@Risk

There’s no doubt about it: counterfeiters are becoming more and more sophisticated, and as a result, their products are penetrating supply chains deeper than ever before. In fact, the U.S. Department of Commerce estimates that counterfeiting cost the U.S. economy about $10 billion in 2008 –and as remarkable as it sounds, that’s just for fake semiconductors alone.

Of course, when it comes to counterfeiting, the bottom line isn’t the only thing at risk. Fake components in the supply chain also threaten intellectual property, reputation, warranties and returns, security, and in some cases, even the end users’ health and safety, as well.

So, what can your company do to protect itself? Are there specific steps you can take to mitigate the threat of illicit parts in your supply chain?

For starters, I suggest reading “The Real Solution to Fake Parts,” an excellent whitepaper published a few weeks ago by Verical, an emerging online electronic components marketplace.
The author, John P. Brown, is co-founder and VP of Marketing and Strategy at Verical, and he uses only a dozen pages to neatly outline the scope, causes, and different “flavors” of counterfeiting.

In addition, Brown gives an overview of several of the different classes of defenses, including:

• Buffer stock
• Direct purchasing from authorized channels
• Visual inspections
• Component testing
• Improved trackability/traceability
• Enhanced suppler screening
• Policing of secondary market
• Government regulation
• Inspections and police action

Admittedly, every time legitimate supply chains adopt a new approach to stop fakes, the counterfeiters adapt to defeat them, and at times it can seem like you are doing nothing more than shoveling sand against the tide. Still, as Brown rightly points out, the cost of inaction is too high. Companies need to put defense strategies to work –and most importantly of all, they need to collaborate with suppliers (particularly those who serve shortage buyers) to insure the legitimacy of all components of their supply chain network.

Read the complete whitepaper here.