COVID-19 Brings The Risk of Counterfeit Components to Forefront
Among the many issues supply chains have had to address amidst the COVID-19 pandemic, one that has not made as many headlines is the increase in the number of bad actors willing to take advantage of a strained supply market with counterfeit components and products.
Counterfeits Are Widespread
When supply is low and coupled with extreme demand, counterfeit materials will always be a risk worthy of consideration, but the global slowdown of supply chains has made many manufacturers and consumers less vigilant. One recent example can be seen in the medical industry; in February, U.S. Customs and Border Protection (CBP) seized over 100,000 counterfeit 3M surgical masks in Cincinnati, Ohio. CBP determined that the products were imported into the United States from a company in Hong Kong—a country where 3M does not manufacture its N95 respirators. This only adds to the number of counterfeit masks acquired this year; in the first few weeks of 2021 alone, the Department of Homeland Security seized over 10 million counterfeit 3M N95 masks.
The growing trend of finding counterfeit vaccines is even more problematic. Recently, Mexican authorities arrested six individuals selling counterfeit vaccines for $2,000 per dose, and a man in Seattle was arrested for “vaccinating” 50-100 people with counterfeit materials at $400-$1,000 per dose. Authorities are still investigating what his victims were vaccinated with.
The counterfeit issue in the electronics sector is just as widespread, if not more so, and incredibly lucrative for the perpetrator. “There’s $70 billion a year in printer consumables sold into the world,” said Scott Best, technical director of anti-counterfeiting products at Rambus, in Semiconductor Engineering. “This is a remarkable opportunity for counterfeiters. It is a $10 million effort to take apart somebody else’s security chip, completely reverse engineer it (the reverse engineering is completely legal), and print a functional clone. That’s 50 people for a couple of years. But if you can do it, there’s a guaranteed $100 million annual product stream from that chip.”
Although it is difficult to establish exactly how extensive the counterfeit market has seeped into the electronics manufacturing industry, it was recently estimated that counterfeits are integrated into over $169 billion of electronic devices.
Protect Supply Chains from Counterfeit Components
In this environment, it is more critical than ever to make purchases directly from the component manufacturer. This minimizes the variables involved between the selling transaction and the inventory acquisition, which allows your supply chain to remain insulated from risk and your company to maintain production uninhibited.
To do so, however, often requires a large upfront investment in working capital. An inventory management solution from Partstat allows customers to make inventory purchases and last time buys direct from the component manufacturer without any strain on working capital. All acquired inventory is guaranteed to be fully traceable with all appropriate documentation, and your capital will be able to be used in ways that maximize ROI. In other words, Partstat buys your inventory so you don’t have to!
No amount of risk is worth the losses associated with the unintentional use of counterfeit components. Nearly irreparable reputational damage awaits those who choose not to fortify their supply chains, not to mention the blame should an individual be harmed due to a malfunctioning product. With lives at stake, make supply chain insulation a priority.