Embed Size (px)
Citation preview
© iNEMI 2013
Assessing the Risk of Counterfeit
Components
Colm Nolan, IBM
Martin Huehne, Celestica
1 © iNEMI 2013
Assessing the Risk of Counterfeit Components
• Introduction of Presenters
• Introduction
• Risk of Counterfeit Use – Calculator #1
• Risk for untrusted sources – Calculator #2
• Counterfeit Losses & Costs – Calculator #3
• Request for Feedback
• Q&A
Agenda
Note: All phones will be on mute until the end of the presentation Questions should be typed into the chat box to All Presenters/All Participants and we will answer them through the chat window and during the Q&A session
2 © iNEMI 2013
Assessing the Risk of Counterfeit Components
• Colm Nolan ... IBM, Anti-Counterfeit & Misbranded Program Manager.
– Colm is currently leader of the anti-counterfeit program for IBM working with the world wide teams from supply chain, security, channel, legal etc..
– His background is in Semiconductor and Server Operations and Engineering, having held roles at senior management level in all.
• Martin Huehne ... Celestica, FA & Lab. Manager at the Thailand factory
– As part of his current work and a previous assignment, Martin has been involved in the anti-counterfeit analysis carried out in his laboratory for more than 8 years.
– He holds a degree in physics and a doctoral degree in physical chemistry and has worked on failure analysis, semiconductor technology and instrumental analytical chemistry in engineering, research and management.
• Dave Brown ... Intel Corporation, Sr. Principal Engineer
– His current work includes developing many of the methods Intel uses to mitigate counterfeiting attacks on Intel branded products.
– He currently servers as the Chairman of ISO Technical Committee 247: Fraud Countermeasures and Controls that is developing international standards where the scope includes counterfeit product issues. He was involved with writing the direct component marking standard (once known as EIA-706) that established the use of 2-dimensional barcode on integrated circuits.
– He joined Intel in 1978 after receiving BSEE and MSEE degrees from Purdue University.
Presenters
3 © iNEMI 2013
iNEMI Today
International Electronics Manufacturing Initiative (iNEMI) is an industry-led
consortium of around 100 global manufacturers, suppliers, industry
associations, government agencies and universities. A Non-Profit Fully
Funded by Member Dues; In Operation Since 1994.
Visit us at www.inemi.org
5 Key Deliverables:
• Technology Roadmaps
• Collaborative Projects
• Research Priorities Document
• Proactive Forums
• Position Papers
3 Major Focus Areas:
• Miniaturization
• Environment
• Medical Electronics
Mission: Forecast and Accelerate improvements in the Electronics
Manufacturing Industry for a Sustainable Future.
4 © iNEMI 2013
Counterfeit Components – Assessment Methodology and
Metric Development Project began in March 2012
Its purpose and scope...
Identify and develop methodologies with associated
metrics to assess the overall extent of the counterfeit
problem in the electronics industry. The outputs will
enable iNEMI members to assess the risk of counterfeit
use in their respective industries, the risk of untrusted
sources of supply in that industry and generate the total
cost of ownership associated with those risks.
Assessing the Risk of Counterfeit Components
Introduction
5 © iNEMI 2013
Many Tasks were identified...
• Develop a methodology to evaluate or assess the risk of counterfeit use
• Develop a methodology to evaluate or assess the aggregated risk of untrusted sources of supply
• Develop an assessment / mitigation strategy which includes a methodology to estimate long term cost of ownership
These are the three calculators we will review here today. Our goal is to introduce these calculators to you and to ask for your feedback on how effective they are for you.
Assessing the Risk of Counterfeit Components
Introduction
6 © iNEMI 2013
• In addition to the calculators, a white paper of the tasks
undertaken by the team and the tools developed has
been written
– Published on the iNEMI website
– http://thor.inemi.org/webdownload/projects/Miniaturizat
ion/Counterfeit_Whitepaper.pdf
Assessing the Risk of Counterfeit Components
Introduction
7 © iNEMI 2013
Counterfeit Components Team
7
© iNEMI 2013
Risk of Counterfeit Use
Calculator #1
9 © iNEMI 2013
Risk of Counterfeit Use – Calculator #1
• This calculator quantitatively asses the relative risk of a product being counterfeit
• Can be used by
– Component Manufacturers – identify risk for their product
– Product Designers – identify risk of products to be used or of end product
– Distributors – identify products at risk and those requiring extra controls
– End Users – identify risks of selected products and provide product ranking
• It is based on 4 key attributes – product profile, supplier and supply line characteristics, counterfeit deterrents used on the product and channel characteristics
• The user selects the appropriate rating for each of the elements from the rating table and the calculator provides an overall risk assessment for that product.
• The higher the rating, the higher the risk of counterfeit for that product
• The relative ratings for a product portfolio enables the company to focus their efforts on the high risk products.
10 © iNEMI 2013
Risk of Counterfeit Use - Calculator #1
1. Select the Product Type
& Profile 2. Select the supply
Line profile 3. Select the counterfeit
Process controls 4. Select the output & channel
characteristics
11 © iNEMI 2013
Risk of Use - Ratings Table #1
Select the rating that corresponds to the
best description for that element
12 © iNEMI 2013
Use the rating the table below that best corresponds to the description for that rating.
Profile
Demand / EOL Supplier Supply LineMitigation &
Controls
Supplier
History
Rating = 1
Product has Low
demand and/or is not
EOL
OCM Direct from OCM
Supplier has
Strong Mitigation &
Controls
No known
Counterfeit
Incidents
Rating = 2 No 2 rating No 2 rating No 2 rating No 2 rating No 2 rating
Rating = 3
Product has Low
demand and is EOL or
high demand and not
EOL
Authorized
Distributor
Multiple known
suppliers
Some evidence of
mitigation /
controls
Counterfeit
supply
suspected
Rating = 4 No 4 rating No 4 rating No 4 rating No 4 rating No 4 rating
Rating = 5Product has High
demand & is EOL
Broker or
Ind.
Distributor
Supply line not
defined / clear
No evidence of
mitigation /
controls
Counterfeit
supply
confirmed
Input
Rating
1. Select the rating that corresponds
to the Product Profile
Risk of Use - Ratings Table #1 – Part 1/3
2. Select the rating that corresponds to 4
elements of the Supply Line profile
13 © iNEMI 2013
Ease of Counterfeit Ease of Detection Counterfeit Controls
Very difficult to
counterfeit; requires
factory access or capital
investment >$1M
Easy to detect, e.g. by
check of packaging,
documents, labels,
history
Uses Unique Overt and
Covert Controls &
Identifiers that are easy
to validate
Requires major
equipment / facilities
such as wire bonders
and laser markers,
>$100k capital
Possible by optical
inspection
Unique Overt or Covert
Controls / Identifiers
that are easy to validate
Requires moderate
equipment and capital
($10k-100k)
Possible by routinely
applied 2D X-ray
inspection,
decapsulation
Overt and Covert
Controls / identifiers
but validation not easy
Needs simple equipment
such as sand blasters
and ink printers (<$10k
capital)
Requires advanced
analytical tactics, i.e.
XRD, CSAM, 3D X-ray
Some overt controls /
identifiers but
validation not easy
Easy - little / no
investment required
(<$1000)
Difficult to detect;
nearly
indistinguishable from
authentic
No special controls in
place
Process
Risk of Use - Ratings Table #1 – Part 2/3
Select the rating that corresponds to 3
elements of the Counterfeit Process Controls
Rating = 1
Rating = 2
Rating = 3
Rating = 4
Rating = 5
Rating
14 © iNEMI 2013
Sales ChannelExcess Inventory &
PrototypeCustomer Rework
Ease of
Fraudulent
Reuse
Disposal
Direct- OCMs/
Manufacturers
/Suppliers
Minimal Excess
inventory. Very limited
prototyping/tight OCM
security and traceable
records that are
digitally
signed/encrypted
and/or independently
audited.
Direct to OEM
In-house only under tight
controls in certain
designated areas, tight
security and traceable
records (signed /
encrypted and/or
independently audited)
Exponential factor
of 1 for low ease
of reuse
In house only, on
site physical
destruction,
traceable records
(signed / encrypted
and/or independently
audited)
Known channel:
Franchised / Authorized
Distributors
Excess and prototype
inventory under tight
controls and security
Trusted Sales
Rep and
Franchised
Distributor to
OEMs
In-house + vendor, under
tight controls and
security
Exponential factor
of 2 for high ease
of reuse
In house + vendor
physical destruction,
traceable records,
third party
certification*
Limited - OEMs/ CMs
and some use of
Brokers
Significant inventory
but under tight
controls and security
Trusted Sales
Rep and
Unfranchised
distributor to
CMs
Primarily offsite vendor
based, with controls and
security.
Offsite vendor, with
controls and
records for physical
destruction
Very Limited - Primarily
Reputable Independent
Distributors /Brokers
Some controls in place.
No traceable records.
No security
Independent
Distributors,
dependent on
end user
oversight.
Offsite some controls in
place. No traceable
records. No security
Offsite vendor, some
controls and
records. No proof of
physical destruction
No control / Unknown-
Unknown Independent
Distributors/Brokers
/Unknown Sources
Excess and prototype
inventory not
controlled
Customer not
defined, open
market.
Offsite Vendor, no
controls and no
traceability
Vendor or no vendor.
No controls, no
records
Output
Risk of Use - Ratings Table #1 – Part 3/3
Select the rating that corresponds to 6
elements of the Output & Channel Characteristics
Rating = 1
Rating = 2
Rating = 3
Rating = 4
Rating = 5
Rating
15 © iNEMI 2013
Counterfeit Risk of Use - Examples
Range of products
to be assessed
FLASH product is
the highest risk
Area of greatest
concern / focus on
FLASH
16 © iNEMI 2013
Calculator #1 DEMO
© iNEMI 2013
Risk Calculator for Untrusted Sources
Calculator #2
18 © iNEMI 2013
The risk calculator for untrusted sources (#2)
• Based on objective information, the calculator produces
relative ratings which are expected to be correlated to
the risk of receiving counterfeits from untrusted sources.
• The ratings can support a decision whether to purchase
from a particular source or which of several suppliers to
choose.
19 © iNEMI 2013
Screenshot of Untrusted Source Risk Calculator
1. Select memberships
& accreditations
2. Rate mitigation & controls 3. Fill in information on
company characteristics
20 © iNEMI 2013
Instructions
• For each supplier, search for the information to fill in the numbers in columns B - G, I - M, and O - S.
• If firm information is not available for some items enter your best guess instead.
• Compare the total ratings in column U. They indicate the expected risk of receiving suspect parts in relative number but not the absolute risk. The lower the total rating, the lower is the expected risk.
• Rank the suppliers of a particular product according to the total ratings.
• Optionally, you can use the scores in columns H, N and T as additional aids in decision making on which supplier to choose. Again, the lower the score, the lower is the risk.
21 © iNEMI 2013
Examples
• Supplier A is ISO 9000 certified. Therefore, enter the rating 2 into column E in the row of supplier A.
• Supplier B is not ISO 9000 certified. Therefore, enter the rating 4 into column E in the row of supplier B.
Screenshot
from sheet
Rating Tables
Cells from sheet
Untrusted Supply
Calculator
22 © iNEMI 2013
Calculator #2 - DEMO
23 © iNEMI 2013
Conclusion on examples
• After entering the complete input information, the total
rating result in column V is 103 for supplier A and 8249
for supplier B. Choose supplier A, not B.
• Due to the extremely high rating for supplier B, consider
to disqualify supplier B from any purchases until he
improves.
© iNEMI 2013
Counterfeit Losses and Costs
Calculator #3
25 © iNEMI 2013
Counterfeit Losses & Costs – Calculator #3
• This calculator provides an estimate of the costs and losses associated with counterfeit product
• There are 3 assessments provided
– A) Total loss estimate by product
– B) Loss estimate by GEO or market
– C) Total Counterfeit Cost & Losses estimate.
• The total loss estimate is based on the output from calculator #1 … where the counterfeit risk result is classified as low, medium or high
• The loss by GEO or market is generated using the World Bank Corruption Control index
• The Total Counterfeit Cost is an estimate of all aggregated costs & losses incurred by a company where counterfeit product has entered that company’s supply chain.
26 © iNEMI 2013
Total Counterfeit Loss – Calculator #3 (A)
1. Input the products
to be assessed 2. Input risk of counterfeit
use from calculator #1 3. Input industry estimate
of counterfeit use
Estimated Counterfeit Revenue
Losses
4. Input the estimated w/w
Revenue for the product
27 © iNEMI 2013
Counterfeit Loss by GEO – Calculator #3 (B)
1. Input all countries / markets
the product is sold 2. Input estimated or target
Revenue for that market 3. Input the Corruption Control Index
for that market ( World Bank )
1. Input all countries / markets
the product is sold
Estimated Counterfeit Revenue
Loss by Country / Market
28 © iNEMI 2013
World Bank – Corruption Control Index
1. Select the Control of
Corruption
3. Read the Rank No
2. Select the Countries
29 © iNEMI 2013
Total Counterfeit Cost – Calculator #3 (C)
2. Input all costs – actual
or estimated
1. Input estimated counterfeit
Rate (internal or external data)
Total Counterfeit Cost
30 © iNEMI 2013
Calculator #3 - DEMO
31 © iNEMI 2013
• At the exit of the webinar, you will be taken to a survey
monkey page asking for feedback on the webinar and on
the calculators. Your responses will help determine the
future direction of work on the calculators and the next
steps for this project.
Assessing the Risk of Counterfeit Components
Request for Feedback
32 © iNEMI 2013
Q&A
