Counterfeit Prevention Starts With Purchasing Direct from the OCM

By Logan Wamsley

The issue of counterfeit electronic components unknowingly entering into OEM product designs has always been an inherent risk, but as counterfeit suppliers have gotten more sophisticated in their approach and have succeeded in entering designs ranging from life-saving medical devices to military equipment, the electronics industry has of late been rushing to uncover solutions to mitigate the issue.

One such solution can potentially be found in the leveraging of blockchain technology. “The electronics industry is estimated to witness a significant rise in the implementation of blockchain in the near future as counterfeit parts pose a considerable threat to manufacturing,” said Transparency Market Research in a press release for their report on blockchain. “High security is ensured, as blockchain verifies and records all the transactions made. It is also a faster and a cheaper medium of carrying out transfer of online information and virtual money without the need of any third-party verification.” By looking at verified, traceable transaction history of a chain, OEMs will be able to better analyze their supply chain and understand where weaknesses in their counterfeit protections strategies might be.

The implementation of blockchain, however, comes with some caveats. For example, the technology by default requires full disclosure of each and every transaction done within the chain. In other words, private and publicly traded manufacturers alike would be required to disclose critical information including sales and profit margins in order for their transactions to be properly identified. While transparency is a highly desirable trait in the market, this might be a bridge too far — especially for publicly traded companies whose bottom line is tied to stock pricing.

A more desirable solution in today’s market involves bypassing the markets where counterfeit manufacturers operate entirely, which can be accomplished by purchasing direct from the component manufacturer. To do so, however, requires a significant upfront investment in working capital that many OEMs may not be able to commit to.

In response to this market need, Partstat has developed a Last Time Buy Solution that offers OEMs the ability to preserve their working capital while acquiring all the critical electronic inventory necessary to complete the lifecycle of their product.

Here’s how it works: instead of the OEM making the purchase, Partstat will purchase the inventory, using our own capital, on the OEM’s behalf, direct from the component manufacturer in a single bulk transaction. This has many benefits beyond simply inventory acquisition; by committing to a large quantity of inventory with a single purchase, the economies of scale tip in the OEM’s favor, which opens up the door for significant bulk purchase discounts the component manufacturer otherwise may not be able to offer.

Of course, once the inventory is in hand, the issue then becomes how to properly maintain the inventory, which may prove problematic for smaller OEMs who do not have the infrastructure bandwidth needed for long-term storage on-site. Here, Partstat offers, as part of our Last Time Buy Solution, full utilization of our industry-leading storage facilities. These facilities — which include climate-controlled warehousing, a custom storage vault, and full die and wafer banking capabilities — comply to the most stringent ISO:9001 standards and have been rated as “best in class” for electronic component storage. For as long as the product lifecycle dictates, Partstat will store the inventory and ship it to the customer on a personalized delivery schedule.

Companies responsible for counterfeit electronic components have proven time and again that they are capable of evolving along with the industry, growing smarter and more advanced just as their victims learn to mitigate them. The only proven, guaranteed way to safeguard your supply chain is to purchase inventory direct from the component manufacturer. And through a Partstat Last Time Buy Solution, this is easier than ever before to do.