Disclosures that counterfeit parts are still being sold on the "gray market" should serve as a reminder that anytime designers buy components outside of their authorized sales or distribution channel, they run the risk of purchasing counterfeit, defective or stolen parts. In mid-February, U.S. marshals announced that they had seized a large number of counterfeit Compaq memory boards and hard drives from reseller Hardware 4 Less. The products were being sold to other wholesalers for end-customer orders.

The key difference between franchised or authorized distributors and independent distributors or brokers is that franchised distributors buy directly from component suppliers while independents buy used parts or excess inventories and resell them to companies that need them. Although franchised distributors and OEMs have loudly vocalized their complaints about the gray market, it has always been a channel for dumping excess inventories.

But dealing with brokers can be risky. The gray market attracts disreputable resellers that gouge buyers on price in times of component shortages, or that deal intentionally in counterfeit, stolen or low-quality parts. In times of parts allocation and tight supply, activity in the independent distribution and broker channels takes off. Brokers may sell the allocated parts for 10, 20 or more times the components' actual value.

A group of companies including Compaq created the Anti-Gray Market Alliance (AGMA) in September to address the impact of the gray market. AGMA has reported that various studies show the gray market accounts for more than $20 billion in revenue each year. That's a big chunk of change.

I can't stress enough the need to know your suppliers and to establish close relationships with them, whether they are franchised or independent distributors or even online auction sites that bring buyers and sellers together to offload excess inventories. It's a very simple strategy that can spare companies major headaches.

To ensure that you're getting a quality part, ask questions. Ask the resellers if they perform in-house inspections or how they can ensure that you'll receive nondefective parts. Ask about the terms of their product warranties and guarantees. And don't forget to ask about their return policies for defective components.

Users don't want to be stuck with thousands of defective parts and a production line that remains idle.