Combating Counterfeits in the Supply Chain

Up to 10% of all worldwide technology products are expected to be counterfeit, while the Bureau of Industry and Security of the US Department of Commerce has reported a rise in counterfeit incidents sequentially each year.

In 2011, US Senators Carl Levin and John McCain announced a Senate Armed Service Committee investigation into counterfeit electronic parts and the risks these parts pose to the Department of Defense supply chain. On November 8, 2011, the Committee held its first hearing in Washington, DC during which Senator Levin promised a swift response. Testimony during this hearing revealed the results from a congressional probe, which found at least 1,800 cases of counterfeit electronics in US weapons systems covering more than 1 million suspect parts. Approximately 70% were traced to Chinese firms. Panel members also testified that counterfeiting costs the semiconductor industry an estimated $7.5 billion a year in lost revenue and about 11,000 US jobs alone.

On December 31, 2011, US President Barrack Obama signed the fiscal year 2012 US National Defense Authorization Act (NDAA), which creates regulations for counterfeit part detection and avoidance. Members at all tiers of the defense supply chain must put counterfeit risk mitigation procedures in place and certain steps must be completed within 270 days of the President's signature. This includes:

• Contractors are now responsible for detecting and avoiding the use or inclusion of counterfeit electronic parts or suspect counterfeit parts
• Contractors are also responsible for any rework or corrective action that may be required to remedy the use or inclusion of such parts
• Defense contracts will no longer allow the cost of counterfeit electronic parts and suspect counterfeit electronic parts or the cost associated with rework or corrective action to resolve the use or inclusion of such parts
• Qualification procedures and processes must be established to use trusted suppliers and procure electronics from authorized suppliers

Meanwhile, although the defense sector is clamping down on counterfeits, most of the components are commercial electronics and can impact any worldwide company using the same electronics within their products. With each incident possibly encompassing thousands of parts and millions of dollars in revenue, the use of potential counterfeits represents a major liability with grave financial downside for any product. Even more ominously, this phenomenon could pose a serious threat to human life or national security.

IHS provides content, software and expert analysis enabling critical global electronics decision-making within component selection, sourcing and logistics, as well as integrated obsolescence management, BOM management, environmental compliance and counterfeit risk mitigation. Through integration to the world's largest and broadest electronic and electro-mechanical component management solution, IHS counterfeit market intelligence grants access to the datasets, tools, experts and expert analysis needed to implement a risk-based approach to minimize the impact of counterfeits. Design and sourcing decisions can be kept within the trusted supply chain through IHS access to government qualified suppliers, the enforcement of approved supplier/vendor/manufacturer lists and the availability of parts and their alternates from original component manufacturers (OCM) and authorized distributors to aftermarket suppliers and – where necessary – lower-risk brokers or independent distributors.

Learn how to protect your supply chain, your products and your company's brand against the risks that counterfeits and inferior parts present.

Downloads:

• Top 5 Most Counterfeited Parts
• Combating Counterfeits in the Supply Chain Guide
• Parts Management Solutions
• IHS Design and Supply Chain Solutions
• ERAI Counterfeit Part and Supplier Risk Mitigation Solution
• IHS iSuppli Reports Counterfeit Parts Quadruple Since 2009

Today's marketplace is characterized by risk, uncertainty, and volatility. Capabilities for product engineering, obsolescence management, and counterfeit risk mitigation are more important than ever before. IHS offers the industry's largest electronic and electro-mechanical component management solution in every regard – the greatest part counts, manufacturer coverage, part parametric properties, historical part information, depth of BOM analysis, and breadth of commodity coverage. The company's industry-leading solutions are available in a wide array of top-tier, mid-tier, and low-tier product options that offer the flexibility of choice that our customers need to maximize their value. With access to information on more than 265 million physical devices, along with intuitive tools for integration into engineering design processes and applications, IHS provides the most advanced component selection and procurement decisions for military and commercial applications.

Through integration to the world's largest and broadest electronic and electro-mechanical component management solution, IHS counterfeit market intelligence grants access to the datasets, tools, experts, and expert analysis needed to implement a risk-based approach to minimize the impact of counterfeits. Design and sourcing decisions can be kept within the trusted supply chain through IHS access to government qualified suppliers, the enforcement of approved supplier/vendor/manufacturer lists, and the availability of parts and their alternates from original component manufacturers (OCM) and authorized distributors to aftermarket suppliers and – where necessary – lower-risk brokers or independent distributors.

Counterfeit, Substandard and High Risk Part and Supplier Intelligence capabilities:

• IHS-ERAI Solution: Exclusive access to the most complete, authoritative and up-to-date reporting, investigation services, and risk assessment tools for thousands of parts and suppliers in order to profile potential counterfeit, substandard and high risk parts.

BOM, Obsolescence and Component Management capabilities:

• BOM Manager: BOM Manager monitors components in your bill of material for availability, compliance and obsolescence, as well as GIDEP and ERAI counterfeit risk information to reduce cost and risk, while enabling a strategic, enterprise-wide approach to product content management.
• CAPS Universe: Single point access to current technical, compliance and sourcing information for millions of electronic, electro-mechanical and fasteners parts from more than 1000 suppliers. Includes cross-references, manufacturers datasheets and environmental documents.
• IHS Comet: Avoid costly production interruptions or re-designs with advanced bill of material management tools to stay ahead of component obsolescence, environmental compliance, counterfeit part and supply chain risks.
• PCN Alert: Get daily updates of PCNs, End of Life Notices and Counterfeit Alerts for your AVL parts to effectively monitor and quickly analyze potential sourcing and compliance risks.

Industry Standards & Regulations:

• SAE AS5553 from SAE International: Counterfeit electronic parts, avoidance, detection, mitigation and disposition
• IHS Standards Expert™: 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.
• SAE International: SAE standards contain detailed production and interoperability guidelines; clarify legal and regulatory grey areas; condense product development cycles; ensure consistency and high quality in manufacturing; and lead the way to maximum performance. IHS is the most comprehensive source for obtaining SAE's critical technical information. Only IHS can provide immediate internet access to SAE standards in PDF along with other industry standards from a single platform.
• IHS Military Specs and 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.

Government Qualified Products and Procurement Intelligence capabilities

• IHS Haystack Gold: The Haystack Gold logistics management system contains more than 3,470 documents containing over 85 million parts qualified and tested against Military Specifications by the US Government. Haystack gold provides access to over 180 million part records, and includes procurement history for both government and industry sectors that provides easy access to information on the source from which the government purchased the item, what was paid and how often the item was purchased.