Supply Chain Complexity: Department of Defense

February 8, 2013
Categories: Counterfeit, Global Supply Chains

A recent U.S. Senate committee report describes 1,800 known cases of suspect counterfeit electronic parts in the defense supply chain, supplied by more than 650 companies.

The pervasive issue of counterfeit parts is a major issue and may lead to unreliable operations or even failure of key components. In another report from the Government Accountability Office, out of 16 randomly selected parts commonly used in military-grade platforms, every part they examined was found to be either a suspect counterfeit or bogus. Richard J. Hillman, Managing Director of Forensic Audits and Investigative Service, stated in his testimony to the Senate Committee on Armed Services, “Counterfeit parts—generally those whose sources knowingly misrepresent the parts’ identity or pedigree—have the potential to seriously disrupt the Department of Defense supply chain, delay missions, affect the integrity of weapon systems, and ultimately endanger the lives of our troops.”

The issue of counterfeit components is deeply challenging, due in part, to the growing complexity of global supply chains. As noted in CREATe’s latest whitepaper, ‘the DOD manages more than four million different parts at a cost of more than $94 billion.’ An infographic highlights the fragmentation, showing how supply chains typically include subcontractors, brokers, assemblers, component manufacturers and government depots located on continents throughout the world. At any of these points, counterfeits can infiltrate products.

CREATe Leading Practices for IP protection offers online assessment tools, independent evaluations, and training for companies to work collaboratively with their suppliers and business partners to mitigate the risk of counterfeits entering supply chains.

Download the whitepaper, Health & Safety Risks from Counterfeits in the Supply Chain.
Learn more about CREATe’s services by visiting resources.