Counterfeit Components in Supply Chain’s

The threat of being supplied with counterfeit components and products has become a significant problem in many supply chain systems. Illicit parts span nearly all industries, including government contractors, electronic suppliers, drug suppliers, and numerous others. Counterfeit suppliers are often sophisticated and track market conditions as diligently as a legitimate producer. When a market for a particular product is growing, counterfeit suppliers ramp up their operations in order to provide consumers or businesses with imitation parts in times of limited supply.

In March 2011, the Senate Armed Services Committee performed a study in order to estimate the amount of phony electronic components that existed in certain U.S. military vehicles. The study found counterfeit parts in cargo planes, Special Operations helicopters, and surveillance planes. These ill-legitimate parts were suspected to be from China, with the total amount exceeding one million. These counterfeit supplies compromise safety, security, and intellectual property protection rights.

In order to reduce the amount of counterfeit parts, businesses and governments are focusing on scrutinizing all supplies flowing through the supply chain. An amendment was made to the National Defense Authorization Act to now require the Department of Defense to detect high-risk suppliers, sub-contractors, and to strengthen the inspection routine. Supplies should only come from certified and trusted suppliers. The amendment also requires counterfeit parts to be reported to appropriate governments officials and to the Government-Industry Data Exchange Program, which shares information from governments and business purchasers. Section 818 of the National Defense Authorize Act describes the compliance measures in more detail.

A study conducted by IHS reported the number of high-risk suppliers to the U.S government and the electronics industry, has grown by nearly 62% from 2002-2011. The government and all industries are encouraged to test supplier compliance often with rigorous testing, inspections, and reporting. The threat of counterfeit components has continued to grow and supply chain experts are looking into ways to eliminate ill-legitimate products in circulation.

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