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Speed Demons

Wed, 09/14/2011 - 11:54am
Ed SmithIf there is one phrase that is most universally associated with the global electronics industry, it is “fast-moving.” Technology today doesn’t gradually evolve, it develops in leaps and bounds, and the processes that are necessary to bring that technology to market have advanced just as quickly. Unfortunately, sometimes speed can be our industry’s downfall -- when companies are caught in a bind; when parts are hard to come by, whether they have gone end of life, are on allocation or any of a hundred other scenarios in which buyers need to quickly find components.

It’s at this point where they look to source outside authorized component channel – and here’s where the trouble can begin. Counterfeiters use unauthorized channels to infiltrate the supply chain. As a result, the probability of receiving counterfeit, remarked or otherwise substandard components from a third party source has increased exponentially over the past five to 10 years. Those who choose to ignore this reality and source from unauthorized channels are not just gambling with their company’s future, but with the integrity of the entire supply chain.

A 2010 report from the U.S. Commerce Department outlined results of a study to determine the extent of the infiltration of counterfeit electronics into U.S. defense and industrial supply chains. The survey found that unauthorized distributors accounted for 576 of 613 counterfeit part incidents occurring at distributors in 2008. Since this revelation, the government has adopted more stringent procurement policies. In fact, even authorized distributors must now sign agreements stating that we buy from the manufacturer and not third parties. And, we’re happy to provide this proof to our customers.

The survey also revealed that nearly 46 percent of manufacturers of discrete electronic parts and 55 percent of microcircuit makers surveyed reported they had encountered counterfeit versions of their products between 2005 and 2008. These findings clearly indicate today’s counterfeiters are more prolific and more proficient than ever before.

Despite the best intentions of sources outside authorized channels, the nature of their business model makes them much more vulnerable to manipulation by counterfeit networks. Product from third party sources typically changes hands – and regions – many times before it lands in a broker’s stock. Without a verifiable paper trail, there is no way to confirm parts have not been tampered with, repackaged or relabeled. Nor can a seller assure that along the way, all intermediary sources stored and handled the components in accordance with the original manufacturer’s quality guidelines.

At Avnet, our job is to give customers reliable and trustworthy options. Through our Avnet Express website’s offering, customers can access our vast inventory of available parts, order quantities as few as one part and often benefit from our same day shipping capability.

Avnet also recognizes the increased risk facing customers in Asia, particularly China, which continues to be identified by U.S. Customs agency as the primary source of counterfeit electronics. Avnet Electronics Marketing China was one of the first authorized electronics distributors to be qualified under China’s Reliable Electronic Component Suppliers (RECS) system and we maintains a Sales and Service Counter (ASSC) within the Shenzhen International Components Center (ICC), the first venue endorsed by the Chinese government for trading electronic components that are guaranteed to be genuine.

More recently, Avnet has added its Americas region electronics marketing inventory to the Electronic Components Industry Association’s new “authorized-only” search site which lists inventory that is genuine and backed by the manufacturer’s warranty. Companies in the electronics industry now have a variety of options to get parts from franchised sources. Even if you need components quickly – you have choices.

Our industry and our country cannot afford the shortsighted “it won’t happen to me,” approach to the risk of sourcing outside authorized channels. The Alliance for Grey Market and Counterfeit Abatement (AGMA) has estimated approximately 10 percent of technology products sold worldwide are counterfeit. Sales revenue for these parts would be equivalent to $100 billion.

We must also consider the possibility that monetary gain might not be not every counterfeiter’s ultimate goal. Our society’s dependence on electronics makes us vulnerable to hacking and attacks via malicious firmware. These corrupted circuits are programmed with “back doors” which allow attackers to gain access to computers and servers. Imagine the damage that could be inflicted by an attack on our defense and national security systems or air traffic control, nuclear facilities or our power infrastructure.

There is no easy solution to keeping fake parts out of the supply chain completely, but the fact of the matter is: your risk of acquiring counterfeit product is negligible if you buy strictly from authorized distributors. Like any business, counterfeiters’ existence is directly tied to the demand for its product. If that demand diminishes, eventually the incentive to supply will as well. The choice is yours. 
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