Category Archives: Risk Management

Risk Assessments and Avoidance Protocols: Segmenting Your Supply Base by Risk – 2013 SAE Counterfeit Parts Avoidance Conference

At the SAE 2013 Counterfeit Parts Avoidance Symposium Sept. 27, 2013, in Montreal, Canada, Kevin Sink, VP, Total Quality, TTI, Inc., offered insights about dealing with the supply base.

Advertisements

A paper on “Contractor Responsibility: Toward An Integrated Approach To Legal Risk Management”

In recent essays, I have discussed how counterfeit parts avoidance and detection has emerged as an area of business and legal risk that aerospace and defense (A&D) contractors should incorporate into compliance programs. The following article describes the current landscape of heightened US Government demands for contractor responsibility and provides a backdrop for issues I have described about the imbalanced approach to counterfeit prevention described within the proposed DFARS rule on “Detection and Avoidance of Counterfeit Electronic Parts”….

Contractor Responsibility: Toward An Integrated Approach To Legal Risk Management” By Steven A. Shaw, Mike Wagner, and Robert Nichols (March 2013)

Continue reading

iNEMI Webinar: Tools to Assess Risk of Counterfeit Use | iNEMI

“This webinar from the iNEMI Counterfeit Components Assessment project group provides a comprehensive view of the problem by surveying the possible points of entry in the supply chain and assessing the impact of counterfeit components on the industry at various points of use. The group has developed three easy-to-use risk assessment methodologies that can be used by suppliers, end users and equipment providers to quantify the risk of counterfeit use for their products or parts. These tools cover three areas: the risk of counterfeit use, risk of untrusted supply sources, and counterfeit loss and total cost estimations. …”

More at iNEMI.

Counterfeit Prevention and Materiel Inventory

I recently received correspondence from an A&D contractor representative who observes “there seems to be little published about what suppliers have/are doing with material they already have.”  Continue reading

Proposed SAE AS6171 and its Risk Levels – Observations and Recommendations to Support Practical Risk Management Applications

The SAE G19A Test Laboratory Standards Development Committee is working on a new standard, AS6171, “Test Methods Standard; Counterfeit Electronic Parts”, intended to support AS5553. My understanding is that AS6171 will eventually replace the product assurance section that currently appears in AS5553A. Thus far, SAE G19A subcommittee has put forth ballots for four test method documents. All of these proposed test methods map test and inspections to one or more of five risk levels and refer to AS6171 for definitions and implementation of these risk levels. AS6171 is in the form of a working draft and has not yet been submitted for balloting.

Continue reading

A New Frontier for Specialty Risk Management – Counterfeit Parts Liability Risk

Many insurance brokerage and risk management firms support the A&D contractor community in the area of “supply chain risk”. The scope, however, tends to focus on supply chain disruptions due to financial volatility, natural disasters, and civil unrest; and cyber-attacks. The counterfeit parts threat appears to be a new frontier for Risk Management and Insurance specialists.

Continue reading

Focus Areas for an A&D Contractor Industry Counterfeit Prevention Strategy

A high level counterfeit prevention strategy is needed to address standards gaps and to resolve implementation issues that, to some degree, are driven by new and forthcoming US Government requirements directed to the aerospace and defense (A&D) Contractor Industry. Collaboration between A&D Contractor Industry companies is key to developing such a strategy, focusing limited resources and driving meaningful implementation at appropriate levels within the supply chain.

I offer the following thoughts on focus areas to include in a high level counterfeit prevention strategy developed from the perspective of A&D contractors.

 

Continue reading

Counterfeit Part Risk Analysis – moving from “subjective assessments” to risk analysis supported by empirical data and defensible estimates

Counterfeit part risk has been discussed from various perspectives. Briefings presented by DoD describe a “profile of counterfeit risk” based on the age of technologies and the susceptibility of those technologies to counterfeiting [1]. SAE Aerospace Standard AS6174 presents a counterfeit materiel risk assessment model based on “impact of supply chain” (cost of operations, degraded function, sabotage or malicious functions, personnel injury or death) and “likelihood of counterfeiting” based on production availability from original manufacturers [2]. SAE Aerospace Standard AS5553 includes a “risk stack chart” describing counterfeit electronic part risk as a function of “supplier reliability and product criticality” [3]. DfR Solutions describes counterfeit electronic part risk in terms of probability of failure versus supplier trustworthiness [4]. Integra Technologies describes types of counterfeit electronic parts, tests and inspections used to detect them, and the probability of detection [5]. A common thread weaving through all of these representations is that vulnerability to counterfeits and risk mitigation is a function of supplier selection, due diligence applied when using riskier suppliers and end use application considerations.

In a recent article, Dr. David E. Frick describes the hazards of ascribing levels of risk based on esoteric analysis versus risk assessments supported by empirical data and defensible estimates [6]. While each of the aforementioned representations are helpful toward pointing organizations in the right direction, quantitative techniques are needed to support practical applications for evaluating counterfeit avoidance approaches. In this essay, I present notional counterfeit parts risk analysis examples based on a methodology described within the “Risk Management Guide for DOD Acquisition” [7] and discuss implementation issues for DoD, A&D contractors and academia to consider when devising quantitative risk-based approaches to addressing the counterfeit parts threat.

Continue reading

Where Policy, Legislation, Standards and Practicality Collide – Counterfeit Parts Prevention Issues Requiring Government / Industry Collaboration to Address

Legislation and regulatory requirements and standards gaps continue to present aerospace & defense industry and US government users with significant implementation challenges with respect to counterfeit part avoidance and detection. The counterfeit parts issue is similar to the lead-free electronics issue in that regulations drive the need for standards, but technical challenges and supply chain limitations must be recognized so that reasonable and implementable regulations and policies are developed in response to the threat. Though many of these challenges have been discussed in Industry and Government forums and described in trade literature and the media, many remain unresolved.

Continue reading

FY2013 NDAA – National Security Strategy for the National Technology and Industrial Base

Section 1603 of the FY2013 NDAA introduces an amendment to include additional objectives within the national security strategy for the national technology and industrial base …

Continue reading

Advertisements