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Counterfeit Parts

Counterfeit Parts

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  • Discuss the industry Supply Chain ModelDiscuss the Needs of the IndustryDiscuss the Roles ofSystem IntegratorDesign Responsible Middle Tier OrganizationsNon Design Responsible Middle Tier OrganizationsDistributorsHistoricallyFastenersRaw MaterialsNow with outsourcing, moving to more complex Procurements at Lower Points in the Supply Chain
  • Risk Terminology Much More Prevalent in AS9100cAs Appropriate and Criticality Based Terminology also supports this process
  • Not Much Risk from the distribution PointRisk FromDesign Change with No Part Number ChangesMaterial Substitutions With No Part Number ChangesOCM Discontinuing Production of Specifically Qualified ComponentAudit Focus - OCMEngineering, Procurement, ManufacturingInspection & TestParts Control (Segregation, Bonded Storage, etc.)Lot TraceabilityLot Storage (Segregation by Lot Code)Part Handling & PackagingAudit Focus Procuring OrganizationsPart Specification-Engineering determination of Part meeting Design Need (Current Need, Future Need, Obsolescence, Etc.)Part Qualification Approach (Reliability, Material Baselining, etc.)Procurement Strategy (Current Need, Future Need, Obsolescence, Etc.)Oversight Approach on OCM – Risk Based Oversight of CM & Parts QualificationProcurement Flowdowns for CM, Change Notification, Sub Tier Supplier Sources, etc.)
  • Not Much Risk from the distribution PointRisk FromDesign Change with No Part Number ChangesMaterial Substitutions With No Part Number ChangesOCM Discontinuing Production of Specifically Qualified ComponentAudit FocusFranchise DistributorParts Control (Segregation, Bonded Storage, etc.)Lot MixingPart Handling & PackagingAudit Focus Procuring OrganizationsPart Specification-Engineering determination of Part meeting Design Need (Current Need, Future Need, Obsolescence, Etc.)Part Qualification Approach (Reliability, Material Baselining, etc.)Procurement Strategy (Current Need, Future Need, Obsolescence, Etc.)Oversight Approach on OCM – Risk Based Oversight of CM & Parts Qualification Procurement Flowdowns for CM, Change Notification, Sub Tier Supplier Sources, etc.)
  • Risk FromUnknown SourceLoss of Traceability/Lot ControlImpact to Design BaselineAudit FocusIndependent DistributorParts Control (Segregation, Bonded Storage, etc.)Lot MixingPart Handling & PackagingAudit Focus Procuring OrganizationsPart Specification-Engineering determination of Part meeting Design Need (Current Need, Future Need, Obsolescence, Etc.)Part Qualification Approach (Reliability, Material Baselining, etc.)Extensive Test & Inspection of Parts to ensure conformance of PartsComparison to known Good Parts.

Counterfeit parts Counterfeit parts Presentation Transcript

  • 1
    Counterfeit Parts Prevention & AS9100
    Atlanta, GA
    July 23, 2010
    Kevin Beard
    Auditor Workshop
    Atlanta, GA
    July 22-23, 2010
  • Presentation Intent
    Discuss Industry Problems with Counterfeit Parts
    Discuss Industry Efforts On Counterfeit Part Prevention
    Discuss Role of G-19, AS5553 and Other Standards
    Discuss the Roles of Various Groups within an Organization in Preventing Counterfeit Parts From Entering Product
    Discuss Methods for Auditing Counterfeit Parts Prevention (CPP) within AS 9100
    Internal Audits
    Supplier Audits
    2
  • What is a Counterfeit?
    a. Parts which do not contain the proper internal construction consistent with the ordered part. (die, manufacturer, wire bonding, etc.)
    b. Parts which have been used, refurbished or reclaimed, but are represented as new product.
    c. Parts which have different package style or surface plating/finish than the ordered parts.
    d. Parts which have not successfully completed the Original Component Manufacturer’s (OCM)’s full production and test flow, but are represented as completed product.
    e. Parts sold as upscreened parts which have not successfully completed upscreening.
    f. Parts sold with modified labeling or markings intended to misrepresent the parts’ form, fit, function, or grade.
    3
  • Counterfeit Parts Origin
    4
  • E-Waste
    Laborer de-soldering circuit boards over a coal-fired grill.  Rock in the box is where boards are hit to remove solder.  Pliers are used to pluck off chips which go into various buckets.  The boards are then tossed into a pile for open burning.
    © Basel Action Network 2006.
    5
    5
  • 6
    Counterfeit Overview
  • How Counterfeits Enter The Supply Chain
    7
    7
  • Counterfeit Overview
    8
    8
  • Counterfeit Overview
    9
    9
  • Counterfeit Overview- Impact -
    Counterfeiting accounts for more than 8% of global merchandise trade and is equivalent to lost sales of as much as $600B and will grow to $1.2T by 2009.
    Source: Dept of Commerce
    10
  • Due Diligence Is Essential
    11
    11
  • 12
    12
  • What We Know
    • There is a lack of dialogue between all organizations in the U.S. supply chain.
    • Companies and organizations assume that others in the supply chain are testing parts.
    • Lack of traceability in the supply chain is commonplace.
    • There is an insufficient chain of accountability within organizations.
    • Recordkeeping on counterfeit incidents by organizations is very limited.
    • Stricter testing protocols and quality control practices for inventories are required.
    • Most DOD organizations do not have policies in place to prevent counterfeit parts from infiltrating their supply chain.
    13
  • Supply Chain Awareness-Key Industry Associations
    Aerospace Industries Association (AIA) Counterfeit Parts Integrated Process Team (IPT)
    ERAI
    Independent Distributors of Electronics Association (IDEA)
    Semiconductor Industry Association (SIA) Anticounterfeiting Task Force (ACTF)
    US Chamber of Commerce Coalition Against Counterfeiting and Piracy (CACP)
    14
  • 15
    Industry Working TogetherG-19
  • G-19 The Way Forward
    16
    AS TBD
    AS 6081
    AS 5553
  • 17
  • AS5553 Focus
    Parts Availability
    Purchasing Process
    Supply Chain Traceability
    Procurement Contract Requirements
    Product Assurance
    Material Control
    Reporting
    18
  • AS 5553 -Purchasing Process
    Assess sources of supply
    Assess risk
    Interview
    Audit
    Alerts
    Make Risk Based Decisions
    Maintain approved supplier list
    19
  • 20
  • 21
  • 22
    The Way Forward
    Brokers
    Independent
    Franchise
    Commercial
    Defense
    Space
    Inspection
    Test
  • Auditing Counterfeit Parts Prevention within AS 9100
    Can We Audit For Counterfeit Parts Prevention within
    AS9100b?
    AS9100c?
    Explicit/Implied?
    What Parts of the Standard?
    23
  • Counterfeit Parts & The Industry Model
    Aerospace Industry Challenges
    Complex Products
    Complex Processes
    Small Quantity Purchases
    Long Duration Product Lifecycles
    Ever Changing Supply Chain
    Many OCMs Go Out Of Business Prior to the End of the Product Lifecycle
    Supply Chain Roles In Counterfeit Parts Prevention
    System Integrator
    Design Responsible Middle Tier Organizations
    Non Design Responsible Middle Tier Organizations
    Distributors
    24
  • Counterfeit Parts & The Industry Model
    DOD, NASA, Civil Aviation, Etc.
    Industry Supply Chain
    Design Resp
    Primes
    Primes
    Primes
    Sub-System
    More Complex Procurements In Supply Chain
    Not Design Resp
    Component
    Sub-Component
    Parts OCMs & Aftermarket
    Franchised Distributor
    Other Type Distributor
    Other Sources
    • Surplus
    • Open Market
    • Recyclers
    • Etc.
    • Stocking
    • Broker
    • Independent
    Counterfeit Parts Entering the Supply Chain
    25
  • AS 5553 and Risk
    Risk in the Aerospace Supply Chain
    Design Responsible Organizations
    Manufacturing Responsible Organizations
    Warehousing and Distribution Organizations
    Common Areas of Risk
    Source Selection
    Obsolescence
    Loss of Traceability
    Piece Part Configuration Changes without Notification
    Many Others
    Risk Model in AS5553
    Categorization of Risk
    Hierarchy of Risk Inputs & Mitigations per Category
    Application of Mitigations Based on Risk Input Hierarchy
    26
  • SAE AS5553 & Risk Hierarchy
    Risk Hierarchy in AS 9100c
    Highest Risk
    Supplier with
    GIDEP & ERAI Alerts
    _
    _
    _
    _
    OCM
    100%
    _
    _
    _
    _
    _
    Small %
    Life Test
    _
    _
    _
    _
    _
    1X Visual Inspection
    In Business < 1 Year
    & Unknown Financials
    _
    _
    _Supplier Audited & Approved
    Life
    Dependent
    _
    _
    _
    _
    _
    Non-Critical
    Design Lifecycle Approach
    Configuration Management
    ID/Traceability
    SCM Strategy
    Test & Insp Level
    Source of Supply
    Test / Insp
    Population
    Supplier Assessment
    Product & Application
    Lowest Risk
    ?? How Can This Approach Be Applied in AS 9100b/c ??
    27
  • Counterfeit Parts & The Industry Model
    AS9100 Applicability
    Parts Qualification Concept
    Creation of Design Baseline
    Configuration Management Concept
    Control of Design Baseline
    Application In Supply Chain
    Robust Procurement Strategy
    28
  • Counterfeit Parts & The Industry Model
    Needs of the Industry
    Ensure QMS Promotes Acquisition of Acceptable Parts for Integration into the Organizations Product
    Engineering
    Good Risk Identification, Analysis & Mitigation Decision Processes
    Design Specifications that identify parts from suppliers that provide parts with a high degree of Supply Chain Assurance
    Purchasing & Receipt Inspection
    Proper Source Usage to Prevent Inadequate Parts from entering the Organization’s Supply Chain
    Supplier Assurance of Proper Sub-Tier Source Usage
    Proper Evaluation Techniques to Prevent Inadequate Parts from entering the Production Process
    Production Planning & Inspection
    Proper Production Planning that Ensures Adequate I&T of Supplier Parts at the appropriate points in the Production Process
    29
  • 30
    Scenario 1
    Direct Purchase of OCM Parts
    DOD, NASA, Civil Aviation, Etc.
    Primes
    Primes
    Primes
    Control
    Sub-System
    Component
    Parts OCMs & Aftermarket
    Sub-Component
    Franchised Distributor
    Other Type Distributor
    Other Sources
    • Stocking
    • Broker
    • Independent
    • Surplus
    • Open Market
    • Recyclers
    • Etc.
    Where Are The Risks?
    Where Do We Focus The Audit
  • 31
    Scenario 2
    Purchase From Franchised Distributor
    DOD, NASA, Civil Aviation, Etc.
    Primes
    Primes
    Primes
    Control
    Sub-System
    CM?
    Component
    Parts OCMs & Aftermarket
    Sub-Component
    CM?
    Franchised Distributor
    Other Type Distributor
    Other Sources
    • Stocking
    • Broker
    • Independent
    COTC
    • Surplus
    • Open Market
    • Recyclers
    • Etc.
    Where Are The Risks?
    Where Do We Focus The Audit
  • 32
    Scenario 3
    Purchase From Other Type of Distributor
    DOD, NASA, Civil Aviation, Etc.
    Primes
    Primes
    Primes
    Control
    Sub-System
    Component
    Parts OCMs & Aftermarket
    Compliance
    Verification
    Sub-Component
    Franchised Distributor
    Other Type Distributor
    Other Sources
    Compliance
    Verification
    No COTC
    • Surplus
    • Open Market
    • Recyclers
    • Etc.
    • Stocking
    • Broker
    • Independent
    Where Are The Risks?
    Where Do We Focus The Audit
  • Common QMS Areas of CP Prevention Challenges
    Requirements Definition at Proposal/Contracts Phase
    Design Planning For Production and Full Life of Components
    Purchasing Strategy to Support Production and Full Life of Components
    Control of Subtier Suppliers for CM and Parts Qualification
    Identification & Traceability Requirements
    In House & Through Out Supply Chain
    Production Planning
    Inspection & Test of Components
    Does AS9100 Have Wording in These Areas??
    33
  • Audit Approach to CP Prevention
    Themed Approach to Audits
    Parts Qualification
    CM & Traceability Controls
    Outsourcing/Supply Chain Control
    Others??
    34
  • Parts Qualification Focused Audits
    Audit Focus - Procuring Organizations
    • Part Life Planning - Engineering determination of Part meeting Design Need (Current Need, Future Need, Obsolescence, Etc.)
    • Part Qualification Approach
    • Reliability, Material Baselining, Etc.
    • Lot Control Against Know Qualified Part
    • Procurement Strategy (Current Need, Future Need, Obsolescence, Etc.)
    • Procurement Flowdowns for :
    • Configuration Management, Change Notification, Sub Tier Supplier Sources, etc.
    • Source Integrity
    • Risk Impact on Initial Qualification and Acceptance Approach
    • Risk Evaluation on Future Procurement Impacts to Initial Qualification
    • Inspection Against Qualification Unite
    Where in AS9100 can you audit these activities??
    35
  • CM & Traceability Control Focused Audits
    Audit Focus - OCM
    • Engineering
    • Procurement
    • Manufacturing
    • Inspection & Test
    • Parts Control (Segregation, Bonded Storage, etc.)
    • Lot Traceability
    • Lot Storage (Segregation by Lot Code)
    • Part Handling & Packaging
    Audit Focus – Franchise Distributor
    Design Change with No Part Number Changes
    Material Substitutions By OCM With No Part Number Changes
    OCM Discontinuing Production of Specifically Qualified Component
    Strength of COTC Chain of Custody
    Parts Control (Segregation, Bonded Storage, etc.)
    Lot Storage (Segregation by Lot Code
    Part Handling & Packaging
    Where in AS9100 can you audit these activities??
    36
  • Outsourcing/Supply Chain Control Focused Audits
    Supportive Requirements In AS9100c
    7.2.2.e Risks have been identified (See 7.1.2)
    7.3.1 D&D Planning Shall consider the ability to produce, inspect, test and maintain the product
    7.3.3 The Organization shall Define ……. The drawings, parts lists, and specifications necessary to define the configuration and the design features of the product.
    7.4.1 The organization shall ensure that purchased product conforms to req’ts. The type and extent of control applied…..Dependent on the effect….. on subsequent product realization or the final product
    The Organization shall evaluate and select suppliers based on their ability to supply product in accordance with organ. Req’ts.
    7.4.1.f determine and manage the risk when selecting and using suppliers
    Various others
    37
  • AS Standards Used for CP Prevention
    DOD, NASA, Civil Aviation, Etc.
    Primes
    Primes
    Primes
    AS 9100 & AS 5553
    Sub-System
    Component
    Sub-Component
    Parts OEMs & Aftermarket
    Franchised Distributor
    Other Type Distributor
    Other Sources
    • Surplus
    • Open Market
    • Recyclers
    • Etc.
    • Stocking
    • Broker
    • Independent
    AS9120 & AS6081
    38
  • Challenge to Organization’s Auditors
    Review the AS9100c standard with a view towards
    The Industry Structure
    Supply Chain Structure Influence On Product
    The Challenges Facing the Industry
    Counterfeit Part Risk In Organization’s Supply Chain
    Our Ability to Interact with Organization’s during Audits with Regards to Counterfeit Parts Prevention
    Appropriate Interpretations & Application Of AS9100 In Our Audits
    39
  • Linking AS9100c to AS5553
    40
  • Linking AS9100c to AS5553
    41
  • Linking AS9100c to AS5553
    42
  • Linking AS9100c to AS5553
    43
  • In Closing
    Significant Challenges
    Industry Focus Ramping Up.
    What Part will We Play in Solving this Industry Problem?
    Your Input Is Invited
    Your Audit Efforts in this Area are Needed!
    44
  • Counterfeit Part Prevention
    Which Device Do You Want In The Airplane you are flying on?
    Counterfeit
    Known Good Part
    Questions?
    45