This webcast covered counterfeiting, obsolescence, and supply chain risk. Attendees were encouraged to complete a survey at the end for a chance to win an Amazon Kindle. The speakers discussed predictive obsolescence and how applying predictive forecasting tools like life-cycle codes and years to end of life estimates can help mitigate the effects of component obsolescence. Examples of counterfeit incidents were provided and it was noted that over 50 counterfeiting incidents had been reported in the last 14 days. Best practices for avoiding supply chain risk through vetting suppliers and qualifying parts from trusted sources within the approved supply chain were also discussed.
Micro-Scholarship, What it is, How can it help me.pdf
IHS Webcast - Counterfeiting, Obsolescence, and Risk
1. Welcome to Today’s Webcast
Counterfeiting, Obsolescence, and Risk
Solutions to mitigate cost, risk, theft and security disruptions in your supply chain
April 7, 2010
3. Supply & Demand Chain Executive
The executive’s user manual for
successful supply and demand chain
transformation, providing analysis,
viewpoints and case studies to steer
executives and supply management
professionals through the world of
supply and demand chain enablement
to gain competitive advantage.
www.SDCExec.com
twitter.com/SDCExec
www.linkedin.com/in/andrewkreese
4. An Era of Counterfeiting
“We estimate that, based on
2008 data, the total global
economic value of counterfeit
and pirated products is as
much as $650 billion every
year…
…estimates imply that the
global value of counterfeit and
pirated products could be up to
$1.77 trillion by 2015.”
Frontier Economics, February 2011
4
5. Supply Chain Risk is High
SC BENCHMARK STUDY
What do counterfeits do
Increase warranty/maint. costs 65%
Reduce expected product life 64%
Inhibit sales / customer satisfaction 62%
Add to individual unit costs 51%
Increase development time/costs 38%
What do counterfeits cause?
Product quality/reliability failures 84%
Customer returns/recalls 67%
Production line stoppages 57%
Product launch delays 36%
What do counterfeits impact?
Damage brand / reputation 71%
Product safety / legal liability 55%
Expose contractual liability 42%
Compromise security 37%
Undermine compliance claims 44% “Jeopardize our missions
Source: “Benchmarking Counterfeit & Inferior Grade Components”,
Supply & Demand Chain Executive, 2009
and soldiers safety.”
6. Industry Fights Back
SAE International forms G-19 Committee that leads to AS5553
Purpose
This SAE Aerospace
Standard standardizes
practices to:
maximize availability of
authentic parts,
procure parts from reliable
sources,
assure authenticity and
conformance of procured
parts,
control parts identified as
counterfeit,
and report counterfeit parts
to other potential users
and Government
investigative authorities.
7. GIDEP and ERAI Counterfeit Reports
90% of all incidents reported by ERAI
SAE AS5553 Names Two
Primary Sources: ERAI and Reported Counterfeit Incidents
GIDEP
8. Congress Investigation Launched
“The presence of counterfeit
electronic parts in the Defense
Department’s supply chain is a
growing problem that government
and industry share a common
interest in solving.”
Carl Levin, D-Michigan, and
Sen. John McCain, R-Arizona
March 2011
9. Effects of the Japan Crisis
Panic Buying, Shortages, and Pricing Issues?
Source: IHS iSuppli 2011
10. Brokers Gone Wild… Already?
Already, calls into brokers are finding big increases in
pricing, with pricing increases of more than 100% seen
by several of the sourcing pros I spoke to this past week.
One of the challenges in using brokers in these emergency
situations is that the initial calls themselves can serve to
intensify pricing pressure.
As such, VPs and Directors of Direct would be very wise
to control, aggregate, and actively manage all calls to
brokers in an attempt to avoid what could be called “self-
competition.”
Brokers Wild – Pressure on Japanese Supply Chain Intensifies
Posted by Andrew Bartolini on April 1st, 2011
CPO Rising
11. Today’s Speakers
Mark Snider
President
ERAI, Inc
Daniel Bronstein
Solution Engineer, Electronic
Products & Solutions Group
IHS
11
12. Predictive
Obsolescence
Danny Bronstein
Solution Engineer - Direct Parts
Electronic Products & Solutions
Phone: +1 909 481 4150
Email: daniel.bronstein@ihs.com
INFORMATION
+
INSIGHT
=
KNOWLEDGE
33. Best Practices in Supplier and
Parts Risk Mitigation
Mark Snider, President
ERAI
34. My Commitment is Personal
Solving counterfeits is critical to our family
35. About ERAI Inc.
A World of Information at Your Fingertips
• Founded in 1995, ERAI is an information services organization that
monitors, investigates and reports issues affecting the global
electronics supply chain.
• ERAI provides tools to mitigate risks on substandard parts, counterfeit
parts, vendors and even customers.
• Subscribers include OEMs, CMs, Distributors, OCMs, government
agencies and industry associations.
• Actively involved in a number of committees and task forces
addressing the counterfeit issue.
• Founding participant in SAE International G-19 Counterfeit Electronic
Components Committee and several sub-groups
36. IHS and ERAI are Exclusive Partners
One provider of counterfeit alerts and supply chain risk mitigation
36
42. How difficult are these to detect?
Let’s look at another: Asiliant Technologies M69000
43. Very difficult… and getting worse.
“it wouldn’t take much more to make it perfect”
44. How Risk Enters Your Supply Chain
Intended and unintended ports of entry for counterfeits
1. Many unsafe part & supplier “sources”
• Online Broker Search Engines
• Maverick procurement methods or spending limits
• Google
2. These are counterfeit ports of entry
• Rapid access to millions of parts
• Minimal membership requirements
• Quick & easy access to a large audience of buyers
Request for Quote
Request for Quote
3. Are you creating your own shortages? Request for Quote
…
…
• Multiple RFQ’s create false demand signals …
…
Request for Quote
• Leads to price increases and incentive for counterfeiting
45. Best Practices to Avoid Risk
Stay Within Your Trusted Supply Chain
1. Direct from the Factory
2. Your Approved Vendor / Manufacturer (AVL / AML)
3. Other Franchised and Authorized Sources
4. Approved Independent Distributors
5. ERAI Members
6. Valid Alternate Parts or Sources
• Distributors, Aftermarket Sources
• Alternate Parts - Upgrades, Downgrades, Equivalents…
• Manufacturers and Products sanctioned by qualifying authorities
• Government QML/QPL
Contractually define your expectations. Test accordingly.
47. Vet the Open Market
Qualify your suppliers
ASK YOUR SUPPLIERS…
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?
48. Vet Real Stock from “Available” Parts
It limits risk exposure from fake sources and price games
49. Many Types of Supplier Risk Occur
A wide range of incidents pose serious business problems
50. “Where there’s a will, there’s a way.”
Past due invoices, wire fraud, faulty product for example…
51. “Where there’s a will, there’s a way.”
Company aliases are changing all the time
52. “Where there’s a will, there’s a way.”
Relationships exist across “new” supplier entities as well
53. BOM analysis is where our clients begin
It’s where “the rubber meets the road” to assess risk exposure
54. Risks are detected and monitored
Problems are immediately flagged and the BOM can be monitored thereafter
Actual Medical Devices Bill of Material (4 of 94 electronic components)
“IC's were failing to boot up.”
“Maxim stated in writing that they did not manufacture the product shown in the below noted
photographs. The lack of a country of origin and other visual nonconformities suggest the parts in
question have been remarked by an unauthorized third party.”
“Test report shows parts not performing up to spec, incorrect voltage.”
55. Conclusion: Address How You Buy
Explicitly tackle the difficult decisions head on
1. Are all open market sources the same? No
2. Does real stock versus “available stock” matter? Yes
3. Will a blanket policy preventing open market source
eliminate risk? Some
4. Do vetted open market suppliers require less
testing? No
5. Is buying only from authorized distribution practical
or technically feasible? Not always
Stay within your trusted supply chain.
56. Free Offer for Attendees: Risk Analysis
We will do a BOM risk assessment for webcast attendees
Fill Out Our Survey and Specify “YES” to Free Analysis
Or Send Email with Subject Line “April 7th Webcast Offer” to ProductMarketing@ihs.com
Limited to qualified electronics value chain entities.