Counterfeit merchandise: Keeping it real

JohnWesterveld

Here are two Microprocessors.  They look the same.  They have the same part number.  One will work fine.  The other?

The other, while it appears to be the exact same part is a cheaply made counterfeit.   If you’re lucky, it will fail as soon as you put it in.  If you are unlucky, it will fail as it is being used by your customer.  Depending on what this chip does, the failure could simply result in a return and an unsatisfied customer.  However, it doesn’t take much of an imagination to see that if this chip is part of a critical component in an aircraft, automobile or healthcare product, the failure could result in injury or death.

As I started to look into this subject, I came to the realization that it is HUGE.  To help me keep things straight, I’ve broken counterfeiting down into two broad categories;  Counterfeit retail products  and counterfeit components.  Both have different risks associated with them and have different mitigation strategies that should be considered.

We’ll look at retail products first.    People have been selling cheap knockoffs for as long as I can remember; clothes, purses, shoes and jewellery ($10 Rolex anyone?), and more recently, DVDs and video games.  If counterfeit watches and DVD’s aren’t enough, we are starting to see counterfeit medication too.  Everything from Tamilflu to Viagra have been counterfeited and sold as the real product…at significant risk to the person using the drug.

Ominously, counterfeit products and components are making their way through the military as well.  Counterfeit components are finding their way into missile systems, fighter jets and nuclear submarines.  Recently, the FBI discovered 400 routers in use in military installations were counterfeit and likely have been used for espionage.

From the brand owner’s perspective, counterfeit products are very damaging;  they impact sales, they drive up costs, they impact your good name, and they can harm your customers.

It seems that protecting yourself from counterfeiters is devilishly difficult.  Options include;

  • Holographic labels (like you have on  your credit card)
  • Micro-print (I’ve seen these on cheques)
  • Unique / obscure marks (small dot on a label)
  • Serial numbers
  • RFID tags.

Unfortunately, counterfeiters keep coming up with ways of fooling the unsuspecting public. However scientists and engineers are also working to find ways to identify the real thing and have developed new ideas like  nano-artwork.

Let’s look at the supply chain side now.   Counterfeit components can range from relabeling of components (from a generic brand to a known brand), to a replacement of good parts with non-functioning mock-ups. A few months ago, NewEgg discovered that they had been shipping new Intel I7 processors that were in fact clever reproductions of packages that contained non-functioning models of the processor.  I’ve talked about counterfeit components of a different nature in an earlier blog post that talked about components manufactured on a ghost shift.

From the supply chain perspective, counterfeit components are a disaster waiting to happen. This disaster can occur at many levels;  counterfeit components intercepted and identified as part of incoming inspections has the least impact on your company.  If the counterfeit component is caught before your product leaves the factory, you have also been lucky.  Once the product containing counterfeit components gets into  your customer’s hands, failure of the component is your fault in the customer’s eyes.  A more distressing problem is what will happen when that component fails?  Will it just go pop?  Or will it burn like a poorly made lithium ion battery?

To avoid counterfeit parts, here are some ideas

  • Beware of prices well below market values
  • Know your suppliers
  • Test your components often.  Ensure your testers are well versed in counterfeit detection practices including x-ray imaging, solvent body softening, component de-lidding and jet or plasma etching (these methods allow you to see below the surface of a chip and compare to a known good item)
  • China is one of the leading sources of counterfeit electronic components.  While it’s difficult to avoid sourcing from China, be aware of the counterfeit risks.

Additional information on avoiding counterfeits can be found here, here and here.

Do you have a counterfeit story?  Do you have advice on how to avoid falling prey to counterfeit components or products? Comment and let us know.

JohnWesterveld

John Westerveld part of the Global Alliances team for Kinaxis. He joined Kinaxis over 17 years ago bringing with him 16 years of manufacturing experience, including 10 years in the information technology field. While at Kinaxis, John has held several roles including Product Management, Technical Sales support and Product Marketing.

More blog posts by John Westerveld

Discussions

  1. I agree that it can be really dangerous. If that was a computer part then when it fails it will only shut down your computer. Now, imagine that in a car, a bus, or even a 747. The result of it failing is catastrophic but I’m pretty sure that those working sensitive industries like airplanes, etc. take precaution and only deals with trusted manufacturers or distributors.

  2. I agree. You would think that mission critical components would be so carefully sourced that counterfeits would be very unlikely. Unfortunately, despite significant care, counterfeit components are still showing up. I referenced this source (http://www.militaryaerospace.com/index/display/article-display/298418/articles/military-aerospace-electronics/volume-18/issue-7/news/trends/the-scourge-of-high-tech.html) in the article, but there are plenty more.

  3. Counterfeiting is a serious problem for the Aerospace industry. Even when sourcing is done within prescribed channels, counterfeit components can still creep in. Some problems may be rather innocuous, like the manufacturer “black-topping” and re-labeling a component (change date code, change part number…) and some may be potentially disastrous, like true counterfeits (poorly-made yet functional knockoffs). I’ve personally seen these issues in the aerospace industry.
    It is critical that manufacturers adopt measures to combat this trend, and the only real way to do so is to sample. In this case, ignorance is not bliss.

  4. Counterfeiting is a serious problem for the Technical infrastrcuture components. e.g routers, switches , ATM etc.. I remember that a lot of them were CF’s that were specifically backdoored with s/w that permit a specific .gov authority to monitor the data /communiation that flowed thru the lines..

    ..and guess who was the end users of such compononets.. none other then ours truely.. the US. GOV departments…

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