Beware of Counterfeit Electrical Components to Maintain Supply Chain Quality

One of the biggest focuses of procurement specialists is maintaining supply chain quality. However, a growing threat to supply chains presents a risk to both safety and integrity: counterfeit components.

Rolex watches and trendy consumer apparel usually come to mind when thinking of counterfeit items, but increasingly, electrical components and other pieces are being faked to make a quick profit, according to Connector Supplier. However, there are methods to overcome the challenge of distinguishing counterfeit components from real ones in the supply chain, including using physical tests.

Suppliers of counterfeit products, with more than 53 percent of these fake products coming from China, often undercut the competition by reducing the price, resulting in huge losses for manufacturers. Consumers and industries suffer monetary losses of an estimated $250 billion annually due to counterfeit components, according to Industry Week, citing recent reports. The semiconductor industry is hit with a large amount of this annual loss, totaling $75 billion.

In connection with the losses associated with counterfeit products, purchasing executives are likely to be concerned with the various challenges they could pose to the supply chain, ranging from recalls to finding reliable suppliers.

How to Overcome the Challenge of Detecting Counterfeit Products

In a survey on Global Purchasing by Design Engineering & Sourcing Group, 41 percent of U.S. design engineers said they were concerned whether their companies were able to detect issues in connection with counterfeit electronic components.

While it might be difficult to detect counterfeit products along with the other issues that come with supply chain management, University of Connecticut researchers recommend implementing a physical test standard to separate real products from those that might be fake. Tests could include analyzing packages and sampling parts to detect anomalies, which can include blacktopping—a common method used by counterfeiters that involves sanding plastic-covered devices and coating parts with modified substances that use the shavings.

In the survey, the vast majority (72 percent) of respondents said they were most worried about the potential danger or damage these fraudulent parts might pose if they were used in finished products. These hazards might include consumers encountering a product malfunction as a result of using counterfeit components, which may result in injury or death. These defective products could also lead to costly recalls or even lawsuits.

Besides inspecting the physical properties of products, procurement specialists can also have electrical tests done to determine the functionality and performance of these components to ensure they are working as the manufacturer intended.