Component qualification Faulty components: Were 500,000 car recalls in South Korea avoidable?

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Could half a million car recalls in South Korea have been prevented? We talked about this with Zeev Efrat, CEO of Cybord. His company provides AI and Big Data software for component qualification.

You read that correctly: In South Korea, according to the Korean Ministry of Transport, 500,000 vehicles were recalled in 2022, across all brands, not just the Korean Hyundai and Kia, but also models from Tesla, Mercedes Benz, VW, or PLINE. The reason: faulty components. We asked Cybord CEO Zeev Efrat at electronica for possible solutions to this growing dilemma.

Mr. Efrat, recalls in the automotive industry occur from time to time. What does this have to do with the situation in the components market?

Zeev Efrat: The last three years have been characterized by a unique supply chain disruption. After a year of weak demand in 2019 and a further pandemic-related cooling in the first half of 2020, the components market completely overheated, driven by a similarly unique mix of pent-up demand, bad news about global problems in transport logistics, and not least panic orders. The classic bullwhip effect.

And what happens now?

As Akhil Oltikar, the CEO of Omnics, recently explained excellently in the well-known "Supply Chain Intelligence Podcast", it will take time for the oscillations of the bullwhip effect to settle. And combined with the uncertainty around further growth factors, I find it difficult to make concrete predictions.

And why do you attribute this specific recall issue with electronic components to the situation in the components market?

When demand skyrockets and production cannot keep up, shortages occur. Critical components such as microcontrollers suddenly become unavailable, and buyers explore various avenues to secure supplies. This also increases the risk of purchasing faulty parts, which in turn lead to problems in the final product. This happened in many areas and, naturally, as seen in the example of Korea, in the automotive industry as well.

Can this be avoided or at least minimized?

As we have increasingly heard here at electronica, many OEMs are pursuing a so-called Zero-Trust strategy for their supply chain, not just temporarily but permanently. This doesn't mean that they don't trust a specific supplier, but that a 100 percent product quality is only ensured if every purchased product is inspected before assembly.

What is the percentage of defective, old, poorly stored, or even counterfeit parts?

It's not possible to determine the exact number, but it doesn't matter because even one problematic part is a danger. Zero-Trust has become part of the vocabulary among supply chain specialists or operations managers.

And how does Zero-Trust work in practice?

Components are considered unvalidated until they have undergone a 100 percent in-house inspection. In our case, this is done with an AI-based solution. This can take place at goods receipt, at the assembly line, or right after assembly. It is crucial that no faulty subsystem finds its way into a final product, such as a car. Zero trust ideally means lifelong traceability, with surgical precision. Ultimately, this even leads to an improvement in productivity.

Do you believe that this method is feasible for all companies and can prevent failures like the one in Korea?

I am convinced that in this case, the problem could have been completely avoided with a Zero-Trust strategy, or the scale of the recall could have been significantly reduced. So far, traceability has been managed predominantly through documentation and statistics, with the corresponding gray areas. In case of doubt, a recall is initiated to contain the problem before it leads to the worst-case scenario in the finished product, both cost-wise and in terms of safety. With visual inspection, you can pinpoint the error much more precisely and perhaps reduce it to 1 percent or 5,000 faulty parts, and that before a recall becomes necessary.

Do you believe that the problem with defective parts will increase?

Production and trade of components are global and complex, with few authorized and many gray channels. Those who engage in global sourcing must anticipate problems or should not take any risks regardless. Therefore, availability alone should not be the measure since there is a lot at stake, be it financially or concerning the reputation of companies. Surgical precision traceability and Zero-Trust should thus become the gold standard in every production.

Background:Cybord provides AI and Big Data software that inspects, qualifies, and tracks every component and electronic board. At Cybord, 100 percent of components are inspected, offering surgical traceability, thus excluding the use of counterfeit, damaged, or tampered components. (jw)