dmsms standardization 2011 - integrated methods of counterfeit risk mitigation

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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

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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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Page 1: 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

Page 2: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 3: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 4: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 5: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 6: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Where are they going? U.S. Defense Electronic Parts Supply Chain

6

Page 7: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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.

Page 8: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 9: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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.

Page 10: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Purchasing Process Shall…Assess risk… including reports from GIDEP and ERAI

10

Page 11: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 12: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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.

Page 13: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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.

Page 14: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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 .

Page 15: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 16: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 17: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Applying Product and Supply Chain EventsTools can aggregate all events that may impact your BOM/Program

17

Design / Lifecycle

Event

Supply Chain

Failures

Counterfeit Part or

Supplier Event

Regulatory

Compliance Event

Counterfeit

Page 18: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Immediate Counterfeit NotificationPart, BOM, Program alert to potential counterfeit risk in the market

18

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!

Page 19: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 20: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Who is ERAI? Exclusive Partner of IHSLeader in Counterfeit Part & Supplier Market Intelligence

20

Reported Parts

Reported Suppliers

ERAI Offers Thousands of Supplier & Part IncidentsAn averages 25+ counterfeit incidents reported each week

Page 21: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Detailed ERAI Counterfeit Incident DetailPart, Date Code, Lot Code, Photos, Documents, etc.

21

Page 22: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Disqualify or Be Alerted to Bad SuppliersPast due invoices, wire fraud, faulty product for example…

Page 23: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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?

Page 24: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 25: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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?

Page 26: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 27: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 28: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 29: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Find Qualified Sources of Supply

Vendor QualificationPart Numbers, Stock Numbers ,and Vendors Meeting Criteria

29

Page 30: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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.

Page 31: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

View Governing Specifications

Qualification Requirement: MIL-PRF

31

Page 32: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

View Related Documents to the Governing Specification

Single Access to Related StandardsCross-references to related documents

32

Page 33: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Additional Qualification Requirements:Program Implementation of AS5553

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Page 34: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

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

Page 35: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

“In skating over thin ice

our safety is our speed” Ralph Waldo Emerson

Page 36: DMSMS Standardization 2011 - Integrated Methods of Counterfeit Risk Mitigation

Copyright © 2011 IHS Inc. All Rights Reserved.

Thank You

Mr. Rory King, Design & Supply Chain, IHS Inc.

[email protected]

Mr. Greg Jaknunas, Design & Supply Chain, IHS Inc.

[email protected]