist that includes on-site auditing and true traceability of sourcing and testing. The leading, professional and reputable distributors in the semiconductor and electronics supply chain, make their processes and certification readily available for audit and on-site inspection. Quality distributors stay ahead of the curve of counterfeiting, they have to, it is the core of their reputation to not only properly and legally source bona fide components, but to also safeguard their clients and the end-users.

Matt Hartzel, COO for Smith, provided his detailed and careful understanding of the "Quality Ecosystem" in Smith MarketWatch Quarterly:

At Smith & Associates our history and expertise is steeped in the understanding of solving real-world business challenges, pushing QMS standards to the next level, and keeping abreast of the latest legislative and regulatory requirements globally. As a result of this agility, we are able to provide a dynamic set of services that are rooted in industry-recognized certifications and accreditations while incorporating innovative yet standardized counterfeit mitigation processes, procedures and detection mechanisms through our sophisticated laboratories.

Strategic partnering does include trust, but not blindly. QMS is a verifiable set of business processes and procedures that are supported by auditable technical capabilities and knowledge, such as through ISO 9001, ISO 17025, among others. Leading Independent Distributors like Smith & Associates, have the technical knowledge, experience, databases, and sophisticated laboratories that wrap additional QMS layers around a continually updated VRS to ensure that the utmost quality standards are upheld within Smith and required of those in Smith's supply chain.

Lisa Ann Cairns, Ph.D.
Written on Tuesday, 05 November 2013 17:33 by Lisa Ann Cairns, Ph.D.

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