When is the supply chain most susceptible to counterfeits?
It’s a multi-faceted answer and there are multiple layers of susceptibility, but in a technical sense your supply chain becomes susceptible to counterfeit material as soon as you step away from authorized channels for your electronic material. However, there are four main variables that will sway the degree of risk.
- Type of Independent Distributor
When you go out of the authorized channel and into the open market you immediately introduce some level of risk. This is an industry that has seen a lot of consolidation and change over the last 15 to 20 years and as result, there are many types of independent distributors that sit across the reliability scale.
Some independent distributors are high-caliber, responsible alternative sourcing partners with good solid business practices. On the other hand, there are those that are a step down that will bring you closer to unreliability. When you start working with smaller independent distributors, they often don’t have the resources available to put protections in place to guard their own supply chain, never mind yours — and you go further out on the reliability scale and your risks are magnified for the introduction of counterfeits into your supply chain.
- Active vs. Obsolete Part
In addition to your sourcing partner, the type of product you are sourcing, whether an active component or an obsolete part, can have a huge impact on your level of risk.
Active parts carry a lower risk and a lower susceptibility in the supply chain simply because if you’re sourcing a part that your franchised distributor doesn’t have inventory of, your independent distributor can very often find stock at other franchised distributors in other regions. This reduces the amount of susceptibility and risk.
In addition to that, one of the other ways that independent distributors gain materials is through Original Equipment Manufacturer (OEM) and Contract Manufacturer (CM) excess inventory programs. On active components, there is a lower risk that an OEM or CM went to the open market to buy that material and generally you’re dealing with material that is often one step from the manufacturer.
When you step into the obsolete world, susceptibility increases the longer a component has been obsolete. Excess material programs may allow for last-time-buy and obsolete parts to be available, however as that reliable inventory gets consumed then the unreliable material, that may have always been in the market, is there in a much greater percentage. This is where it’s very important that you work with reliable independent distributors who can maneuver their way through those risks.
Price is another variable where you see susceptibility issues when going out into the open market. The higher the price of an item, the higher the motivation for someone to manipulate a component. Counterfeiters are out to make a profit and selling a thousand pieces of penny part has no appeal to them. However, selling a hundred pieces of a $500 part has great appeal.
The last element that can affect your susceptibility to counterfeits is common packaging. One of the primary methods of counterfeiting is to take known good components that are not exactly what you’re looking for, or may have been used and refurbished, and reconditioning them. For example, a common SOT-23, of which many manufacturers make very different flavors of, can be easily manipulated into a different SOT-23 part that you might be looking for. Therefore, the more common a package is available, the higher the risk of it being counterfeited.
Capacitors are a great example for this because there are multiple manufacturers for many capacitor cases that are being sold. And in some cases, there may be two legitimate parts, there may be a $1.50 capacitor by a high-level manufacturer that you require for your build, made out of specific materials and there may be a low-cost capacitor that handles those same characteristics and performance ranges, but isn’t expected to have the same lifestyle, life-span or expected burden on the board. So, you may be running a high temperature application where a lesser quality capacitor may fail much sooner. And in this case, all a counterfeiter has to do is counterfeit the label. They don’t even have to counterfeit the part itself. You can easily be given a counterfeit part that is correct and will test properly but may not last or perform the way it should on the board.
These are all ways where your supply chain is susceptible to counterfeits and need to be taken into consideration. The first one, however, is the most important. Reliable independent distributors know their way around these types of issues, and they are prepared to handle and combat these risks.