1. OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt ESCO 6 th Anti Counterfeiting Forum London, Thursday 19 th February 2015 Avoidance of Counterfeit Materiel in the Supply Chain Graham Goring Component Standards Consultant

2. 2 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt Avoidance of Counterfeit Materiel – Agenda They have the potential to seriously compromise the safety and operational effectiveness of OEM products and the reputation of the whole supply chain. The objective of my presentation is to raise awareness of: The risks and impacts of counterfeit materiel in the supply chain. Best practices to eliminate or mitigate those risks OEM counterfeit prevention requirements Dealing with suspected counterfeit materiel Counterfeit Materiel affects all areas of our businesses

3. 3 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt Standards: Avoidance of Counterfeit Materiel **NEW** DEF STAN 05-135 ‘Avoidance of Counterfeit Materiel’ published 10 July 2014 Other Standards: 9100 Aerospace QMS to be updated IEC/TS 62668-1 Avoiding the use of counterfeit, fraudulent and recycled electronic components IEC/TS 62668-2 Non-franchised Sources SAE AS5553B draft Counterfeit Electrical, Electronic, and Electromechanical (EEE) Parts; Avoidance, Detection, Mitigation, and Disposition SAE AS6174A Avoidance of Counterfeit Materiel SAE AS6081 Un-authorised Distributors SAE AS6496 Authorised Distributors SAE AIR6273 draft Terms and Definitions Further Guidance see: www.iaqg.org/scmh Section 3.5.2 Counterfeit Parts Prevention Guidance

4. 4 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt DEF-STAN 05-135 Avoidance of Counterfeit Materiel -Definition Counterfeit Materiel: Materiel whose origin, age, composition, configuration, certification status or other characteristic (including whether or not the materiel has been used previously) has been falsely represented by: a) misleading marking of the materiel, labelling or packaging; b) misleading documentation; or c) any other means, including failing to disclose information; except where it has been demonstrated that the misrepresentation was not the result of dishonesty by a supplier or sub-supplier within the supply chain. Can be:

5. 5 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt FOR PRODUCTION, AND QUALIFICATION  Parts must be identified by the Original Component Manufacturer (OCM), and their part number, and selected from a Preferred Manufacturers List (PML)  Parts must be sourced from the Original Component Manufacturer (OCM), or their authorised/franchised distributor. (including between 3PL and CM)  Distributors must have traceability back to the OCM  Catalogue Distributors currently do not give full traceability. Some OCMs does not give authorisation to catalogue suppliers.  Important where rework is being carried out in-house, or where we free-issue material to our suppliers traceability is still needed!  Customer or Government entities needs to be treated as a non- authorised source. CM = Contract Manufacturers 3PL = Third Party Logistics providers Counterfeit Materiel- Avoidance

6. 6 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt Counterfeit Materiel – Supplier Detection  When there is no traceability back to the OCM or OEM:  Additional testing must be carried out to determine suitability of part.  Levels of testing are dependent on the risks associated with the use of the part, etc.

7. 7 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt For Un-authorised sources  A risk assessment by application and a risk mitigation plan shall address  Probability of receiving counterfeit materiel?  Probability that inspection and testing selected will detect counterfeit materiel?  Potential negative consequences of installed counterfeit materiel? (Safety, mission and reputation)  Shall be segregated  Parts need to be traceable back to the lowest level of serialized assemblies. For parts being assembled and tested if non-conforming materiel is found then counterfeit materiel should be considered. Destruction of packaging materials where part or authentication markings are present in order to prevent unauthorised reuse. Counterfeit Materiel Avoidance - Requirements

8. 8 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt Counterfeit Materiel – Non-conforming Materiel If material is suspected to be Counterfeit:  Do not return to the supplier  Do not treat as scrap  Items must be quarantined until proven to be Counterfeit  If proven to be Counterfeit  Customers, suppliers, and relevant agencies must be notified  When all parties agree then send for destruction.

9. 9 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt Counterfeit Materiel - Summary OEMs and their suppliers, subcontractors and distributors must be able to demonstrate that they have conducted the due diligence when sourcing materiel and have taken care to prevent counterfeit materiel from entering the supply chain. Where traceability back to the OCM is not available, additional testing must be carried out at levels commensurate to the risks involved OEMs must secure the supply chain by, where possible, purchasing from authorised/franchised suppliers and correctly documenting transactions, and ensuring Suppliers have rigorous quality assurance programmes We need to continually develop strategies to Avoid Counterfeit Material We need to identify processes at all levels in the supply chain affected by Counterfeit Avoidance and update them with these requirements: Non-confirming Materiel Materiel Review Board Purchasing and Supplier Assessment etc.

10. 10 / OPEN 2015-02-19_ESCO Conference - Supply Chain Counterfeit Avoidance.ppt Questions ? Graham Goring Component Standards Consultant +44 (0) 20 3441 1067 graham.goring@e-Standards.co.uk The content on this presentation is provided for general information only. Neither e-Standards nor the presenter make any representations, warranties or guarantees, whether express or implied.