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A Cautionary Tale: Counterfeit Materials
January 29, 2015 | John Ling, EIPCEstimated reading time: 6 minutes
European OEM orders pre-production quantities of thermally-managed PCBs for automotive LED lighting from accredited European fabricator on specified IMS material. PCBs are made to specification, delivered with certificate of conformity and meet all the design requirements.
OEM orders production quantities from Chinese supplier, to same specification as pre-production units. PCBs are delivered with COC, superficially OK but begin to fail in service. OEM asks nominated laminate supplier if the particular specified grade of material he supplies to Chinese customers has the same properties as that supplied to European customers. Laminate supplier answers in the affirmative.
So what went wrong?
Chinese PCB fabricator buys one panel of the material specified on OEM drawing, from the nominated, fully-accredited, laminate manufacturer, and is supplied with a genuine COC. Chinese PCB fabricator then buys production quantities of lower-price, lower-performance material from a non-accredited laminate manufacturer, fabricates and delivers the OEM order, accompanied by a subtly “modified” copy of the genuine certificate of conformity.
Three consequences: OEM is supplied with inferior and potentially unreliable PCBs. Chinese PCB fabricator increases his profit margin. Accredited laminate manufacturer stands to lose his good name and reputation.
Scenario 2
Major North American aircraft OEM asks nominated manufacturer of specified polyimide laminate what his supply-chain route to major North American PCB fabricator supplying PCBs to the OEM is. Laminate manufacturer supplies through third-party distributor. OEM insists that his PCB supplier buys specified laminate direct from the nominated manufacturer.
Why?
Whether as a result of historical bad experience, or simply being cautious, the OEM is very concerned to avoid the consequences of counterfeit materials entering the supply chain for safety-critical applications. And laminate manufacturer cannot afford to risk his good name and reputation.
Within the EU the first importer of the product is considered the “manufacturer” for liability purposes, so in the event of a claim arising from a failure due counterfeiting, the PCB broker will be left carrying the financial liability. Brokers tend to be at the small end of the SME group, with limited assets and quite unable to sustain any significant financial claims that could arise from this scenario. Recovering any losses in China can be very difficult if not impossible.
Supply chain integrity should be as much as part of supply chain quality management as any other virtue.
Material traceability is a headache at the best of times, as one sheet of laminate looks much like another when covered in copper foil, and this enigma is multiplied when the supply chain becomes more complicated with distributors and sub distributors and agents, some of who supply similar materials from several different manufacturers. This is a common situation throughout Europe.
In conclusion, this is a look at the management of risk. Risk comes wearing many hats – there is reputational risk, which can be damaging; there is inherent safety risk, which could be fatal, and there is financial risk to the OEM, the PCB manufacturer, and the PCB broker. One way of minimising risk is by dealing direct.
Perhaps, back in 1865, they concluded that less speed meant more safety. Maybe 150 years later we should encourage greater safety by combining less haste with more diligence, and on a straighter road.
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