Protecting Your Supply Chain from Counterfeits & Liability

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For a few years now, it has been clear that many contractors are not adding new suppliers to their approved vendors’ lists the way they once did. In adopting this policy, they fail to recognize the value of trustworthy, independent distributors. By neglecting the advantages that independent distributors can offer to the supply chain, these firms potentially do themselves a grave disservice. Despite contemporary rhetoric, trustworthy independent distributors are an essential part of the landscape of modern procurement.

In the procurement departments of modern firms, it is common knowledge that line-down situations do occur. While, in a perfect world, this would not be the case, it is an unfortunate business reality. When OEMs, OCMs, and authorized distributors cannot provide parts, procurement personnel are faced with a few choices. They can go without procuring components, leading to slowing or even halting production. Alternatively, they can attempt to locate and purchase the needed parts on the open market from independent distributors, choosing one of two options when doing so: They can purchase through “trusted suppliers” or through suppliers that have not been audited by either their organization or any accredited third-party assessments.  

For the purposes of this column, the latter category of distributors will be termed “un-vetted suppliers,” as they have not been vetted by a government organization, nor have they been certified to an internationally accredited counterfeit avoidance standard. The use of these un-vetted suppliers could potentially come with serious consequences. Recognizing the impact of utilizing such suppliers, in December of 2011, the National Defense Authorization Act (NDAA), Section 818 was signed into law. This law requires defense contractors and subcontractors to:

“Establish qualification requirements…pursuant to which the Department may identify trusted suppliers that have appropriate policies and procedures in place to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts.”

Read the full column here.

Editor's Note: This column originally appeared in the April 2014 issue of SMT Magazine.


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