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DMSMS 2012 - By Joining Forces the Procurement of Counterfeit Parts can be Avoided
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DMSMS 2012 - By Joining Forces the Procurement of Counterfeit Parts can be Avoided






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DMSMS 2012 - By Joining Forces the Procurement of Counterfeit Parts can be Avoided Presentation Transcript

  • 1. By Joining Forces the Procurement ofCounterfeit Parts can be AvoidedKristal SniderVice President, ERAI3899 Mannix DriveSte. 421-422Naples, FL 34114(p) 239-261-6268(e) ksnider@erai.com(w) www.erai.com© 2012 ERAI Inc. 1
  • 2. Come together for united work oractionCollaborateCooperateGet togetherTeam upWhat does joining forces mean?© 2012 ERAI Inc. 2
  • 3. The United States GovernmentDepartment of Defense (DOD) agenciesSystems IntegratorsGovernment Prime ContractorsThe Contractor’s SubcontractorsOriginal Component Manufacturers (OCM)Authorized Suppliers that ONLY sell OCM StockAuthorized Suppliers that Sell OCM and Open Market StockAftermarket ManufacturersIndependent Distributors with in-house inspectionIndependent Distributors without in-house inspectionBrokers with no stock and no in-house capabilitiesTest Facilities with ISO17025 Certification and DSCC ApprovalTest Facilities with no certificationsTrade GroupsStandards Development OrganizationsThe Players© 2012 ERAI Inc. 3
  • 4. November 8, 2011 the SASC held a hearing to “explore the problemof counterfeit electronic parts infiltrating critical defense systemsand the risk those parts pose to such systems.”November 17, 2011- A bipartisan amendment to the NDAA FY’12 wasintroduced to “stop the importation of counterfeit electronic partsinto the United States”, address weaknesses in the defense supplychain and promote the adoption of counterfeit avoidance practicesby DOD and the defense industry.December 31, 2011- President Obama signed a revised version of theamendment which was passed as Section 818 of the NDAA whichspecifically seeks to avoid, detect and mitigate the effects ofcounterfeit electronic parts.4
  • 5. Section 818- A Holistic ApproachSourcingSupplier DebarmentPersonnel TrainingProduct TraceabilityInspection & TestingReportingMaterial Control & DispositionToughen Enforcement of Anti-counterfeiting LawsEmpower CBP (unredacted data)Assign Financial ResponsibilityToughen Criminal Penalties© 2012 ERAI Inc. 5
  • 6. No clear definitionNo clear path given to achieve “trusted supplier”statusPotentially an unreasonable burden will be placedupon “trusted suppliers” if there is an escape.“Trusted Supplier”6
  • 7. ARP61781.) Desktop check list saves your company time andmoney.2.) On site inspection check list ensures auditors areconsistent during evaluation and supplier rating.ERAI Recommendation –How to Identify “Trusted” Open Market Suppliers© 2012 ERAI Inc. 7
  • 8. Identify recommended standardsNo supply chain intermediary is immune tocounterfeit partsSpecify approved accreditation bodiesIndustry Standards© 2012 ERAI Inc. 8
  • 9. 9Material Control1. Definition: “Counterfeit” & “Suspect Counterfeit”2. Objective evidence required is unclear3. Need more guidance relative to how and how long tocontrol suspect material4. Third party verification process
  • 10. DoD should look to AS5553 and AS6081DoD should provide guidance to strengthen theseexisting, published standards in order to meet itsobjectiveDoD should consider how it can protect organization’sthat follow its directives (e.g. Safe Harbor)© 2012 ERAI Inc. 10ERAI Recommendation-Material Control
  • 11. © 2012 ERAI Inc. 11Reporting
  • 12. 9-18-2002- VisionTech joined ERAI11/16/2004 - 09/25/06- 11 complaints lodged by 10 different distributorsFaulty Product = 6Substandard Product = 3Suspect Counterfeit = 2January 2007 – Policies strengthenedMultiple complaintsMisrepresentation of origin of goods© 2012 ERAI Inc. 12Reporting
  • 13. Between January – October 200710 Complaints filed by 7 different suppliersComplaints Dismissed = 4Complaints Reported = 6VisionTech’s membership was revoked© 2012 ERAI Inc. 13Reporting-Learning from mistakes
  • 14. 3,082 out of 3,263 orders placed were with knowncounterfeit suppliers in China.Sales exceeded $15.8 million.70% of the goods stored in VisionTech’s warehouse at thetime of the raid were counterfeit.876 customers in the US – 234 Non-US based- DOJestimates 70-95% of the product bought from VisionTechby these businesses may have been counterfeit.59,000 parts marked as military-grade.© 2012 ERAI Inc. 14VisionTech SalesJanuary 1, 2007 - June 7, 2010
  • 15. If you see something, say something!© 2012 ERAI Inc. 15Reporting
  • 16. Stay InformedJoin- ERAI: Counterfeit Part Avoidance, Detection,Disposition and ReportingFollow ERAI on Twitter (@ERAI_Inc)Like ERAI on Facebook© 2012 ERAI Inc. 16