Counterfeit electronic components: What is really at risk?

Rocel Juntura, Global Director of Quality

February 13th, 2019

Risks from counterfeit electronic components are a global threat.

Defective and counterfeit parts can cause a range of problems, from safety, waste, and compromised reputations. While high-reliability verticals present incredibly high stakes for safety and reliability of parts, we argue that all verticals need the confidence of exceptional parts performance. Here are some of the risks of counterfeit electronic components — and how you can mitigate them.

Financial risks of counterfeit electronic components

With around $250 billion a year in reported losses due to counterfeit electronic components, it’s safe to say that — at a minimum — counterfeits are bad for business. And in the high reliability vertical, there is simply no room for error.

Mitigation of financial risks involves exceptional security and screening in your electronic components sourcing. To ensure that you are working with the best possible materials, take a deep dive into your partners’ practices. Who does the inspections and what are their qualifications? How up to date are their testing practices? What are the results of their audits?

Sourcing electronic components involves risks, and performing due diligence on your partners’ processes is the first step to mitigating those risks.

Reputational risks

Your reputation is everything. Guarding it means working toward excellence in all you do. The unfortunate reality is that many variables in electronic components sourcing are outside of your control. However, you can choose who you work with to source electronic components.

You can mitigate reputational risks by ensuring that your partners are certified, engaged in the industry, and have exceptional internal processes to weed out counterfeit or non-conforming parts. Look for partners that openly share their internal audit information. Transparency is a good business practice in general, but in electronic components sourcing it’s nonnegotiable.

Intellectual property rights

Intellectual property rights are an often-overlooked area of counterfeit impacts. Governed by a varying network of laws across the world’s countries, intellectual property rights protect consumers, industries, governments, and whole economies from counterfeit product failure.

In a 2018 report, the United States Government Accountability Office noted “counterfeiting may pose risks to industry and government by increasing [intellectual property rights] protection and enforcement costs, by affecting sales and brand value for the businesses whose products are counterfeited, and by potentially reducing tax revenue collected by the government.”

A healthy supply chain is part of a greater good — a healthy global economy. When counterfeit products enter the stream of commerce, the damage can go far beyond one business.

The best way to support the enforcement of intellectual property rights globally is to work with other legitimate partners in sourcing electronic components. Promptly reporting when you identify parts that are counterfeit helps not just your direct supply chain identify risks, but it also supports the health of the broader economy.

How do you take on mitigation of electronic components risks?

Staying alert to the threats of counterfeit electronics means ongoing vigilance. Whether your concerns are urgent, obsolete, or hard-to-find products, we can assist you with finding safe, affordable solutions.

Across all verticals, we take cost margins seriously. We pride ourselves on finding savings not just today, but for your long-term operations. Counterfeit losses should not play into your cost calculations.

Partnering with the best doesn’t have to wait. To start today, just give us a call.

 

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" To ensure that you are working with the best possible materials, take a deep dive into your partners’ practices. "

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