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Nolan’s Notes: The Bottom Line on Cybersecurity and Counterfeiting

It was a little thing. I needed two size 2012 watch batteries to repair a light-up Christmas decoration. No big deal. As I walked through the grocery store to the batteries, there were empty spots on the shelves here and there. What was, in early 2020, an entirely empty aisle of paper products, had instead evolved into a sprinkling of missing products here and there. When I got to the kiosk of batteries, it looked similar: some of the hangers were empty. Sure enough, the batteries I needed were out of stock.

“No worries,” I thought. “I’ll just go to the hardware store near my next stop.” It was the same story at the hardware store. Even though their inventory of batteries was more extensive, they were completely out of that elusive size 2012. But I had to be alert; the staff at the hardware store had filled the empty hanger with a different sized battery, thinking it was better to look full than to be accurate in sizes. Had I been distracted; I might have purchased the wrong battery entirely.

It’s a common sight in daily life: empty spaces on shelves in our stores and long delivery times for goods being shipped. It doesn’t matter whether it’s a business item, such as raw materials for the manufacturing floor, gift items for the holidays, or everyday groceries. It’s a truth we all know right now that the supply chain is full of seemingly random delays and shortages. These shortages create opportunities to be exploited by opportunists. Now, when I say opportunists, I don’t mean the clerk who filled a hole in the store shelf with a different product. No, I mean those who pass off counterfeits as the real thing, or who engage in cyber-espionage or ransom attacks.

In recent newspaper article, an L.A. port director said, “Bad actors exploit e-commerce operations by selling counterfeit and unsafe goods through online platforms, particularly during the holiday season when shoppers are looking for deals. If the price of the product seems too good to be true, it probably is. Counterfeit goods are often of poor quality and can even be unsafe for you and your family.” ¹

Another news piece taught shoppers how to spot a fake, reporting, “With fears over a shortage of goods this holiday season, officials from Department of Homeland Security investigations and the U.S. Customs and Border Protection are concerned shoppers will turn to non-reputable online sites or fall victim to counterfeit sellers.” ²

Retailers are forming coalitions to address the online sale of stolen and counterfeit goods and calling on Congress for assistance. "While we constantly invest in people, policies, and innovative technology to deter theft, criminals are capitalizing on the anonymity of the internet and the failure of certain marketplaces to verify their sellers,” writes Mychael Schnell. “This trend has made retail businesses a target for increasing theft, hurt legitimate businesses who are forced to compete against unscrupulous sellers, and has greatly increased consumer exposure to unsafe and dangerous counterfeit products.”³

U.S. Customs and Border Protection, an agency under the Department of Homeland Security, publishes counterfeit information at their website.⁴

It seems that anticipating an unpredictable supply chain has become way of life for us all. I-Connect007 has reported on supply chain issues regularly over the past two years. Most recently, we devoted the March 2021 issue of SMT007 Magazine to supply chain concerns. Coincidentally, the Suez Canal was blocked by a container ship mishap at about the same time we went to print with the magazine; that certainly helped drive home our point with that issue.

Unsurprisingly, the supply chain concerns for electronics manufacturing continue. And it seems to be on everyone’s mind. Recently, we surveyed PCB fabricators, asking them to share their greatest challenges in their business. We structured the survey so that respondents could give their answer in their own words. No ticking of boxes, as that often inserts the survey writer’s bias into the survey. Once we had the replies, we categorized what we received, and this pie chart is what emerged:

Figure 1: Supply chain is an overwhelming concern for PCB fabricators and suppliers, according to an I-Connect007 survey.

Cybersecurity, while perhaps not as “in your face” as supply chain issues at this moment, is equally concerning. With the rise in ransomware attacks worldwide, the concerns now are more than simply data theft.

Just as with consumer goods, supply chain concerns can easily lead to counterfeiting and cybersecurity issues in electronics manufacturing. It was reported that the “majority of global businesses believe supply chain attacks can become a major threat within the next three years, with 45% experiencing at least one such attack in the last 12 months. This figure is higher, at 48%, in the Asia-Pacific region, where organizations also are reporting more ransomware attacks and paying out higher ransoms than their global counterparts.” Writer Eileen Yu put some numbers to the trend: “Worldwide, 96% of respondents that paid the initial ransom had to pay additional extortion fees of $792,493 on average. The report noted that 57% of companies that suffered a ransomware attack acknowledged they did not have a defence strategy in place to coordinate a response. This figure was 53% in Asia-Pacific.” ⁵

In this issue, we bring you several articles on cybersecurity and counterfeiting, including submissions from I-Connect007 columnists Michael Ford and Bill Cardoso, as well as some really practical cybersecurity tips from IT specialist Divyash Patel. Furthermore, we discuss what you need to know to leverage smart factory offerings to better manage supply chain and counterfeiting. We share our “man on the street” interviews with industry representatives, discussing their take on the challenges and opportunities. We also interview Joel Scutchfield at Koh Young on how new product development is responding to these challenges. And, last but not least, as a special treat, we contacted some of the presenters at the SMTA symposium on Cybersecurity and Counterfeiting held earlier this year and invited them to share their presentations here in the magazine. We’re proud to bring you four key presentations from Vernon Densler, Eyal Weiss, and David Mills.

In the spirit of “forewarned is fore-armed,” we hope this issue is informative and helpful. Our industry is benefitting from a growth period—we’re on the offensive again. Let’s not forget to play some defense as well.

References

1. “More than $30 million in fake designer goods seized at ports of L.A. and Long Beach,” Los Angeles Times, Dec. 6, 2021. Article quotes Donald R. Kusser, CBP’s port director at the Los Angeles-Long Beach port complex.
2. “How To Spot Counterfeit Goods This Holiday Season,” WLNY, Nov. 18, 2021.
3. “Retailers call on Congress to fight online sales of stolen and counterfeit goods,” The Hill, Dec. 9, 2021.

This column originally appears in the January 2021 issue of SMT007 Magazine.