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The Not-So-Simple Task of Traceability

| September 24, 2015 | 1 Comment
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MYLabel_Software_580_2 (300x155)Traceability: it seems like such a simple solution. If a component is assigned an identifier as it leaves the factory that identifier will follow it throughout the supply chain. At any point in the process, the component’s ID can be checked against a database to verify the part is what it claims to be.

There are more accessible identification processes available than ever before. RFID tags are small enough to be attached to many types of components. Plant-DNA-based inks are also being used on electronics. So why is traceability—recognized as a key strategy in anti-counterfeiting efforts—still so challenging?

One reason is cost. Although RFID tags have come down to just pennies per tag, those pennies add up if hundreds of thousands of devices are rolled off a production line. Instead, most component makers identify devices by lot numbers and by date codes. This data is sufficient for most tracking purposes.

The DNA process requires licensing and equipment that is unique to the solution. Although the cost is not prohibitive, it is expensive and the solution has not been adopted across the electronics industry.

Additionally, sourcing practices have become so complicated they are defying tracking. In order to take advantage of volume pricing, OEMs and EMS providers order more parts than they may need. If those parts are not used they begin to lose their value or begin to deteriorate. OEMs and EMS will often resell these components to companies known as independent distributors and brokers. Independent distributors help companies that are looking for parts find them and take excess off a company’s books; brokers may buy parts at a discount with the hopes of a product shortage that will drive prices up. These companies, in turn, transact with other OEMs, EMS, other distributors and online marketplaces.

Component lots rarely stay together as they pass through the supply chain. Even tubes or reels of parts are sometimes broken up. Once a part is taken out of its original packaging a number of things can bend a lead or corrode metal. The risk of a damaged part increases the more it is handled. Robin Gray, chief operating officer of the Electronics Components Industry Association (ECIA) writes in Traceability Doesn’t Tell the Whole Story: “For each stop in the traceability chain, customers often expect proof that the part was properly packaged, stored and handled as well as having no malware installed. Who handled the part is important. If the part never leaves the authorized supply chain, there is less likelihood of it being counterfeited, altered, used or damaged.”

Devices may also be renamed or renumbered as they pass though the supply chain. EMS companies will often assign their own identification number to volumes of commodities such as DRAM that may have been sourced from different vendors. While original part numbers are supposed to accompany components throughout their life, that doesn’t always happen. “What evidence is sufficient to show the chain of custody of a part?” ECIA’s Gray writes. “Paper documents are clearly not the answer, since paper documents are easily counterfeited. One technique used by counterfeiters is to buy a small quantity of parts in order to copy the legitimate documentation accompanying the genuine parts obtained from an authorized source. Other traceability techniques and methodologies also run the risk of being counterfeited.”

Since independents buy and sell from many types of companies counterfeit components often slip into boxes and lots that change hands often. Counterfeiters often take authentic parts and remark them to increase their value. Conscientious independents have gone to great lengths to inspect incoming devices and have invested millions of dollars in high-level test equipment. Nevertheless, small fly-by-night companies inevitably slip into the supply chain. Several high-profile cases have been prosecuted by the U.S. Department of Justice. In nearly every case, businesses were set up under a variety of different names to shield the counterfeiters’ real intent (see Anatomy of an Electronics Counterfeit Operation and Man Admits Smuggling Components to Russia).

The ECIA and its members have emphasized that traceability can be guaranteed when components are sourced through authorized distribution. Online marketplaces such as Verical.com, a division of Arrow Electronics Inc., also emphasize the traceability and warranty guarantees associated with authorized distribution. The risk of acquiring counterfeit devices is greatly reduced when buying through authorized channels, and traceability is at the heart of most anti-counterfeiting efforts.

But even the ECIA admits it is not the whole story. “Finally, traceability does not verify that a part is genuine; properly packaged, stored and handled; free of malware; or unused,” Gray writes. “Under the best of circumstances, traceability only shows where the part has been. The lowest risk for customers is to buy the part from the shortest authorized supply chain, i.e., buying directly from the component manufacturer or the manufacturer’s authorized distributor.”

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Category: News Analysis

About the Author ()

Barbara Jorgensen is managing editor of Electronics Purchasing Strategies. She can be reached at barbara.jorgensen@epsnewsonline.com

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