Quality Management Systems and The Importance in Electronic Components Distribution

Quality management systems are the most important tool in an electronic components distributor's arsenal as it protects manufacturers from poorly performing or counterfeit chips. In this 3-part series, we're going to dive into how Sourceability's QMS became counterfeiters' worst nightmare.

Quality is critical in the electronic component supply chain. It is a standard measured against similar requirements for products with a uniform degree of excellence. Electronic components are held to some of the highest quality standards. If they weren’t, the risk of malperformance affecting a product in anything from coffee makers to pacemakers would increase exponentially.

Manufacturing a single semiconductor involves hundreds of steps that, in total, can take up to–and sometimes more than–three months. Original component manufacturers (OCMs) must tightly control everything from air quality, temperature, and the uniforms of the technical staff aiding in the creation of semiconductors. Even semiconductor transportation must be done with specially made containers and packaging, or the chips will degrade in performance efficiency or be rendered completely useless.  

Once a semiconductor has completed its journey from design to mass production, its odyssey to final product implementation is only just beginning. For many original equipment manufacturers (OEMs), contract manufacturers (CMs), original design manufacturers (ODMs), and more, awaiting these components at their final stop, quality is still not entirely assured.

Why not? Counterfeit components exist and have recently been skyrocketing in detection since the start of the 2020-2022 chip shortage. Long lead times due to chip scarcity from ravenous demand left many manufacturers in a difficult situation. Manufacturers could wait to purchase stock from their suppliers of choice once it became available. Because of this choice, these manufacturers would be forced to initiate production stalls or lower production output to continue operations. The second choice was to buy from different sources that advertised stock on hand.  

Those that chose the second option risked receiving an order of counterfeits.  

In an article by the Wall Street Journal, “What’s Worse Than a Chip Shortage? Buying Fake Ones,” published in 2021, author Stephanie Yang detailed how chip desperation turned some OEMs to platforms and distributors they normally wouldn’t give a second glance. Specifically, the article described a scenario in which a New York-based 3D-printer manufacturer, BotFactory, turned to AliExpress for semiconductor stock after going several weeks without chips and losing sales.  

The stock arrived in plastic wrap, not the anti-static packaging required for shipping components. To the surprise of no one, the chips didn’t work. But it was a chance BotFactory and many other OEMs were forced to take during the shortage. Over $500 billion was lost in global sales between 2020 and 2022 due to the chip shortage. Though, counterfeits aren’t just a danger that lurks during a shortage.  

The Semiconductor Industry Association estimates counterfeit electronics cost the semiconductor industry $7.5 billion annually. Worse still, an estimated 15% of spare or replacement semiconductors purchased by the U.S. Pentagon are counterfeit. The SIA obtained these statistics in a SASC Hearing in 2011. A year prior, in 2010, Stephanie McCloskey, an administrator for VisionTech Components, was sentenced for helping sell thousands of counterfeit components between 2007 and 2009. McCloskey and others sent some of these circuits to major U.S. defense contractors. McCloskey v. United States of America was the first federal case involving counterfeit integrated circuit trafficking. Counterfeiters haven’t stopped.  

In 2012, an investigation by the Senate Armed Services Committee found that over one million counterfeit electronic components had been used in equipment designed for the U.S. Air Force, Navy, and Special Operations. Despite the awareness of counterfeits slipping into highly strict supply chains, from the 2012 report, the risk has not diminished. If anything, counterfeiters have only become more sophisticated, and the chip shortage was a golden opportunity.

In February 2022, nuclear power plants found counterfeit components in their supply chain. BotFactory’s ill-gotten purchase occurred in the spring of 2021. It could take another few years for the true extent of the damage counterfeits caused during the chip shortage to be fully realized. The automotive chip shortage is still lingering, and with it, the chance for counterfeits to take advantage of OEMs and others in desperate need.  

Counterfeits and their risk to the semiconductor supply chain are why quality management is essential in electronic component distribution.  

What Establishes a QMS and How Continual Improvement is Crucial

Not all quality management systems (QMS) are created equal. Counterfeits can enter a supply chain, along with other bad actors, through poorly designed and maintained QMS. Counterfeits endanger more than the economy once they’ve successfully entered a supply chain or, worse, a product. There are at least seven types of counterfeit components: recycled, remarked, overproduced, out-of-spec, cloned, forged, and tampered. Each one is dangerous.

Research by the University of Florida discovered counterfeit components create security and reliability risks for critical systems or infrastructure. Their sale threatens safety and integrity within modern society by aiding terrorist or organized crime groups and reduces the incentive to develop new products and ideas which impacts worldwide innovation, economy, and employment. Counterfeit detection is a massive part of quality management systems as specialized testing can quickly weed out counterfeit or even damaged components.  

There are ways to quickly determine whether an electronic component distributor has a proper quality management system. The first step is taking the time to learn if a distributor is appropriately certified. Electronic component distributors should have ISO 9001:2015 certification and be able to present proper documentation of this certification by the appropriate governing body. ISO 9001 certification is only issued by third parties authorized by the Electrostatic Discharge Association (ESDA). The ESDA has a complete list of authorized bodies on its website for confirmation.  

What is ISO 9001? It is defined as the international standard that specifies requirements for a quality management system. First published in 1987 by the International Organization for Standardization (ISO), this global agency comprises national standard bodies for over 160 countries. ISO 9001 is the only standard in the series to which organizations can certify after demonstrating the ability to consistently provide products and services that meet customer and regulatory requirements. ISO 9001 certification can be held by any organization regardless of size or industry, and companies report that the ISO guidelines help them organize processes, improve process efficiency, and continually improve.  

Continually improving is vital to excellent quality management.  

While ISO 9001 QMS guidelines are excellent, those that do not improve upon the standardized basis can fall victim to counterfeits and human error more frequently. ISO 9001 is based on a plan-do-check-act methodology with process-oriented approaches to documenting and reviewing structure, responsibilities, and procedures to achieve excellent quality management. The latest revision to ISO 9001, the 2015 revision, emphasizes risk-based thinking to help enhance process approaches. While this sets a firm foundation for an organization’s QMS, it does not solely ensure quality.  

Most companies seeking to improve their QMS beyond ISO 9001 usually have further certifications. A significant, often overlooked certificate is ANSI/ESD S20.20-2007, a company-level certification based on a standard developed by ESDA. It is titled “Protection of Electrical and Electronic Parts, Assemblies, and Equipment (Excluding Electrically Initiated Explosive Devices).” This standard gives guidelines and test methods for controlling electrostatic discharge while handling electrical and electronic parts. It provides organizations with the proper tools for how to begin.  

It is crucial for electronic component distributors to possess ANSI/ESD S20.20 certification as it is specifically for companies that design, manufacture, package, test, and/or handle electronic devices or equipment sensitive to electrostatic discharge. The standard should help facilities develop, carry out and sustain an ESD control program to train employees handling electric/electronic devices and electrical grounding for persons handling and packaging these products.  

Electrostatic discharge can be highly detrimental to electronic component performance, even for quality products. If care isn’t taken during handling, then static discharge could render a component entirely useless. These certifications, both ANSI/ESD S20.20 and ISO 9001, are meant to create policies to prevent most cases of human error and counterfeit risk from occurring.

Further improvement by an organization wipes the threat out entirely.

Quality Management with Sourceability

As an electronic component distributor, quality comes first at Sourceability. More accurately, Sourceability as a market leader puts innovation that prioritizes quality. Sourceability’s quality management system is a multi-step process that combines our meticulous desire to achieve excellence with ISO 9001 and ANSI/ESD S20.20 standards. Internal audits are performed to confirm the accuracy and continuously improve our processes with the latest in counterfeit mitigation.  

This is an introduction to our quality management system. In future articles, we will further dive into the technology and other processes that we use for the millions components sold through our global marketplace, Sourcengine.  

When a component begins its journey through Sourceability’s quality management system, it starts by going through verification. Each component undergoes stringent verification and documentation to ensure our customers receive genuine and functional electronic components. This is accomplished by photographing the shipments that arrive at Sourceability’s facilities to create accurate and thorough records.  

These records are comprised firstly of part data, including manufacturer, MFG barcode label data, part and item numbers, country/countries of origin, RoHs and lead-free status, and moisture sensitive level (MSL). Records are also kept on the packaging type for components, whether it is a tube, tray, tape, reel, bag, or others. Furthermore, Sourceability’s team documents the packaging condition for the component, whether it is factory sealed, factory packed, or third-party. Because of the importance of avoiding electrostatic discharge and components, further information is documented. Some final pieces of information, included on Sourceability’s component records, are ESD packaging utilization, date codes, and intact moisture barrier bag  

Keeping accurate and detailed records helps keep track of possible fraudulent components from slipping in early on. As a member of the Electronic Resellers Association International (ERAI), Sourceability works tirelessly to detect and mitigate counterfeit risks by reporting those we discover through our QMS to the ERAI. Trained through ERAI’s courses, our staff utilize cutting-edge technology to weed out any counterfeits before they have a chance to end up in your products.

Sourceability’s rigorous inspection process implements a multi-step procedure to assure component quality. Performed by our global quality assurance team of experts, Sourceability’s battery tests include marking permanency examinations, blacktop, remarking, acetone and heated solvency, high-powered microscopy evaluation, chemical decapsulation, X-ray fluorescence (XRF) analysis, solderability assessment, dimensional inspection, acceptable quality level (AQL) level sampling, intact MBB seals.  

Several of these processes are how a distributor can test components to determine legitimacy. The most conventional counterfeit component detection techniques are external visual inspection, marking permanency and blacktop examination, electrical inspection, X-ray inspection, XRF, or scanning electron microscopy. Due to counterfeiters continuously improving their craft to produce more seamless counterfeits, further testing beyond conventional tests is often required. This is why Sourceability has numerous test methods with leading-edge quality control equipment.  

Our RPS Cadence Steam Aging System replicates the impact of 12+ months of storage to provide additional testing capability through precision-controlled temperature and steam. Another tool, Keyence IM-7020 Instant Measuring Equipment, can provide 99 different dimensions when measured, reporting, and verifying with automatic data reporting and inspection records, thereby eliminating operator error. Lastly, our Creative Electron TruView Prime X-Ray Inspection System allows for inspecting 100% of components tape-and-reel at record speed. Our professionals utilize this equipment to help quality performance by enabling our inspectors to identify even the subtlest defects in the most sophisticated counterfeit components.  

While there are several more critical tools within Sourceability’s quality management arsenal, the Creative Electron Inspection system was developed to meet the most stringent requirements of semiconductor failure analysis, BGA and QFN inspection, general quality inspection, and more. These tests leave even the most sophisticated counterfeits with no chance of avoiding detection.  

Beyond testing, our facilities are appropriately monitored to ensure compliance with our ANSI/ESD S20.20 certifications. What that means is Sourceability’s facilities are within strict ESD, temperature, and humidity standards to prevent degradation of components that enter. Our global locations feature ESD static dissipative flooring with ESD workstations in our inspection and laboratory areas. Climate control is utilized and monitored in real-time with Dickerson Wi-Fi-enabled data loggers. Should we need to access our data, our acquisition tools can operate anywhere in the world through an internet-connected device. That also goes for remote temperature and humidity management.  

As the cherry on top, team members undergo annual mandatory ESD awareness training to prevent human error. This only scratches the surface of our team’s continual push for supreme quality in every product.  

Sourceability’s quality management system is in a constant state of evolution. As counterfeiters improve, we strive to stay three steps ahead by embracing new, innovative tools to aid our experts. Our process is well documented, ensuring our franchised partners and buyers Sourceability will never settle for anything less than perfection in quality management. If you have a question about our quality management system and how we help others, you can chat with some of our experts today. If you are ready to buy or need help sourcing stock, send our staff at Sourcengine an RFQ.  

Join us next month for part two of Sourceability’s Quality Management System Deep Dive.

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