The rising tide of counterfeit components is causing manufacturers to tighten their grip on the supply chain. Many are recommending that customers only buy from authorised sources. But is this the new commercial reality or an over-simplification? Can the market really exist on authorised-only sources? Asks Edmund Coady.

In an ideal world, original equipment manufacturers (OEMs) would only buy components from authorised distributors. In the real world, however, whilst customers may prefer to source from the authorised channel, commercial pressures often drive them to non-authorised sources and even the grey market.

Recently, the growth of the counterfeit component industry has prompted many component manufacturers to issue guidelines recommending that customers buy only from authorised sources. Some are going even further and withdrawing support for authenticating parts purchased from non-authorised sources.

Whilst the legal validity of this position has yet to be tested in a court of law, it certainly appears to be a good way to foil the counterfeiters.

However, is it a realistic to expect every component to be purchased from the authorised network? Can customers be confident that authorised sources will have every item on their bill of materials, including specialist parts?

Perhaps the more pertinent question is whether customers can be 100% certain that product sourced from authorised distributors is genuine.

Adam Fletcher, chairman of the Association of Franchised Distributors of Electronic Components (Afdec), points out that returned products may not necessarily be the original product sourced from the component manufacturer or authorised distributor.

"With more products being shipped directly to the production line, and goods-in inspections sacrificed for logistical economies, there are simply no guarantees that the returned items have not been contaminated with product sourced on the open market."

It is also true that even authorised distributors may not buy 100% of their product from their manufacturing principals. Faced with the choice between failing on delivery to a high-spending customer, or filling-in inventory gaps by sourcing product from other authorised or non-authorised sources some, if not all, distributors are likely to put customer satisfaction above the purity of the supply chain.

The key here is to maintain traceability back to the authorised channel and to work in partnership with customers so that they understand if, and when, traceability is lost.

Whilst denying responsibility for authenticating product bought from non-authorised channels, some manufacturers themselves regularly sell quantities of surplus components onto the open market. The presence on the open market of these genuine components gives OEMs false confidence to source from outside authorised channels.

If component manufacturers really are determined to stamp out counterfeit parts then perhaps they, and the OEMs, should stop feeding the open market with surplus parts.

Another huge factor in driving customers to non-authorised distributors and brokers is component obsolescence.

As fellow Component Obsolescence Group (COG) member and ex-chairman of COG UK, Ian Blackman, explains; "Authorised distributors do not address large parts of the long-life markets. All too often, COG members are forced onto the open market because the component manufacturers withdraw products within a matter of years, or even months, whilst OEMs need to support products for up to thirty years."

"At a recent COG meeting, for example," continues Blackman, "members heard of a major US aircraft manufacturer faced with a need for 14,000 obsolete semiconductors. Unable to re-design or find inventory in the authorised channels, the OEM approached the component manufacturer to ask them to undertake a one-off production run. The manufacturer refused, and the OEM was forced to source the parts on the open market. Put simply, non-authorised distributors exist, and will continue to exist, because they can supply when authorised sources are unable to deliver."

According to Afdec's Adam Fletcher, customers must also take responsibility for minimising the need to move outside the authorised supply chain.

"The lead-times for metalwork and PCB are typically far longer than those for components. With accurate planning customers can accommodate the standard lead-times from the component manufacturers and their authorised partners. Without accurate forecasts, customers must choose whether to wait for product from authorised sources or to face the risk of going elsewhere."

Of course, the manufacturers are right that buying from authorised sources should eliminate the risk of buying counterfeit parts. But in order to make this a realistic strategy, the industry needs to clean up its act: manufacturers must stop dumping surplus product onto the open market and provide long-term support for obsolete parts; distributors must be prepared to make their inventories deeper and wider, and customers must plan ahead and work to known lead-times.

When, and if, that day ever comes, then the industry will surely only buy from authorised sources. Until then everyone, including the component manufacturers, must share the responsibility for the rise in counterfeiting and share the burden of authenticating products.

Edmund Coady is sales director with Charcroft Electronics