DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation
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Transcript of DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation
Copyright © 2011 IHS Inc. All Rights Reserved.
Integrated Methods of Predictive
Obsolescence, Standards Management,
and Counterfeit Avoidance
Mr. Rory King, Design & Supply Chain, IHS Inc.
Mr. Greg Jaknunas, Design & Supply Chain, IHS Inc.
Thursday, September 01, 2011
DMSMS Standardization 2011
3:30 PM to 5:00 PM Concurrent Sessions
Standards and Databases for Counterfeit Mitigation
Session Chair: Mr. James Stein - Defense Standardization Program Office
Copyright © 2011 IHS Inc. All Rights Reserved.
About IHS Inc.A Leading Information Provider
2
Energy &
Power
Design &
Supply Chain
EHS &
Sustainability
Defense, Risk &
SecurityCountry & Industry
ForecastsCommodities,
Pricing & Cost
• Tens of thousands of customers and hundreds
of thousands end-users in 180+ countries
• Customers include nearly 70% of US
Fortune1000; 80% of Global Fortune 500
Strong, Growing Products and Financials:
• Public, NYSE: IHS (2005)
• Revenue: $1.1B (2010)
• Founded in 1959: To provide product
catalogs for aerospace engineers
• Today: Leading global source of critical
information and insight dedicated to
providing the most complete and trusted
information and expertise
• Employs 5,100 people in 30 countries
Areas of Expertise & Content
Copyright © 2011 IHS Inc. All Rights Reserved.
$1.7 Trillion = Total Value of Global Counterfeits & Pirated Products
…and 2.5 Million = Jobs Lost or Not Created as a ResultAccording to: Frontier Economics, 2011
$100 Billion or 10% = Amount of Global Technology CounterfeitedAccording to: Alliance for Gray Market and Counterfeit Abatement and KPMG International, 2005
$1.4 Billion = The Retail MSRP of U.S. Counterfeit Seizures in 2010According to: US Customs & Border Protection, US Immigration and Customs Enforcement, 2011
40% Impacted = Percent of U.S. Defense Impacted by Fake and/or
Damaged PartsAccording 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 2010
Counterfeits by the NumbersMagnitude of a growing, global problem
Copyright © 2011 IHS Inc. All Rights Reserved.
A Big DealRisks to Company, Brand, and Performance
4
65%
64%
62%
51%
38%
84%
67%
57%
36%
71%
55%
42%
37%
44%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Increase warranty/maint. costs
Reduce expected product life
Inhibit sales / customer sat
Add to unit costs
Increase product dev’pt time/costs
Product quality/reliability failures
Customer returns/recalls
Production line stoppages
Product launch delays
Damage brand / reputation
Expose product safety / legal liability
Expose contractual liability
Compromise device/product security
Undermine compliance claims
FIN
AN
CIA
L&
PE
RF
OR
MA
NC
E
PR
OD
UC
T&
OP
ER
AT
ION
S
CO
MP
AN
Y&
BR
AN
D
What is the Impact of Counterfeit Electronics?(% Respondents)
Source: Benchmarking Counterfeit & Inferior Grade Components,
Supply & Demand Chain Executive & IHS Inc., April 2009
Copyright © 2011 IHS Inc. All Rights Reserved.
A Huge DealLoss of Life and National Security in Jeopardy
5
Shown: DailyTech LLC, June 17, 2011Source: Benchmarking Counterfeit & Inferior Grade Components,
Supply & Demand Chain Executive & IHS Inc., April 2009
Copyright © 2011 IHS Inc. All Rights Reserved.
Where are they going? U.S. Defense Electronic Parts Supply Chain
6
Copyright © 2011 IHS Inc. All Rights Reserved.
7
No Supplier is Immune from RiskLack 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.
Copyright © 2011 IHS Inc. All Rights Reserved.
Objective: Stay in the Trusted Supply ChainBest 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
----------------------------------------------------------------------------------------
Below this line is high cost risk! Redesign and emulation are “lower”
cost than (high risk) low cost unknown parts/sources.Stop
Copyright © 2011 IHS Inc. All Rights Reserved.
SAE International:G-19 committee develops set of standards to mitigate counterfeits
9
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.
Purchasing Process Shall…Assess risk… including reports from GIDEP and ERAI
10
Copyright © 2011 IHS Inc. All Rights Reserved.
Defense Adoption and Counterfeit IncidentsGIDEP and ERAI are the counterfeit reporting entities
Incidents: 91% of reports via ERAIDOD Adoption: August 31, 2009
Source: IHS Inc. 2011
Copyright © 2011 IHS Inc. All Rights Reserved.
Link Between Counterfeits and ObsolescenceGreatest risk from counterfeiters targeting obsolete parts
12
Source: IHS Inc. 2011
As of May 2011, a minimum of
54% of IHS-ERAI reported
counterfeit incidents were
component lifecycle status of
EOL/Lifebuy or Discontinued.
Copyright © 2011 IHS Inc. All Rights Reserved.
Obsolescence Mgt: Component Level Decision Support Research, Simulation, and Analysis
13
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 .
Semiconductor and Component Lifecycle
Introduction
Growth
Maturity Decline
Phase-out
ObsoleteToday
YTEOL
LTB Notice
LTB
New Product
Introduction (NPI)
End of Life (EOL) or
Discontinuance (PDN)
Product Change
Notification (PCN)
Component Management tools, like
IHS Parts Universe, combine
obsolescence forecasts, lifecycle
documentation, and other decision-
support information to automate and
improve obsolescence management.
Copyright © 2011 IHS Inc. All Rights Reserved.
Obsolescence Mgt: Entire BOM/PlatformDecision 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.
Disasters: What About the Unpredictable?Japan produces over 50% of silicon wafers globally
Semiconductor Fabs
1 Aizu Wakamatsu, Fukushima
ON Semiconductor (Logic)
Fujitsu (Analog, Discrete, Memory)
Texas Instruments (Analog, Optical)2 Atsugi, Kanagawa
Mitsumi (Analog, Logic)3 Goshogawara, Aomori
Renesas (Logic)4 Gunma
ON Semiconductor (Discrete, Logic)
Renesas (Analog, Discrete)
5 Hitachinaka, Ibaraki
Renesas (Logic, Micro, Memory)
6 Iwate
Fujitsu (Micro, Memory)
Toshiba (Discrete)7 Kofu, Yamanashi
Renesas (Analog, Logic, Micro)8 Miho, Ibaraki
Texas Instruments (Analog, Optical)
9 Miyagi
Fujitsu (Logic, Micro)
Rohm (Discrete, Micro)10 Sendai, Miyagi
Freescale (Logic)11 Shiroishi, Miyagi
Sony Semiconductor (Logic)
12 Tsukuba, Ibaraki
Rohm (Discrete)13 Tsuruoka, Yamagata
Renesas (Logic)
14 Utsunomiya, Tochigi
Matushita (Discrete)
Silicon Wafer Production
A
B
C
D
Shin-Etsu Kamisu, Ibaraki
Shin-Etsu Nishigo, Fukushima
MEMC Utsunomiya, Tochigi
SUMCO Yonezawa, Yamagata
Display Manufacturing Hitachi Displays
Panasonic LCD
Tohoku Pioneer
Resins, Films, Chemicals,
Copper Clad Laminate…
Fukushima
Epicenter
A
B
D
C
1
3
2
4
Tokyo7
6
85
910
11
12
14
13
Source: IHS iSuppli 2011
Copyright © 2011 IHS Inc. All Rights Reserved.
BOM Alert/Notification Tools Offer WarningShown: 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 risks
Copyright © 2011 IHS Inc. All Rights Reserved.
Applying Product and Supply Chain EventsTools can aggregate all events that may impact your BOM/Program
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Design / Lifecycle
Event
Supply Chain
Failures
Counterfeit Part or
Supplier Event
Regulatory
Compliance Event
Counterfeit
Copyright © 2011 IHS Inc. All Rights Reserved.
Immediate Counterfeit NotificationPart, BOM, Program alert to potential counterfeit risk in the market
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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.
Alert!
Copyright © 2011 IHS Inc. All Rights Reserved.
These go to Industry & Government ReportsIHS exclusively provides single access to ERAI and GIDEP reports
AUTHORIZATION
REQUIRED
AUTHORIZATION
REQUIRED
GIDEP noticesERAI notices
Copyright © 2011 IHS Inc. All Rights Reserved.
Who is ERAI? Exclusive Partner of IHSLeader in Counterfeit Part & Supplier Market Intelligence
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Reported Parts
Reported Suppliers
ERAI Offers Thousands of Supplier & Part IncidentsAn averages 25+ counterfeit incidents reported each week
Copyright © 2011 IHS Inc. All Rights Reserved.
Detailed ERAI Counterfeit Incident DetailPart, Date Code, Lot Code, Photos, Documents, etc.
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Copyright © 2011 IHS Inc. All Rights Reserved.
Disqualify or Be Alerted to Bad SuppliersPast due invoices, wire fraud, faulty product for example…
Copyright © 2011 IHS Inc. All Rights Reserved.
Used to Locate Potential Vetted SuppliersIndependent 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.
Who are trusted supply chain sources?What are all of the parts that meet our design criteria?
24
OCM & Aftermarket Sources
Authorized & Franchised Distributors
Approved Independents & Vetted Open Market Sources
AVL/AML Approved Suppliers
Copyright © 2011 IHS Inc. All Rights Reserved.
So, what alternate sources exist?What are all of the parts that meet our design criteria?
25
Functionally Equivalent?
Equivalent Parts?
Upgrades? Downgrades?
Technical Specifications?
Compliance Information?
Copyright © 2011 IHS Inc. All Rights Reserved.
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.
Determine Procure-ability – Look for Problem Items
Weapon 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
Applying Procurement IntelligenceZeroing in on supply chain risk to BOM and Platforms
27
Copyright © 2011 IHS Inc. All Rights Reserved.
Locate Cataloged Items in 3rd-Party Reference Sources
Government Qualified Products Database (QPD)Parts and Vendors qualified to military specifications
28
Copyright © 2011 IHS Inc. All Rights Reserved.
Find Qualified Sources of Supply
Vendor QualificationPart Numbers, Stock Numbers ,and Vendors Meeting Criteria
29
Copyright © 2011 IHS Inc. All Rights Reserved.
Find Government Qualified Parts, based on Military or Industry
Specifications
Qualification Requirements Analysis
30
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.
View Governing Specifications
Qualification Requirement: MIL-PRF
31
Copyright © 2011 IHS Inc. All Rights Reserved.
View Related Documents to the Governing Specification
Single Access to Related StandardsCross-references to related documents
32
Copyright © 2011 IHS Inc. All Rights Reserved.
Additional Qualification Requirements:Program Implementation of AS5553
33
Copyright © 2011 IHS Inc. All Rights Reserved.
Supply Chain and Lifecycle
ProcurementDesign
Agility thru Tools and Decision-Support Quickly and efficiently mitigate counterfeits and part/supplier risk
34
Copyright © 2011 IHS Inc. All Rights Reserved.
“In skating over thin ice
our safety is our speed” Ralph Waldo Emerson
Copyright © 2011 IHS Inc. All Rights Reserved.
Thank You
Mr. Rory King, Design & Supply Chain, IHS Inc.
Mr. Greg Jaknunas, Design & Supply Chain, IHS Inc.