Combatting counterfeit electronics: The role of the Cloud in ensuring supply chain integrity

As a serious challenge to today’s global electronics supply chain, counterfeiting and grey market diversion of electronics components threaten the integrity of products for manufacturers. Counterfeits and obsolete electronics components create significant risks for manufacturers, customers, and compromise health and safety for consumers.  

In fact, the Electronics Reseller Association International (ERAI) Inc. reported that up to 768 counterfeit electronic components circulated the market in 2022, a year-on-year increase of 35%. At the same time, the statistics are also indicative of the dramatic increase in supply chain risks caused by counterfeits. To back that up, data reveals that counterfeit components cost the industry billions of dollars each year, and the fight against counterfeit components has been a focus of industry concern for decades. 

Clearly, new solutions are needed to improve electronics supply chain integrity and stability. 

Serialization: The most powerful weapon to fight counterfeiting 

The most powerful technology in the battle against counterfeiting is serialization. Unique serial numbers are designated to each product through complex algorithms that originate from a separate database integrated with the manufacturer’s production line. Serial numbers follow the product as it moves along the supply chain so it can be reliably traced back to the source. This form of Parent-Child serial number relationship provides a quick way to determine if the source is valid before it gets to its final destination, the customer. The serial number, which is a unique identification number similar to an automobile’s VIN number, can be checked against a database to verify the product’s authenticity from its origin.   

These numbers are extremely difficult, if not impossible, for counterfeiters to duplicate. Considering the number of stops a normal package makes along the supply chain, serialization gives manufacturers, distributors, and shippers a much higher rate of confidence in the integrity of their electronic components. However, most manufacturers are ill-prepared to adopt a serialization-based track-and-trace system due to a lack of standardization across the supply chain and not having a robust and automated labeling system in the first place. 

Cloud-based labeling solutions: The first line of defense 

The standardization of cloud-based barcode labeling solutions with approved suppliers and distributors can greatly diminish the likelihood of obsolete or counterfeit components making their way into the supply chain.  

Cloud-based labeling solutions allow for secure access by approved suppliers and partners, as well as offering many other benefits to manufacturers. They also prevent mislabeling through the use of automation while offering support for regulatory data, multiple languages, and customer-specific labeling requirements. In the end, labeling consistency and reliability is exponentially improved. 

Furthermore, with serialization technology added to cloud-based labeling solutions, an unprecedented degree of security in tracking electronic components can save billions of dollars and prevent other safety concerns and environmental disasters. 

Future-proofing the electronics supply chain 

The electronics industry is in an exciting phase of rapid expansion and change, and outdated labeling solutions are unable to keep pace with these dynamics. Fortunately, cloud-based labeling is one immediate way the electronics industry can take charge in response to this changing environment. Such an approach allows organizations to be more responsive to the critical nature of the current labeling challenges and improve the stability of global supply chains, while concurrently stemming the dangerous rising tide of counterfeits. 

Are you struggling with the growing issue of counterfeit electronics? Want to learn how you can secure your supply chain? Download our complimentary report today to learn more!