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DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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Rory King and Greg Jaknunas provide a briefing on expertise, tools, and best practices to enable anti-counterfeit, supply chain risk mitigation and problem-resolution capabilities within Parts Management. It will discuss methods integrating standards management, predictive and reactive obsolescence forecasting, and counterfeit databases and reporting mechanisms. It will illustrate how GIDEP and ERAI alerts, reports, and analysis can be integrated within traditional BOM obsolescence management processes. It will also illustrate how widely-deployed tools such as IHS Haystack, Standards Expert, and BOM Manager can enable and support efforts such as SAE AS5553 Counterfeit Electronic Parts; Avoidance, Detection, Mitigation, and Disposition. Attendees will learn methods to manage EOL cases, qualify and approve suppliers and parts, as well as methods to minimize cost and avoid risks from counterfeiting and obsolescence.

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DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

  1. 1. Integrated Methods of PredictiveObsolescence, Standards Management,and Counterfeit AvoidanceMr. Rory King, Design & Supply Chain, IHS Inc.Mr. Greg Jaknunas, Design & Supply Chain, IHS Inc.Thursday, September 01, 2011DMSMS Standardization 20113:30 PM to 5:00 PM Concurrent SessionsStandards and Databases for Counterfeit MitigationSession Chair: Mr. James Stein - Defense Standardization Program Office Copyright © 2011 IHS Inc. All Rights Reserved.
  2. 2. About IHS Inc. A Leading Information Provider • Founded in 1959: To provide product • Tens of thousands of customers and hundreds catalogs for aerospace engineers of thousands end-users in 180+ countries • Today: Leading global source of critical • Customers include nearly 70% of US information and insight dedicated to Fortune1000; 80% of Global Fortune 500 providing the most complete and trusted information and expertise Strong, Growing Products and Financials: • Public, NYSE: IHS (2005) • Employs 5,100 people in 30 countries • Revenue: $1.1B (2010) Areas of Expertise & Content Energy & Design & Defense, Risk & EHS & Country & Industry Commodities, Power Supply Chain Security Sustainability Forecasts Pricing & Cost 2Copyright © 2011 IHS Inc. All Rights Reserved.
  3. 3. Counterfeits by the NumbersMagnitude of a growing, global problem $1.7 Trillion = Total Value of Global Counterfeits & Pirated Products …and 2.5 Million = Jobs Lost or Not Created as a Result According to: Frontier Economics, 2011 $100 Billion or 10% = Amount of Global Technology Counterfeited According to: Alliance for Gray Market and Counterfeit Abatement and KPMG International, 2005 $1.4 Billion = The Retail MSRP of U.S. Counterfeit Seizures in 2010 According to: US Customs & Border Protection, US Immigration and Customs Enforcement, 2011 40% Impacted = Percent of U.S. Defense Impacted by Fake and/or Damaged Parts According to: U.S. Government Accountability Office (GAO) , 2010 26,794 = Counterfeit Electronics Incidents Reported from 2005-2008 According to: U.S. Department of Commerce, Bureau of Industry & Security, OTE, January 2010Copyright © 2011 IHS Inc. All Rights Reserved.
  4. 4. A Big Deal Risks to Company, Brand, and Performance What is the Impact of Counterfeit Electronics? (% Respondents) Undermine compliance claims 44%COMPANY Compromise device/product security 37% BRAND Expose contractual liability 42% & Expose product safety / legal liability 55% Damage brand / reputation 71%PERFORMANCE OPERATIONS Product launch delays 36% PRODUCT Production line stoppages 57% & Customer returns/recalls 67% Product quality/reliability failures 84% Increase product dev’pt time/costs 38% FINANCIAL Add to unit costs 51% Inhibit sales / customer sat 62% & Reduce expected product life 64% Increase warranty/maint. costs 65% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Source: Benchmarking Counterfeit & Inferior Grade Components, Supply & Demand Chain Executive & IHS Inc., April 2009 Copyright © 2011 IHS Inc. All Rights Reserved. 4
  5. 5. A Huge DealLoss of Life and National Security in Jeopardy Shown: DailyTech LLC, June 17, 2011 Source: Benchmarking Counterfeit & Inferior Grade Components, Supply & Demand Chain Executive & IHS Inc., April 2009Copyright © 2011 IHS Inc. All Rights Reserved. 5
  6. 6. Where are they going? U.S. Defense Electronic Parts Supply ChainCopyright © 2011 IHS Inc. All Rights Reserved. 6
  7. 7. No Supplier is Immune from Risk Lack of accountability and traceability allows counterfeits to enter “It is not uncommon, however, for authorized distributors to purchase parts outside of the OCM supply chain in order to fulfill customer requirements – 58 percent purchase parts from other sources. Specifically, 47 percent of authorized distributors procure parts from independent distributors, 29 percent procure from brokers, and 27 percent procure from Internet-exclusive sources.” Source: U.S. Department of Commerce, Office of Technology Evaluation, Counterfeit Electronics Survey, November 2009. 7Copyright © 2011 IHS Inc. All Rights Reserved.
  8. 8. Objective: Stay in the Trusted Supply Chain Best practices suggest a cascading level of degrees of risk 1. Direct from the Factory (OCM) 2. Approved Vendor / Manufacturer (AVL / AML) 3. Franchised and Authorized Distributors 4. Approved Independent Distributors & Brokers 5. ERAI Members 6. Low Risk and Qualified and Sources of Supply • valid sources of real stock, replacements, or alternate designs • from qualified government suppliers & manufacturers • with healthy supply chain, inventory, and lifecycle status • and vetted for bad supplier conduct or counterfeit part incidents ----------------------------------------------------------------------------------------Stop Below this line is high cost risk! Redesign and emulation are “lower” cost than (high risk) low cost unknown parts/sources.Copyright © 2011 IHS Inc. All Rights Reserved.
  9. 9. SAE International: G-19 committee develops set of standards to mitigate counterfeits IHS Standards Expert™ is a standards management solution providing desktop access to critical standards, specifications, codes, and related documents from professional societies, trade associations, and national/international standards developing organizations, with tools to manage standards across departments and divisions.Copyright © 2011 IHS Inc. All Rights Reserved. 9
  10. 10. Purchasing Process Shall… Assess risk… including reports from GIDEP and ERAICopyright © 2011 IHS Inc. All Rights Reserved. 10
  11. 11. Defense Adoption and Counterfeit Incidents GIDEP and ERAI are the counterfeit reporting entities DOD Adoption: August 31, 2009 Incidents: 91% of reports via ERAI Source: IHS Inc. 2011Copyright © 2011 IHS Inc. All Rights Reserved.
  12. 12. Link Between Counterfeits and Obsolescence Greatest risk from counterfeiters targeting obsolete parts As of May 2011, a minimum of 54% of IHS-ERAI reported counterfeit incidents were component lifecycle status of EOL/Lifebuy or Discontinued. Source: IHS Inc. 2011Copyright © 2011 IHS Inc. All Rights Reserved. 12
  13. 13. Obsolescence Mgt: Component Level Decision Support Research, Simulation, and Analysis Semiconductor and Component Lifecycle Component Management tools, like New Product Product Change End of Life (EOL) or Introduction (NPI) Notification (PCN) Discontinuance (PDN) IHS Parts Universe, combine LTB Notice obsolescence forecasts, lifecycle Maturity Growth Decline documentation, and other decision- LTB Introduction YTEOL Phase-out support information to automate and Today Obsolete improve obsolescence management. IHS 4DOnline Parts Universe provides single-point access to current technical, lifecycle, compliance and sourcing information for millions of electronic components from over 1000 suppliers. It includes cross-references, datasheets, and environmental documents .Copyright © 2011 IHS Inc. All Rights Reserved. 13
  14. 14. Obsolescence Mgt: Entire BOM/Platform Decision Support Research, Simulation, and Analysis Leveraging BOM Tools In PLM, PDM, Or In This Case IHS BOM Manager Helps Move From MPN To Affected BOM With BOM Identified, End Unit Exposure Can Be Correlated IHS BOM Manager monitors components in your bill of material for availability, regulatory compliance, obsolescence and counterfeit risks and cost reduction for a strategic, program-wide approach to component supply and logistics management .Copyright © 2011 IHS Inc. All Rights Reserved.
  15. 15. Disasters: What About the Unpredictable? Japan produces over 50% of silicon wafers globally Semiconductor Fabs Silicon Wafer Production 3 1 Aizu Wakamatsu, Fukushima A Shin-Etsu Kamisu, Ibaraki  ON Semiconductor (Logic)  Fujitsu (Analog, Discrete, Memory) B Shin-Etsu Nishigo, Fukushima  Texas Instruments (Analog, Optical) 2 Atsugi, Kanagawa C MEMC Utsunomiya, Tochigi 6  Mitsumi (Analog, Logic) D SUMCO Yonezawa, Yamagata 3 Goshogawara, Aomori  Renesas (Logic) 13 10 9 4 Gunma 11 Display Manufacturing D  ON Semiconductor (Discrete, Logic)  Hitachi Displays 1 Epicenter  Renesas (Analog, Discrete)  Panasonic LCD B 5 Hitachinaka, Ibaraki  Tohoku Pioneer  Renesas (Logic, Micro, Memory) 6 Iwate 4 14 Fukushima  Fujitsu (Micro, Memory) Resins, Films, Chemicals, 12 C  Toshiba (Discrete) Copper Clad Laminate… 5 8 A 7 Kof u, Yamanashi 7  Renesas (Analog, Logic, Micro) 2 Tokyo 8 Miho, Ibaraki  Texas Instruments (Analog, Optical) 9 Miyagi  Fujitsu (Logic, Micro)  Rohm (Discrete, Micro) 10 Sendai, Miyagi  Freescale (Logic) 11 Shiroishi, Miyagi Source: IHS iSuppli 2011  Sony Semiconductor (Logic) 12 Tsukuba, Ibaraki  Rohm (Discrete) 13 Tsuruoka, Yamagata  Renesas (Logic) 14 Utsunomiya, Tochigi  Matushita (Discrete)Copyright © 2011 IHS Inc. All Rights Reserved.
  16. 16. BOM Alert/Notification Tools Offer Warning Shown: Damaged tooling in the earthquake leads to obsolescence Source: IHS Inc. 2011 IHS PCNalert Daily updates of PCNs, End of Life Notices , Supply Chain and Regulatory Events, as well as Counterfeit Alerts for AVL parts to effectively monitor and quickly analyze potential sourcing and compliance risksCopyright © 2011 IHS Inc. All Rights Reserved.
  17. 17. Applying Product and Supply Chain Events Tools can aggregate all events that may impact your BOM/Program Counterfeit Design / Lifecycle Supply Chain Regulatory Counterfeit Part or Event Failures Compliance Event Supplier EventCopyright © 2011 IHS Inc. All Rights Reserved. 17
  18. 18. Immediate Counterfeit Notification Part, BOM, Program alert to potential counterfeit risk in the market Alert! IHS-ERAI solution includes value-added services, critical information, and risk assessment tools about thousands of parts and suppliers in order to profile potential counterfeit, substandard, and high risk parts.Copyright © 2011 IHS Inc. All Rights Reserved. 18
  19. 19. These go to Industry & Government Reports IHS exclusively provides single access to ERAI and GIDEP reports AUTHORIZATION REQUIRED AUTHORIZATION REQUIRED ERAI notices GIDEP noticesCopyright © 2011 IHS Inc. All Rights Reserved.
  20. 20. Who is ERAI? Exclusive Partner of IHS Leader in Counterfeit Part & Supplier Market Intelligence ERAI Offers Thousands of Supplier & Part Incidents An averages 25+ counterfeit incidents reported each weekReported Parts Reported SuppliersCopyright © 2011 IHS Inc. All Rights Reserved. 20
  21. 21. Detailed ERAI Counterfeit Incident Detail Part, Date Code, Lot Code, Photos, Documents, etc.Copyright © 2011 IHS Inc. All Rights Reserved. 21
  22. 22. Disqualify or Be Alerted to Bad Suppliers Past due invoices, wire fraud, faulty product for example…Copyright © 2011 IHS Inc. All Rights Reserved.
  23. 23. Used to Locate Potential Vetted Suppliers Independent Distributors and Brokers in good standing Assess Capabilities and Test Accordingly Industry Membership and Reporting? Quality System and Processes? Warranty and Insurance? Supplier Qualification and Purchasing Process? Non-Conforming Material Control? Inspection and Test? Efforts made to verify a Parts’ Authenticity before use?Copyright © 2011 IHS Inc. All Rights Reserved.
  24. 24. Who are trusted supply chain sources? What are all of the parts that meet our design criteria?OCM & Aftermarket Sources AVL/AML Approved Suppliers Authorized & Franchised Distributors Approved Independents & Vetted Open Market SourcesCopyright © 2011 IHS Inc. All Rights Reserved. 24
  25. 25. So, what alternate sources exist? What are all of the parts that meet our design criteria? Functionally Equivalent? Equivalent Parts? Upgrades? Downgrades? Technical Specifications? Compliance Information?Copyright © 2011 IHS Inc. All Rights Reserved. 25
  26. 26. Locate Cataloged Items in 3rd-Party Reference Sources What about Procurability and Qualification? Government catalogued parts and sourcing data for millions of items IHS Haystack Gold: Haystack Gold logistics management system contains parts and sourcing data for millions of items in the U.S. Federal Supply Catalog and over 70 U.S. Army, Navy, Air Force and related databases. Augment existing component and supplier data in internal PDM and ERP systems with XML and standard transport protocols Copyright © 2011 IHS Inc. All Rights Reserved.
  27. 27. Determine Procure-ability – Look for Problem Items Applying Procurement Intelligence Zeroing in on supply chain risk to BOM and PlatformsWeapon System Platform Metrics Total Platform NIINs 148,865 Matching Haystack Part Numbers 667,884 NIINs with Inventory 10,500 Parts found in QPD for all NIINs 490,134 NFTD Part Numbers for all NIINs 12,477 Part Number with 5/9 Status 159,838 NIINs with Status Other than Active 10,304 NIINs still in HSG 9464 Replacement NIINs in SegK 771 Inactive NIINs in NFTD 98 Total NIINs with No Data 69 Copyright © 2011 IHS Inc. All Rights Reserved. 27
  28. 28. Locate Cataloged Items in 3rd-Party Reference Sources Government Qualified Products Database (QPD) Parts and Vendors qualified to military specifications Copyright © 2011 IHS Inc. All Rights Reserved. 28
  29. 29. Find Qualified Sources of Supply Vendor Qualification Part Numbers, Stock Numbers ,and Vendors Meeting Criteria Copyright © 2011 IHS Inc. All Rights Reserved. 29
  30. 30. Find Government Qualified Parts, based on Military or IndustrySpecifications Qualification Requirements Analysis IHS Military Specs & Standards: Collection of over 107,000 documents from U.S. Department of Defense (DoD) and related government/federal agencies. DoD standards state requirements in performance terms in order to make maximum use of non- Government standards and commercial technologies, products, and practices. Copyright © 2011 IHS Inc. All Rights Reserved. 30
  31. 31. View Governing Specifications Qualification Requirement: MIL-PRF Copyright © 2011 IHS Inc. All Rights Reserved. 31
  32. 32. View Related Documents to the Governing Specification Single Access to Related Standards Cross-references to related documents Copyright © 2011 IHS Inc. All Rights Reserved. 32
  33. 33. Additional Qualification Requirements: Program Implementation of AS5553Copyright © 2011 IHS Inc. All Rights Reserved. 33
  34. 34. Agility thru Tools and Decision-SupportQuickly and efficiently mitigate counterfeits and part/supplier risk Supply Chain and Lifecycle Design Procurement Copyright © 2011 IHS Inc. All Rights Reserved. 34
  35. 35. “In skating over thin ice our safety is our speed” Ralph Waldo EmersonCopyright © 2011 IHS Inc. All Rights Reserved.
  36. 36. Thank YouMr. Rory King, Design & Supply Chain, IHS Inc.Rory.King@ihs.comMr. Greg Jaknunas, Design & Supply Chain, IHS Inc.Greg.Jaknunas@ihs.comCopyright © 2011 IHS Inc. All Rights Reserved.

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