Download Counterfeit Parts

®
Conference on Quality in the Space & Defense Industries
2008 - CQSDI
ERAI and a Risk Mitigation Strategy to
Address Today’s Complex Global
Marketplace
March 4, 2008
Dan DiMase
President
ERAI, Inc.
([email protected])
www.erai.com
© 2008 ERAI, Inc.
®
INTRODUCTION
• Trade association that monitors, investigates, reports
and mediates issues affecting the global supply chain
• Risk mitigation on substandard and counterfeit parts,
vendors, and customers
• Founded in 1995
• Over 1K members globally in over 33 countries
• Members include OEMs, CMs, Distributors, OCMs,
Government agencies, other industry associations
Serving & Uniting the Industry
© 2008 ERAI, Inc.
®
SUPPLY CHAIN HAS BEEN COMPROMISED
• E-Waste is contributing to the problem
• Counterfeiting is big business
• RMAs from customers back to franchise or
factories
• Stock rotations back to factories from franchise
• No one is immune in the supply chain
• Create a program to address the issue – it’s not
going away anytime soon
Working to Protect our Members
© 2008 ERAI, Inc.
®
E-WASTE AND COUNTERFEITING
© Basel Action Network 2006
© Basel Action Network 2006
Woman cooking circuit boards over
pool of molten solder. Thousands of
men, women and children handle
imported electronic waste from North
America and Japan in this way every
day in China. Taizhou, China 2007.
Circuit Board being cooked. Taizhou,
China 2007
© 2008 ERAI, Inc.
®
COMPLAINT PROCESSING
• Processed over $6 million incidents in 2007
• Cases are investigated and reported or mediated
• All incidents are thoroughly investigated &
verified
• Meditation efforts helped members recover over
$976K in 2007
• Saves time and avoids expensive litigation
• Difficult or challenged cases are reviewed by
voluntary grievance committees
• Must fall into categories defined in Internal
Processes & Policies Manual
Fair & Impartial Investigation
© 2008 ERAI, Inc.
®
COMPLAINT & REPORTING SERVICES
Over 30 types of complaints processed including:
• Sale of counterfeit and/or substandard parts
• Misrepresentation of goods
• Credit card or wire fraud
• Bankruptcy filings
• Returned checks
• Unpaid invoices
• Violation of purchase order terms and conditions
• Contract Disputes
• Unscrupulous business practices
Integrity in the Supply Chain
© 2008 ERAI, Inc.
®
REPORTING SERVICES
• Summary report of investigation
• Complaint alerts
• Reporting company is anonymous
• Dispute alerts
• Outside of Processes & Policies
• Avoid repeating a problem, alert subcontractors,
divisions, and other companies
• Separate database for high-risk and counterfeit
parts
Complete and Current Information
© 2008 ERAI, Inc.
®
HIGH-RISK AND COUNTERFEIT
• Reporting company maintains anonymity
• Issues - failed function, used parts sold as new, stolen
parts and counterfeit
• Counterfeit items must have confirmation from OCM, test
report, or sufficient visual evidence
• Comprehensive non-conforming parts database
• Material Scrubber available for BOMs cross checking
against high-risk parts database
• Non-members can submit data
Global Information Exchange
© 2008 ERAI, Inc.
®
eraiESCROW
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Industry’s first escrow service
Minimizes transaction risk, avoids hassles
Protects buyer/seller financial interests
Contract review
Funds held until buyer receives, inspects, and
approves goods according to contract
• Non-members are eligible
Protecting your Investment
© 2008 ERAI, Inc.
®
ONLINE DATABASE
• Access to search risk mitigation tools
• Updates on counterfeit, faulty or high-risk parts
• Cross check your assemblies or BOM against
high-risk parts database
• Search companies for complaints and disputes
• Review member profiles
• Update personal preferences for profile & alerts
Providing Critical Information & Insight
© 2008 ERAI, Inc.
®
RISK MITIGATION
• Integrate ERAI mitigation web tools into quality &
procurement practices
• Review parts for reported incidents through ERAI and
GIDEP
• Assess vendor profile on ERAI website
• ISO 9000 certified? AS9100/9120? Other quality
accreditations?
• Documented ESD program? ANSI/ESD S20.20?
• Can your supplier provide item traceability?
• Has supplier been reported through ERAI or GIDEP?
Expertise, Service, and Education Combine for Unparalleled Results
© 2008 ERAI, Inc.
®
RECOMMENDED PRACTICES
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Reasonable supplier expectations
Audit all pre-approved vendors
Limit your AVL to pre-approved sources
Review supplier’s warranty & terms and conditions
Monitor vendor performance matrix
Assign ERAI and GIDEP representative
Participate in the ERAI community
• Report issues immediately
• Train your inspectors
• The IDEA-STD-1010-A
Expertise, Service, and Education Combine for Unparalleled Results
© 2008 ERAI, Inc.
®
IDEA PROMOTES USE OF IDEA-STD-1010
IDEA-STD-1010-A
Acceptability of Electronic
Components Distributed in
the Open Market
• Provides examples of
characteristics that indicate
substandard and counterfeit
product
• Standardized Inspection
Controls and provide
– When auditing
– When purchasing
– When inspecting
Establishing Quality Standards for the Industry
Slide courtesy of
®
IDEA INSPECTOR CERTIFICATION EXAM
IDEA-ICE-3000
• Visual inspections of electronic components
from the open market requires specialized
knowledge to detect visual indicators of
substandard and potentially counterfeit
characteristics.
• Designed to demonstrate objective evidence
of inspector competency
• Successful examination provides reason for
increased confidence in the basic working
knowledge and resource-ability of quality and
inspector personnel.
www.idofea.org
Slide courtesy of
®
EDUCATION & TRAINING
• Electronic Industry Supply Chain Conference - EISCC
• May 1 – 2, 2008 in Las Vegas, Nevada
• Topics target common industry challenges
• Counterfeit and high-risk part mitigation
• Vendor selection
• Part inspection
• Import/Export controls
• ITAR
• Industry outlook
• Interactive and hands-on Workshops
• http://www.erai.com/PUBLICVEGAS08.ASPX
Education & Networking with Industry Peers and Professionals
© 2008 ERAI, Inc.
®
SUMMARY
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Proactively prevent losses, recurring problems
Reduce financial losses via mediation / escrow
Mitigate risk - parts, customers and vendors
Enhance quality management and procurement
practices
• Educate your staff
• Obtain up to date information on counterfeit,
faulty, & questionable parts
• Stay informed on current supply chain issues
Solutions for Today’s Complex Global Marketplace
© 2008 ERAI, Inc.
®
APPENDIX
Solutions for Today’s Complex Global Marketplace
© 2008 ERAI, Inc.
®
REPORTED COMPANIES DATABASE
Global Information Exchange
© 2008 ERAI, Inc.
®
COMPLAINT ALERT
Global Information Exchange
© 2008 ERAI, Inc.
®
DISPUTE ALERT
Global Information Exchange
© 2008 ERAI, Inc.
®
HIGH RISK PARTS DATABASE
Global Information Exchange
© 2008 ERAI, Inc.