Counterfeits driven by obsolete parts, says IHS
Obsolete parts have accounted for slightly more than half of all counterfeit-part reports during the last 10 years, according to market analyst IHS.
A total of 57% of counterfeit part reports from 2001 through 2012 have involved obsolete or end-of-life (EOL) components, highlighting the importance of obsolescence management for the electronic supply chain.
IHS recently reported that more than 12 million parts have been involved in global counterfeit incidents in just the past five years, equating to more than one counterfeit part every 15 seconds during that period.
“Some have said that if you can avoid all obsolete parts, you can eliminate all the risk of counterfeits, however, this is untrue for many reasons,” said Rory King, director, supply chain product marketing at IHS.
“Obsolete parts represent only a portion of the counterfeit scourge, with active components accounting for a significant share of all counterfeits reported. Moreover, it’s unrealistic or technically infeasible to economically eliminate the use of all obsolete parts,” said King.
“This underscores the critical need for electronics buyers to arm themselves with the right methods and tools to manage both obsolete and active critical components,” added King.
Obsolescence is inevitable for a number of reasons, most notably that the product lifecycles of components are much shorter than the products in which they are used. This is especially true for long-lifecycle or complex products such as automotive, industrial, medical, aviation, or telecommunications equipment that use once-current, but now-outdated, components.
Although it afflicts many markets, the issue of obsolete parts in long-lifecycle gear is most dramatically illustrated in the defense/aerospace industry.
“Industry figures suggest that a single incident of an obsolete part can cause as much as 64 weeks of down time and $2.1 million to resolve,” King said. “On parts lists, bills of materials, or assemblies that encompass as many as 30,000 parts, it’s typical that 10 percent or more of these components are obsolete, showing what a significant cost obsolescence carries.
“And, given that more than more than one in two counterfeit parts is an obsolete component, the need to forecast obsolescence and have access to alternate part and supplier options is crucial to avoiding both obsolescence costs and counterfeit risk,” King added.
According to King, changes in the supply base such as the impact of the European Restriction of Hazardous Substances Directive (RoHS) resulted in 20% of all components being discontinued above and beyond what buyers were expecting. Another 20 percent of components were unexpectedly discontinued in 2007.
“Manufacturers attributed these events specifically to the shift to lead-free components. If a product is 20 or more years old, you simply can’t avoid obsolete parts, which are prime breeding ground for counterfeits,” said King.