- September 2, 2014
- Posted by: Cheryl Rybka
- Category: Blog
By: Mike White
Counterfeiting and counterfeit products have existed for centuries. Everything from currencies, clothes, handbags, food, toys, medicines, electronic components and almost any other product that is in high demand, short supply, and/or expensive has been copied and/or reproduced in one form or another. In essence, the problem starts when a person or organization, with criminal intent, succeeds in deliberately introducing counterfeit or fraudulent parts or materials into a supply chain that remain undetected due to negligence or lack of capability / awareness on the part of the receiving organizations. The result is non-conforming products being delivered through the supply chain, potentially right up to the end customer.
This is a two part blog on counterfeit parts. Part 1 discusses the history of counterfeiting and issues that arise from counterfeit parts. Part 2 reviews some of the penalties that result in selling counterfeit parts, the global impact and how to be proactive when buying from suppliers.
Most recently, one particular area that has presented a significant challenge is the manufacturing and distribution of electronic components such as integrated chips (IC) and resistors. Some offshore suppliers are even recycling and repackaging parts taken from crash sites and disposal sites to resell them as new products in the open market, especially through the Internet.
This problem is of particular concern for the aviation, space and defense industry since Aviation, Space and Defense (ASD) lacks leverage in the electronics industry. The major users of semiconductors are the telecommunication and computer industries who account for more than 65 percent of the usage whereas the aviation, space and defense usage, where quality, reliability and performance requirements are the most stringent, represent less than 1 percent of semiconductor usage.
“During 2008, it was estimated that 17% of Electronic Components purchased by the Pentagon and its contractors were Counterfeit or otherwise illegal” – (Source – Robert P Ernst, Naval Air Systems Command’s Aging Aircraft Program)
Counterfeit parts can jeopardize the performance, reliability and safety of ASD products. ASD products are susceptible to the introduction of counterfeit parts into the supply chain because the systems are intended for use over an extremely long life cycle. The industry faces the challenge of supporting long life cycle products that are designed using short life cycle electronic components that may be in limited supply. Diminishing manufacturing source issues expose the ASD industries to counterfeited and fraudulently manufactured or reclaimed parts.
As a result of the potential risks associated with counterfeits in ASD products, several regulatory agencies have established a regulatory basis for addressing false and misleading statements, including the assessment of potential civil remedies (fines, certificate forfeiture, etc.) for persons engaged in such activity. Governments have also enacted laws which have penalties for trafficking unapproved and counterfeit parts.
Stay tuned for “Counterfeit and Suspected Counterfeit Parts, Part 2” on Thursday, September 4, when Mike White reviews some of the penalties that result in selling counterfeit parts, the global impact and how to be proactive when buying from suppliers.