How to Prevent Suspect Components from Entering Your Supply Chain

Estimated reading time: 4 minutes

The success of any supply chain relies on quality and stability. If either of these elements are threatened, original equipment manufacturers (OEMs) or their electronics manufacturing services (EMS) provider will struggle to ensure supply chain excellence.

Unfortunately, with the risk of counterfeit and other suspect components ever present, this can sometimes be difficult to achieve. So how can you minimize the risk of these devices entering your supply chain when you are faced with working outside of the franchised component market?

In this article, we help define what we believe is a ‘suspect’ device and provide three practical tips to help prevent them from entering your supply chain.

Defining suspect components

Unfortunately, ‘suspect’ can mean different things to different people. At one end of the spectrum a suspect device could be a counterfeit item, i.e., a fake or unauthorized replica of the real product. At the other, a part which is being sold as new but shows signs of use could also be deemed ‘suspect.’ Regardless of whether the part is indeed counterfeit, or has been repackaged several years after it first came off the production line, both scenarios present a risk to OEMs and EMS providers.

So, to us, a suspect device may include:

• A fake or unauthorized replica of the real product, i.e., a brand-new product intended to defraud. 
• An older device which has been remarked to disguise it as something different, e.g., another manufacturer, different country of origin, revision level, specified performance, etc.
• Known defective parts scrapped by the original part manufacture and then resold
• Parts salvaged from scrapped assemblies and then resold

1) Select and audit your suppliers with care

Whether you are an OEM purchasing the material yourself, or you have outsourced this function to your chosen EMS, close supplier relationships and management are key to ensuring consistent levels of quality. We recommend that all independent suppliers are audited and a thorough understanding of how they manage their supporting supply chains is sought. 

How long have they been in business and do they physically own the stock they are advertising or are they sourcing it from someone else? Are they a member of ERAI and what checks do they carry out themselves to mitigate the risk of suspect devices entering the supply chain? Finally, does their offer seem too good to be true?

In times of crisis it can be tempting to push some of these checks and balances to one side. You're about to hit line-stop and a company you've never heard of before are offering the stock you need. But before you send across the purchase order what do you really know about them? What impact could this part have on your product and reputation should it turn out to be suspect? What does your gut instinct tell you? It's usually right.

In an ideal world, you would not buy outside of the franchised network but realistically, from time to time you might need to. Once you have established a reputable source we recommend partnering with them to avoid the temptation to expand this network each time a new problem part arises.

2) Inspect the components on receipt

Inspection of goods can take many forms. Usually it is dependent on the level of proven quality and supply traceability. Inspection can range from a simple visual inspection through to X-ray, or a more aggressive technique such as decapsulation. In addition to well trained staff and tight procedures, there are a number of ‘tools’ either you, or your EMS partner, will need to invest in to help combat suspect components.

If parts have been supplied through the franchised network you may find that a visual inspection is sufficient in providing peace of mind. But, if you have had to use an independent supplier, further inspection is going to be required, so as not to cause delay or failure.

We would recommend conducting a thorough inspection on all goods from a first-time supply regardless of the level of risk the supplier presents. This can then act as a secondary quality control measure, which if logged appropriately can provide evidence of due diligence on your behalf, if a fault was to occur after manufacture.

3) Create and manage a reference database

Once the parts have been inspected it is important to ensure that the details you have recorded get logged appropriately. Creating a reference database can assist in determining the level of inspection future products from the supplier may need. For example, if you receive regular deliveries from supplier X and you have inspected 100% of every delivery for the past 4 months and they have all passed you may consider reducing the inspection sample down. That said, it only takes one suspect component to get through to cause a major headache so, whatever you decide, it needs to be right for you and your customer base - one size does certainly not fit all.

A reference database can also be used for training purposes. Knowledge is power and the more examples of ‘suspect’ parts Goods Inwards inspectors experience first-hand, the more chance they have of intercepting the next batch. Suspect devices have evolved over the years – from simple 'blank' chips, to sophisticated blacktopped devices complete with counterfeit packaging and bar code labels. Any staff involved in the inspection of incoming parts must be fully trained and kept up to date with the latest news and techniques either they, or the marketplace witness.

Hopefully, you have found this short article of use. While the threat of counterfeit components remains present, taking these precautions can help ensure your supply chain is not disrupted. The topic is however far-reaching and we would be keen to hear from you in the comments below if you have any other advice for OEMs, or their assembly partners, in helping to minimize the risk of suspect devices entering the supply chain.