Counterfeit Components in Electronics Management 2

Counterfeit Components In Electronics Management
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COUNTERFEIT COMPONENTS IN ELECTRONICS MANAGEMENT
Introduction
The history of counterfeits is long and ignoble. It ranges from all the sectors: from art to literature, to manufactured good, motor industry and the electronic industry. Motor industry is the most invested industry with counterfeits. The effects of counterfeits in the electronic industry may range from minor to death consequences. For example, when a consumer purchases an electronic and connects it to the power supply in the house unaware that the gadget may be faulty because of being a counterfeit product may result to short circuiting. Later the entire house may end up on fire leading to loss of property and life as well. Counterfeit electronic components have made the management of equipments in organizations difficult. Therefore, it is important for equipment managers to be aware of counterfeit electric components and how to control their effects on their organizations.
Problem statement
How should managers detect and control counterfeit electronic components in organizations.
Risks of counterfeits
The electronic components are applied in numerous equipments including safety, power train and security among others. Therefore, these equipments require the power tolerant microcontrollers and processors among others. Failure in any of these vital mechanisms may lead to accidents. This has lead to increased importance in fault tolerant solutions in the automobile industry. This goes further to domestic use appliances and industries.
The problem of counterfeit has been here for quite a while. Unscrupulous manufacturers as well as vendors for a long time they have been making large sum amounts of money by selling counterfeit components and or reselling old and used components as new and originals. Most of the counterfeit products are easy to identify (Bartels, Ermel, Sandborn, & Pecht, 2012). However, they do not pose any danger or threat to health and safety. The problem of counterfeit is not restricted only among the high-end consumer products. This extends to other sectors such as the pharmaceuticals who have been warning of counterfeit drugs posing great danger to health of consumers. Despite the efforts by pharmaceuticals, the problem of counterfeit drugs has grown to worse and no better. These counterfeit products cost government billions of dollars annually in losses.
The epidemic of counterfeit electric components is worldwide and it is flooding the world market affecting supply chains in all sectors. Globally, there is an estimation of over $10 billion annually in loss because of the counterfeit products in the market. According to a report done by Hallin the US government is losing lots of billions in the auto industry and millions of workers losing their jobs because of inclining business. Further, the report indicated that the problem of counterfeits raises important issues of safety (Ross, & EDFAS 2011). Another report by AGMA indicated an approximate of one in every ten information technology (IT) components are either completely counterfeits or contain counterfeit parts. However, counterfeiting would turn out to be profitable if scrapped components, inexpensive components and or components from the recycled products would be remarked and reintroduced into the market as new, with higher reliability and more expensive. There has been a fault in dealing with counterfeits. Instead of preventing counterfeits, screening is done on components in efforts to identify and remove counterfeits before use as finished products.
The senate Armed Services Committee released a report that highlighted the risks posed by the electronic counterfeit components to military. While the report mostly focuses on the risks to military systems it is relevant to the risks to other sectors that are non-military. For example, the report refers to a case where an aircraft manufacturer had installed the ice detection gadgets on seven commercial aircrafts despite the fact that they had been suspected of being counterfeits. The company determines that there is no need for immediate action in relation to the installations even after they were informed that the gadgets were counterfeits. The conclusion was that the engineering department argued that the equipments can remain installed but be repaired on the basis of attrition.
There has been battle between the counterfeits and the affected industry each trying to outdo the other. The original manufacturers seek to identify the counterfeits as the counterfeit producers seek to be as good as the original manufacturers. Counterfeit components got into the market place of electronic industry countering an adaptation of a variety of existing testing methods to aid screen electronic parts for authenticity (Pecht, 2008). These methods over time have proven to be effective in detecting counterfeits just before they get into the mainstream supply chains. They have become the conventional means of fighting counterfeits. However, these methods have become familiar among the engineers as well as the purchasing agents hence they include the purchasing documents in order to insure incoming supplies authenticity. Unfortunately, the methods have become familiar to the counterfeit producers and distributors. This enables the counterfeiters to upgrade their crafting and manufacturing skills using materials that can help counterfeit components avoid detection.
Given the fact that the act of counterfeiting is lucrative, the master minds of counterfeits get motivated and inspired to improve their techniques the more in order to maintain their business. Onus is back on the business of counterfeit detection with major focus on the electronic industry that is facing a lot of challenges from the counterfeits. It is committed to improve on techniques to detect the coming new generation of counterfeit electronic components. There is the exploration of the unconventional techniques other than the conventional screening techniques. This would help in keeping ahead of the counterfeit electronic parts in the industry (Simchi-Levi, 2010).
Counterfeit components may lead to failed systems hence causing damage to equipments and property and in other times lead to loss of lives. Counterfeits components installed in auto mobiles may be dangerous and posing a greater risk to lives of many. Like in the case of a military jet that is installed with fake ice detection modules may lead to loss of lives when the fake gadgets malfunctions in time of operation. A car that is on motion may experience an electronic component failure may lead to the malfunction of the entire automobile system. This may lead to road accidents hence loss of lives as well as that of property (Pascoe, 2011). The other risk is at the domestic use. When consumers buy faulty electronic components and connect them to power, there is a possibility that at a particular point the equipment will malfunction and may lead to fire outbreak. This situation has been in Bangladesh textile industries where many lives have been lost through fire outbreaks.
Counterfeit electronic components has become a real concern in the industry with companies that acknowledge this new reality standing a better chance to detect and avoid the counterfeit that has the possibilities of system failures, substantial costs and low customer satisfaction.
Reasons for counterfeit proliferation
Governments across the globe are aware of the origins of the counterfeits in the electronic industry. These cases of counterfeiting represent what markets have been sowing. There are millions of dollars to be made in this black market of electronic components (Staake, & Fleisch, 2008). The counterfeiters of the electronic components just like any other industry are motivated by the profitability in the counterfeiting.
One of the richest sources of counterfeits is the electronic scrap in most cases manufacturers as well as the distributors dispose large amounts of test failures, obsolete products and or scrap without physically destroying them. Therefore, the counterfeit masters intercept and are able to retrieve material by dumpster diving. This increases the rate of counterfeiting in the electronic industry worldwide. There is also the availability of product for counterfeiting at the termination of service life of the products. This is because of many countries’ environmental regulations that bring about shipment of many containers loaded with electronic wastes to Middle East in order to avoid local environmental termination and pollution (BIS 2009). The counterfeit masters seize this opportunity to regenerate counterfeit products by remarking the electronic components with different part numbers, updated characteristics, and recent date codes among others.
Fabs also promote the proliferation of electronic counterfeits. Midnight Fabs may contract and run two shifts for the same customer and run a third shift that is unauthorized. This comes with lower quality as well as lowly trained personnel. Such products are marked like the legitimate products in the market and are sold at lower costs and discounts and they have quality issues attached to them.
Supply of counterfeits has increased over the years with over seventy per cent originating from China. Guang dong province found close to Hong Kong is the core for counterfeiting activities. From this area untrained workers as well as children from the streets collect and sort electrical parts wash them in the rain and dry them in the sun (Chaplain, 2011). Counterfeit products range from mom-and-pop shops that take place in the peasants’ huts to big organized crimes. There have been cases of contracts being put out on the lives of the security officers in charge of legitimate products who had attempted to identify the counterfeit crimes.
The extent of proliferation is evident all over the world. Recently in Guangdong province police discovered components worth over one million dollars installed in computers and documents. These parts were enough to produce complete personal computers, servers, packaging documents and warranty cards for all of these products. Most of the products were under the label of Compaq Computer Corporation. Another dangerous incidence was when millions of mobile phone users worldwide experienced explosions of their cell phones. This was caused by the explosion of the battery because of short circuiting in the circuit board of the gadget. This leads to loss to consumers and in other cases it may cause physical harm. There was also a similar case of computers exploding and systems failing (Battersby, 2010). This was caused by leaking of electrolyte in capacitors mounted on personal computers. The electrolyte was formulated from a stolen formula and it was defective. Such massive losses and damages are because of counterfeit electronic components that are widely spread all over the world.
Management of counterfeits
Management of counterfeits varies from place to place. For example in the west counterfeiting is strictly illegal while as in countries like China it is an entrepreneurial spirit. Therefore, in such a case as in china, the management of counterfeit seems profitable to the authorities indicating that there is no way the government can stop the activities of counterfeiting. Instead the government supports the production and distribution of the counterfeits (Terzi, Panetto, Morel, & Garetti, 2007). Therefore management of counterfeit electronic components becomes difficult at the global level. However, in some countries it is evident that counterfeiting is illegal and companies as well as individuals who may be found producing and or distributing counterfeit products are prosecuted.
The first line of defense and the management of counterfeit electronic parts in countries and regions that prohibit the production and distribution of the fake parts in the assurance of the product authenticity is the inspection of the incoming production (Fowler, 2009). This measure is applicable immediately hence its effectiveness. In case brokers and distributors fail to conduct product inspection that goes beyond the reading of the documents as well as external data on the electronic parts, it would call for various commercial laboratories that provide excellent inspection services and materials for the inspection and management of the counterfeit electronic components. In order to deal with problem of counterfeits it is necessary to have paradigm shifts, focused efforts and paradigm rehearsals (Bastia, 2002).
Legitimate component manufacturers also have a critical role to play in the management and control of counterfeit electrical components. They need to control and confirm product flows and physical destruction of the scrap electronic components. The manufacturers should also find means of sharing product characteristics and data sheets with the customers freely. This would familiarize the users with the genuine parts hence making it easy for them to detect and avoid buying faulty and fake electronic components. Manufacturers also need to consider proprietary marking methods such as gamma marking of the electronic components. This would make it hard for the counterfeiters to imitate and reproduce fake components (Yager, 2011). Further, they should enhance their security systems in order to fight the issue of counterfeiting of their products. This should be extended to the markets. This encourages them to work closely with the customs department in order to interdict shipment of counterfeit components.
The management of counterfeiting extends to the consumers of the electronic components. They need to soften the instant pudding expectations. This is through planning more time for the verification of authenticity of the products. Buyers of the electronic parts should always consider the price they are willing to pay for the commodity and the possible risks that the components may cost t...