Building an Integrated Supply Chain to Prevent Counterfeit Components

Industry leaders address the issue of counterfeit components at 2013 ERAI Executive Conference.

Livermore, CA, April 09, 2013 — As systems age, component sourcing becomes more difficult and increases the risk of counterfeit components in legacy systems. IHS’s Director of Global Supply Chain, Rory King, illustrated that more than 50% of counterfeit component incidents are for parts subject to diminishing manufacturing sources and material shortages (DMSMS) and obsolescence issues. Recent highlighted counterfeit examples have included parts in SH-60B helicopters (introduced in 1984), the “new” C-130J Super Hercules (introduced in 1999), and C-27J cargo planes (started production in 1997), and in the US Navy’s P-8A Poseidon plane (first flight 2009). This is why conferences like the upcoming 2013 ERAI Executive conference are so important.

The issues around counterfeit electronic components in the supply chain aren’t new, and have been a topic for the defense industry for years. The magnitude of the problem was first seriously brought to light in 2008, when the US Defense Department’s Bureau of Industry & Security identified nearly 10,000 incidents of counterfeit goods entering the defense supply chain. In 2012, a year-long study resulted in the National Defense Authorization Act FY2012 Sec. 818, when the US Senate’s armed services committee identified more than 1800 cases of counterfeit incidents, totaling more than one million counterfeit parts.

Until recently, sustainment and counterfeit avoidance was left to DMSMS teams and best practice logistics or engineering tactics. However, so far the solution has primarily been to develop standards, authentication and anti-counterfeit technologies. These responses are vital and necessary, but have largely remained reactive and have not produced the dynamic collaboration crucial to maintaining a healthy, proactive supply chain. Instead, each player is left facing inward — focusing on solutions from their own particular positions in the supply chain: labs look for test solutions, distributors look to offer for proof of authenticity, researchers look for newer and more exotic authentication methods, and obsolescence management focuses on data integration and sourcing.

Achieving long-term sustainment extends way beyond what Warfighter sustainment teams and suppliers can do alone. As the technology available for creating counterfeit components will certainly evolve, the defense supply chain now requires forward thinking collaboration. Bringing together all of the supply chain’s best thinking is a key factor of what it takes to support a systems whose lifecycle will last decades past the original components’ end-of-life.

The time is ripe for this crucial shift in counterfeit avoidance to occur and for collaboration to be realized as a practical, efficient solution. Everything from the tools to the standards are in place. At the ERAI 2013 Executive Conference, Phil Zulueta, Donald Menzies, and Ethan Plotkin bring their experience to a concrete round-table discussion; including examples of cross-supply chain collaboration.

About the Presenters:

Phil Zulueta – G-19 Committee Chairman, SAE International
Phil Zulueta is Chairman of the SAE International G-19 Committee, involved with the mitigation of counterfeit electronic parts through the collaborative development and release of international standards and the delivery of awareness presentations and courses at conferences and related venues.

Ethan Plotkin – CEO, GDCA Inc.
Ethan brings extensive international management consulting experience to Proactive Legacy Management (PLM+) and his role as GDCA’s CEO. Prior to leading the company, Ethan held an executive position with Accenture and worked with large companies to understand their business challenges, and to translate strategy into successful execution of large-scale business improvement programs.

Donald Menzies – CEO, Merit Electronics
Donald started Merit Electronics in 2005. With an understanding of the risks counterfeit components bring to the electronics supply chain, his goal is to bring together the highest levels of authentication and testing, engineering services, and proactive and innovative solutions. Donald’s mission is to transform role of the independent distributor from a passive, reactive stocking broker, into a dynamic and valuable “strategic partner” in the supply chain.

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