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1
Vigilance–Enforcement–Abatement
World Micro Training ProgramDiane Hummer , Mahendran Sanggaren 23rd, July, 2012
Ministry of Domestic Trade Cooperatives and Consumerism
Protecting Malaysia From The Economic Impact of
Suspected Counterfeit Electronic Components
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How did counterfeiting start?
E-waste is main driver
The U.S. and the UK struggled with finding places to dump
their e-waste
China and Pac-Rim countries agreed to take the
e-waste at no charge
Photo source: Science Blogs http://tinyurl.com/d8bsd7y
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Profits in e-waste Remove and re-mark components
China also realized it could obtain more profit by removing
and remarking components and selling them
as new product
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Defense supply chain study followed
In January 2010, the Defense Industrial Base Assessment: Counterfeit Electronics
report was released by the U.S. Department of Commerce, the Bureau of
Industry and Security (BIS), and the Office of Technology Evaluation (OTE)
The purpose of the study was to provide statistics of the extent of the infiltration of
counterfeits into the U.S. defense and industrial supply chain, to provide
understanding of industry and government practices that contribute to the problem,
and to identify best practices and recommendations for handling of and
preventing counterfeit electronics
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From the report: Part 6 Impact
“What is the impact from not detecting and preventing
counterfeit electronics from entering and leaving
Malaysia?”
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Impact Aerospace applications
Without a formal counterfeit electronics detection program,
Malaysia is at risk of allowing defective materials in airplanes
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Impact Medical applications
Penang and the rest of Malaysia have several medical
manufacturing facilities
MRI scanning and human implantable devices are
examples of what can be affected
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Loss of brand identity Reduced brand value can hurt Malaysia
If counterfeit components are allowed to be received by Malaysian manufacturers,
there will be a loss of brand value to those companies, as
well as to Malaysia overall
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Automobile industry Reliability and quality impact
Reworked and counterfeit components can disrupt the
reliability of Malaysian automobile products, including
automobile running gear, and overall automobile quality
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Elevator operation Service disruption and safety concerns
Counterfeit components can find their way into Malaysian elevator systems around the
country. This could cause disruption of service and
unsafe operation
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Traffic control systems Traffic flow disruption and possible injuries
Having fake or reworked components used in the
Malaysian traffic control system could cause traffic flow
problems and even result in serious injuries
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ATM terminals Impact to the economy and citizens
ATM malfunctions caused by counterfeit parts could have a
serious impact on the Malaysian economy and the
country’s citizens
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Counterfeits defined … An electronic part that is not genuine because it:
…is an unauthorized part…does not conform to original OCM design, model and/or performance standards…is not produced by the OCM or is produced by unauthorized contractors…is an off-spec, defective, or used OCM product sold as ‘new’ or working, or……has incorrect or false markings, and/or documentation
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Countering the counterfeits Industry-wide efforts underway
StandardsAS5553 | IDEA-STD-1010 B | CCAP-101AS 6081 | ISO Family | QMS-IDEA-9090
AssociationsIDEA | ERAI |GIDEP | NEDA
DifferentiationAuthorized distributors
Independent distributorsBrokers
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Independent distribution:Where did it come from and
why does the market need it?
Industry Pressure – Industry needed to find more ways to manage costs and drive profit. Independents are an ideal solution
Lack of Solutions - Companies did not have enough resources to effectively manage the 20 percent of the parts that cause 80 percent of their headaches. World Micro-like independents came to the rescue
Franchise, Brokers and Traders -Just Not Enough – Because of manufacturing diversity and volatility of markets, it is no longer economically feasible for franchise distribution channels to support all customer needs. Risk is high when purchasing material from companies calling themselves Independents without certifications. So, independents differentiated themselves. World Micro is a prime example.
Value Added Services Protect Customer Supply –Certified independents have expertise in identifying suspected counterfeit and sub-standard material.
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Independent distribution Minimum requirements
If it is recognized that there is a true need for an Independent Distributor in a company’s vendor base, how does one go about selecting the right supplier?
The first step is to develop a list of minimum requirements. Each company that seeks to be a “Preferred Independent” should be able to provide the following:
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Safe Supplier programs are being built..details
available soon World Micro is involved
World Micro has served as unofficial advisors to three US Senators on the Armed Services Committee
World Micro has a state-of-the art quality lab for testing/detection, industry certifications, on-going
testing/compliance programs
Earned spot on the QSLD
Working with DoD and have supplied govt. for years
Have process for GIDEP reporting
Aligned with associations like ERAI, IDEA etc…