Electronics Counterfeiting Weighs On Defense Budget
by Joe Longo, on January 23, 2017
The military requires a lot of material, and counterfeit goods can be a significant roadblock.
The U.S. military demands billions of dollars worth of advanced hardware and holds this equipment to high standards. However, these standards have not always been exacting enough to stop counterfeit components from sneaking through the supply chain.
This has been a problem for years. Securing Industry reported that in 2010 and 2011, the Department of Defense identified more than 1 million counterfeit military components in its supply chain. Other analysts have noticed this trend. In 2013, market research firm IHS identified more than 12 million reports of counterfeit electronics throughout all global supply chains during the previous five years - an average of one fake component every 15 seconds. This weighed heavily on the military, as well as many other industries.
Counterfeiting comes at an extraordinary cost to the military. In addition to the money spent on the fake parts themselves, there is also the price of resolving the issue. Securing Industry estimated that a single counterfeit part could lead to 64 weeks of downtime and $2.1 billion in additional costs.
In the summer of 2016, the Department of Defense announced a new regulation that will require military contractors and subcontractors to buy electronics from the original parts manufacturers or authorized franchised distributors.
"When you start with credible sources, you are much less likely to get counterfeit parts," Dustin Todd, director of government affairs for the Semiconductor Industry Association, told EBN Online. "Pentagon-wide, the lowest price, technically acceptable, but when you are buying semiconductors you don't want the cheapest source, but rather the trusted source."
An Enterprise Labeling Solution is crucial for industries seeking to stop counterfeiting. By adding easily traceable barcodes to packaging, companies can track their products throughout the supply chain and ensure legitimacy. Also, centralized control of labeling combined with built-in business logic provides the ideal platform to implement serialization and other innovations to help monitor and track product as it traverses the supply chain.