counterfeit materials: a growing...
TRANSCRIPT
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Counterfeit Materials:
A Growing Threat
James Morrow
Presenter
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Agenda
• What is Counterfeit Material?
• Extent of Counterfeiting Problem
• Counterfeit Avoidance Strategies
• Detection Strategies
• Mitigation Strategies
• Solutions
• Summary
• Q&A
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What is Counterfeit Material?
Counterfeit Material is a part (or substance) made or altered to imitate or resemble, an ‘approved part’ without authority or right; and with the intent to mislead or defraud by passing as original or genuine. ----FAA
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The Size And Scope Of The Problem
• Any recognizable brand is at risk
• Impact to world trade: $350 –$500 billion per year
• Growing 10% a year
• 6 - 9% of all world trade is counterfeit
• 750,000 U.S Jobs Lost
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The Size And Scope Of The Problem
• $16 billion in lost sales in vehicle aftermarket industry on a global basis annually
• $3 billion per year lost sales in the U.S. market
• Additional costs include:
Weakening of the brand
Anti-counterfeiting measures taken
Injuries, legal fees and investigations for vehicle accidents potentially caused by counterfeit parts
Warranty claims caused by counterfeit products
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The Size And Scope Of The Problem
Materials Impacted • Refrigerants
• Adhesives
• Polymers
• Lubricants
• Colorants
• Fire Retardants
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Counterfeit Avoidance Strategies
• Develop Anti-Counterfeiting Procurement Process
• Establish Chain of Custody Procedures
• Formally Assess Suppliers for Compliance
• Push Down Counterfeit Avoidance Guidance Through Supply Chain
• Initiate Obsolete Material Management
• Provide Counterfeit Awareness Training
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Red Flags
• Items coming from source other than the original or authorized sources or from suspect locations
• Price too low or significantly different from history
• Scarce items are suddenly available
• Chain of ownership unverifiable
• No certificate of conformance
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Red Flags
• Suspect product identification numbers, lot number/date code
• Prohibited materials present
• Item visual inspection
• Alterations or resurfacing
• Wrong size or design flaws
• Quality difference issues
• Package design and construction
• Size, shape, color, finish or materials
• Evidence of rework, repair or refinishing
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Mitigation Strategies: Chain of Custody
• Mitigation strategies and authenticity testing should be developed using a risk-based approached
• Cross checking Independent suppliers and serial numbers against the GIDEP and/or ERAI
• Suspect or missing documentation triggers review process
• Review critical information to determine if detection testing must be completed
• Ensure process in place to quarantine items that require testing and verification
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Mitigation: Suspect Item
• Immediately quarantine suspect item and clearly mark as nonconforming
• Locate any additional affected items in stock and in production, ensure they are quarantined
• Gather all chain of custody information and authenticity testing records associated with the suspect item(s)
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Mitigation: Suspect Item
• Conduct additional testing (if applicable) in an effort to confirm if the item is counterfeit
• Engage the manufacturer for assistance
• If required, deploy the mitigation team for rework or replacement of suspect item(s) in conjunction with legal, and customer input
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Anti-Counterfeiting Solutions
• Packaging graphics
• Chemical
• Biological
• DNA
• Serialization
• Security Sealing
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Summary
• Counterfeit materials is growing threat which compromises your product’s performance
• Exposure to litigation related to performance and compliance
• Engage the manufacturer for assistance
• If you suspect an item to be a counterfeit, begin the mitigation procedures immediately
• The counterfeit risks must be controlled throughout the entire supply chain
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Q&A
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James Morrow