Counterfeit parts

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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

    1. 1. 1<br />Counterfeit Parts Prevention & AS9100<br />Atlanta, GA<br />July 23, 2010<br />Kevin Beard<br />Auditor Workshop<br />Atlanta, GA<br />July 22-23, 2010<br />
    2. 2. Presentation Intent<br />Discuss Industry Problems with Counterfeit Parts<br />Discuss Industry Efforts On Counterfeit Part Prevention<br />Discuss Role of G-19, AS5553 and Other Standards<br />Discuss the Roles of Various Groups within an Organization in Preventing Counterfeit Parts From Entering Product<br />Discuss Methods for Auditing Counterfeit Parts Prevention (CPP) within AS 9100<br />Internal Audits<br />Supplier Audits<br />2<br />
    3. 3. What is a Counterfeit?<br />a. Parts which do not contain the proper internal construction consistent with the ordered part. (die, manufacturer, wire bonding, etc.) <br />b. Parts which have been used, refurbished or reclaimed, but are represented as new product.<br />c. Parts which have different package style or surface plating/finish than the ordered parts.<br />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.<br />e. Parts sold as upscreened parts which have not successfully completed upscreening.<br />f. Parts sold with modified labeling or markings intended to misrepresent the parts’ form, fit, function, or grade.<br />3<br />
    4. 4. Counterfeit Parts Origin<br />4<br />
    5. 5. E-Waste<br />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.<br />© Basel Action Network 2006.<br />5<br />5<br />
    6. 6. 6<br />Counterfeit Overview<br />
    7. 7. How Counterfeits Enter The Supply Chain<br />7<br />7<br />
    8. 8. Counterfeit Overview<br />8<br />8<br />
    9. 9. Counterfeit Overview<br />9<br />9<br />
    10. 10. Counterfeit Overview- Impact -<br /> 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.<br />Source: Dept of Commerce<br />10<br />
    11. 11. Due Diligence Is Essential<br />11<br />11<br />
    12. 12. 12<br />12<br />
    13. 13. What We Know<br />• There is a lack of dialogue between all organizations in the U.S. supply chain.<br />• Companies and organizations assume that others in the supply chain are testing parts.<br />• Lack of traceability in the supply chain is commonplace.<br />• There is an insufficient chain of accountability within organizations.<br />• Recordkeeping on counterfeit incidents by organizations is very limited.<br />• Stricter testing protocols and quality control practices for inventories are required.<br />• Most DOD organizations do not have policies in place to prevent counterfeit parts from infiltrating their supply chain.<br />13<br />
    14. 14. Supply Chain Awareness-Key Industry Associations<br />Aerospace Industries Association (AIA) Counterfeit Parts Integrated Process Team (IPT)<br />ERAI<br />Independent Distributors of Electronics Association (IDEA)<br />Semiconductor Industry Association (SIA) Anticounterfeiting Task Force (ACTF)<br />US Chamber of Commerce Coalition Against Counterfeiting and Piracy (CACP)<br />14<br />
    15. 15. 15<br />Industry Working TogetherG-19<br />
    16. 16. G-19 The Way Forward<br />16<br />AS TBD<br />AS 6081<br />AS 5553<br />
    17. 17. 17<br />
    18. 18. AS5553 Focus<br />Parts Availability <br />Purchasing Process<br />Supply Chain Traceability <br />Procurement Contract Requirements <br />Product Assurance<br />Material Control <br />Reporting<br />18<br />
    19. 19. AS 5553 -Purchasing Process<br />Assess sources of supply<br />Assess risk <br />Interview<br />Audit<br />Alerts<br />Make Risk Based Decisions<br />Maintain approved supplier list<br />19<br />
    20. 20. 20<br />
    21. 21. 21<br />
    22. 22. 22<br />The Way Forward<br />Brokers<br />Independent<br />Franchise<br />Commercial<br />Defense<br />Space<br />Inspection<br />Test<br />
    23. 23. Auditing Counterfeit Parts Prevention within AS 9100 <br />Can We Audit For Counterfeit Parts Prevention within<br />AS9100b?<br />AS9100c?<br />Explicit/Implied?<br />What Parts of the Standard?<br />23<br />
    24. 24. Counterfeit Parts & The Industry Model<br />Aerospace Industry Challenges<br />Complex Products<br />Complex Processes<br />Small Quantity Purchases<br />Long Duration Product Lifecycles<br />Ever Changing Supply Chain<br />Many OCMs Go Out Of Business Prior to the End of the Product Lifecycle<br />Supply Chain Roles In Counterfeit Parts Prevention<br />System Integrator<br />Design Responsible Middle Tier Organizations<br />Non Design Responsible Middle Tier Organizations<br />Distributors<br />24<br />
    25. 25. Counterfeit Parts & The Industry Model <br />DOD, NASA, Civil Aviation, Etc.<br />Industry Supply Chain<br />Design Resp<br />Primes<br />Primes<br />Primes<br />Sub-System<br />More Complex Procurements In Supply Chain<br />Not Design Resp<br />Component<br />Sub-Component<br />Parts OCMs & Aftermarket<br />Franchised Distributor<br />Other Type Distributor<br />Other Sources<br /><ul><li>Surplus
    26. 26. Open Market
    27. 27. Recyclers
    28. 28. Etc.
    29. 29. Stocking
    30. 30. Broker
    31. 31. Independent</li></ul>Counterfeit Parts Entering the Supply Chain<br />25<br />
    32. 32. AS 5553 and Risk <br />Risk in the Aerospace Supply Chain<br />Design Responsible Organizations<br />Manufacturing Responsible Organizations<br />Warehousing and Distribution Organizations<br />Common Areas of Risk<br />Source Selection<br />Obsolescence<br />Loss of Traceability<br />Piece Part Configuration Changes without Notification<br />Many Others<br />Risk Model in AS5553 <br />Categorization of Risk<br />Hierarchy of Risk Inputs & Mitigations per Category<br />Application of Mitigations Based on Risk Input Hierarchy<br />26<br />
    33. 33. SAE AS5553 & Risk Hierarchy<br />Risk Hierarchy in AS 9100c<br />Highest Risk<br />Supplier with<br />GIDEP & ERAI Alerts<br />_<br />_<br />_<br />_<br />OCM<br />100%<br />_<br />_<br />_<br />_<br />_<br />Small %<br />Life Test <br />_<br />_<br />_<br />_<br />_<br />1X Visual Inspection<br />In Business < 1 Year <br />& Unknown Financials<br />_<br />_<br />_Supplier Audited & Approved<br />Life<br />Dependent<br />_<br />_<br />_<br />_<br />_<br />Non-Critical<br />Design Lifecycle Approach<br />Configuration Management<br />ID/Traceability<br />SCM Strategy<br />Test & Insp Level<br />Source of Supply<br />Test / Insp<br />Population<br />Supplier Assessment<br />Product & Application<br />Lowest Risk<br />?? How Can This Approach Be Applied in AS 9100b/c ??<br />27<br />
    34. 34. Counterfeit Parts & The Industry Model<br />AS9100 Applicability<br />Parts Qualification Concept<br />Creation of Design Baseline<br />Configuration Management Concept<br />Control of Design Baseline<br />Application In Supply Chain<br />Robust Procurement Strategy<br />28<br />
    35. 35. Counterfeit Parts & The Industry Model<br />Needs of the Industry<br />Ensure QMS Promotes Acquisition of Acceptable Parts for Integration into the Organizations Product<br />Engineering<br />Good Risk Identification, Analysis & Mitigation Decision Processes<br />Design Specifications that identify parts from suppliers that provide parts with a high degree of Supply Chain Assurance<br />Purchasing & Receipt Inspection<br />Proper Source Usage to Prevent Inadequate Parts from entering the Organization’s Supply Chain<br />Supplier Assurance of Proper Sub-Tier Source Usage<br />Proper Evaluation Techniques to Prevent Inadequate Parts from entering the Production Process<br />Production Planning & Inspection<br />Proper Production Planning that Ensures Adequate I&T of Supplier Parts at the appropriate points in the Production Process<br />29<br />
    36. 36. 30<br />Scenario 1<br />Direct Purchase of OCM Parts<br />DOD, NASA, Civil Aviation, Etc.<br />Primes<br />Primes<br />Primes<br />Control<br />Sub-System<br />Component<br />Parts OCMs & Aftermarket<br />Sub-Component<br />Franchised Distributor<br />Other Type Distributor<br />Other Sources<br /><ul><li>Stocking
    37. 37. Broker
    38. 38. Independent
    39. 39. Surplus
    40. 40. Open Market
    41. 41. Recyclers
    42. 42. Etc.</li></ul>Where Are The Risks?<br />Where Do We Focus The Audit<br />
    43. 43. 31<br />Scenario 2<br />Purchase From Franchised Distributor<br />DOD, NASA, Civil Aviation, Etc.<br />Primes<br />Primes<br />Primes<br />Control<br />Sub-System<br />CM?<br />Component<br />Parts OCMs & Aftermarket<br />Sub-Component<br />CM?<br />Franchised Distributor<br />Other Type Distributor<br />Other Sources<br /><ul><li>Stocking
    44. 44. Broker
    45. 45. Independent</li></ul>COTC<br /><ul><li>Surplus
    46. 46. Open Market
    47. 47. Recyclers
    48. 48. Etc.</li></ul>Where Are The Risks?<br />Where Do We Focus The Audit<br />
    49. 49. 32<br />Scenario 3<br />Purchase From Other Type of Distributor<br />DOD, NASA, Civil Aviation, Etc.<br />Primes<br />Primes<br />Primes<br />Control<br />Sub-System<br />Component<br />Parts OCMs & Aftermarket<br />Compliance<br />Verification<br />Sub-Component<br />Franchised Distributor<br />Other Type Distributor<br />Other Sources<br />Compliance<br />Verification<br />No COTC<br /><ul><li>Surplus
    50. 50. Open Market
    51. 51. Recyclers
    52. 52. Etc.
    53. 53. Stocking
    54. 54. Broker
    55. 55. Independent</li></ul>Where Are The Risks?<br />Where Do We Focus The Audit<br />
    56. 56. Common QMS Areas of CP Prevention Challenges <br />Requirements Definition at Proposal/Contracts Phase<br />Design Planning For Production and Full Life of Components<br />Purchasing Strategy to Support Production and Full Life of Components<br />Control of Subtier Suppliers for CM and Parts Qualification<br />Identification & Traceability Requirements<br />In House & Through Out Supply Chain<br />Production Planning<br />Inspection & Test of Components<br />Does AS9100 Have Wording in These Areas??<br />33<br />
    57. 57. Audit Approach to CP Prevention <br />Themed Approach to Audits<br />Parts Qualification<br />CM & Traceability Controls<br />Outsourcing/Supply Chain Control<br />Others??<br />34<br />
    58. 58. Parts Qualification Focused Audits <br />Audit Focus - Procuring Organizations<br /><ul><li>Part Life Planning - Engineering determination of Part meeting Design Need (Current Need, Future Need, Obsolescence, Etc.)
    59. 59. Part Qualification Approach
    60. 60. Reliability, Material Baselining, Etc.
    61. 61. Lot Control Against Know Qualified Part
    62. 62. Procurement Strategy (Current Need, Future Need, Obsolescence, Etc.)
    63. 63. Procurement Flowdowns for :
    64. 64. Configuration Management, Change Notification, Sub Tier Supplier Sources, etc.
    65. 65. Source Integrity
    66. 66. Risk Impact on Initial Qualification and Acceptance Approach
    67. 67. Risk Evaluation on Future Procurement Impacts to Initial Qualification
    68. 68. Inspection Against Qualification Unite</li></ul>Where in AS9100 can you audit these activities??<br />35<br />
    69. 69. CM & Traceability Control Focused Audits <br />Audit Focus - OCM<br /><ul><li>Engineering
    70. 70. Procurement
    71. 71. Manufacturing
    72. 72. Inspection & Test
    73. 73. Parts Control (Segregation, Bonded Storage, etc.)
    74. 74. Lot Traceability
    75. 75. Lot Storage (Segregation by Lot Code)
    76. 76. Part Handling & Packaging</li></ul>Audit Focus – Franchise Distributor<br />Design Change with No Part Number Changes<br />Material Substitutions By OCM With No Part Number Changes<br />OCM Discontinuing Production of Specifically Qualified Component<br />Strength of COTC Chain of Custody<br />Parts Control (Segregation, Bonded Storage, etc.)<br />Lot Storage (Segregation by Lot Code<br />Part Handling & Packaging<br />Where in AS9100 can you audit these activities??<br />36<br />
    77. 77. Outsourcing/Supply Chain Control Focused Audits<br />Supportive Requirements In AS9100c<br />7.2.2.e Risks have been identified (See 7.1.2)<br />7.3.1 D&D Planning Shall consider the ability to produce, inspect, test and maintain the product<br />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.<br />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<br />The Organization shall evaluate and select suppliers based on their ability to supply product in accordance with organ. Req’ts.<br />7.4.1.f determine and manage the risk when selecting and using suppliers<br />Various others<br />37<br />
    78. 78. AS Standards Used for CP Prevention<br />DOD, NASA, Civil Aviation, Etc.<br />Primes<br />Primes<br />Primes<br />AS 9100 & AS 5553<br />Sub-System<br />Component<br />Sub-Component<br />Parts OEMs & Aftermarket<br />Franchised Distributor<br />Other Type Distributor<br />Other Sources<br /><ul><li>Surplus
    79. 79. Open Market
    80. 80. Recyclers
    81. 81. Etc.
    82. 82. Stocking
    83. 83. Broker
    84. 84. Independent</li></ul>AS9120 & AS6081<br />38<br />
    85. 85. Challenge to Organization’s Auditors<br />Review the AS9100c standard with a view towards<br />The Industry Structure<br />Supply Chain Structure Influence On Product<br />The Challenges Facing the Industry<br />Counterfeit Part Risk In Organization’s Supply Chain<br />Our Ability to Interact with Organization’s during Audits with Regards to Counterfeit Parts Prevention<br />Appropriate Interpretations & Application Of AS9100 In Our Audits<br />39<br />
    86. 86. Linking AS9100c to AS5553 <br />40<br />
    87. 87. Linking AS9100c to AS5553 <br />41<br />
    88. 88. Linking AS9100c to AS5553 <br />42<br />
    89. 89. Linking AS9100c to AS5553 <br />43<br />
    90. 90. In Closing<br />Significant Challenges<br />Industry Focus Ramping Up.<br />What Part will We Play in Solving this Industry Problem?<br />Your Input Is Invited<br />Your Audit Efforts in this Area are Needed!<br />44<br />
    91. 91. Counterfeit Part Prevention<br />Which Device Do You Want In The Airplane you are flying on?<br />Counterfeit<br />Known Good Part<br />Questions?<br />45<br />

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