Since counterfeit electronic components are increasingly prevalent in the supply chain, I was interested to see an article that ran on SecuringIndustry, which notes that a new standard designed to help manufacturers avoid procuring counterfeit electronic components is in the latter stages of development. Among the elements covered by the new standard are risk mitigation methods in electronic design and parts management, supplier management, procurement, part verification, material control, and response strategies when suspect or confirmed counterfeit parts are discovered.

 

     SAE International—a global association of experts in the aerospace, automotive, and commercial vehicle industries—reports that work has been taking place on the AS5553A standard since May 2010. The standard, Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition, is intended for use in aviation, space, defense, and other high performance/reliability electronic equipment applications. The requirements of this standard are generic and intended to be applied/flowed down to all organizations that procure electronic parts, regardless of type, size, and product provided, the association states.

 

     This comes as good news because the number of instances of counterfeit electronic parts popping up in the supply chain has grown rapidly in recent years. A total of 9,539 suppliers in 2011 were reported either for known involvement in high-risk, fraudulent, and suspect counterfeit-part transactions, or for conduct identified by the government as grounds to debar, suspend or otherwise exclude from contract participation, according to information and analytics provider IHS. That means the number of high-risk suppliers to the U.S. government, including companies that sold suspect counterfeit product to military and commercial electronics channels, grew by 63 percent from 2002 to 2011, the firm’s research shows. The trend highlights the need for members of all tiers of the supply chain to implement tighter supplier-monitoring and procurement procedures to meet increasingly stringent regulations, IHS says.

 

     While use of counterfeit electronic components may have serious consequences in all industries, their use in defense systems may compromise performance and reliability, risk national security, and endanger the safety of military personnel. As a result, the prevalence of counterfeit electronic parts in the U.S. aerospace and defense supply chain has drawn the attention of the Senate Armed Services Committee.

 

     The committee conducted an investigation and, last May, announced that a “flood of counterfeit parts, overwhelmingly from China, threatens national security, the safety of our troops and American jobs.” The committee reviewed 1,800 cases of electronic parts suspected to be counterfeit in the defense supply chain in 2009 and 2010, said Carl Levin, U.S. Senator from Michigan and Senate Armed Services Committee chair. Those 1,800 cases cover more than 1 million individual parts. But while 1 million parts is a substantial number, the committee only looked at a portion of the defense supply chain, Levin said.

 

     “Those 1,800 cases are just the tip of the iceberg,” Levin said.

 

     While those parts appearing in the supply chain is cause for concern, so is the lack of reporting. In only 15 percent of these cases were reports of suspected counterfeit parts submitted to the Government Industry Data Exchange Program (GIDEP), a DOD program that was set up as a system for government and industry participants to file reports about suspect counterfeit parts and help in their removal. Actually, the Senate Armed Services Committee found that most cases of suspect counterfeit parts go unreported to GIDEP. While one industry witness told the Committee that sharing information on counterfeit parts through GIDEP “can help stop suppliers of counterfeit parts in their tracks,” only 271 total reports were submitted to GIDEP during all of 2009 and 2010.

 

     Obviously then there is a reporting issue as well. I am curious, however, about how the new standard will be received as well as how companies will make use of it.