Do you really know who you are doing business with?

Image  A February 5th 2014 Reuters article illustrated that the U.S. National Highway Traffic Safety Administration (NHTSA) forced, the luxury car company, Aston Martin, to recall 17,590 cars.  This was a result of counterfeit plastics used in development of the accelerator pedal, which increased the likeness of a crash.

Counterfeit plastics entered into Aston Martin’s supply chain through a Chinese subcontractor that molds its accelerator pedal.  This subcontractor acquired counterfeit plastics from a Chinese plastics supplier.  The Reuters article explained that Aston Martin is to recall approximately 75% of its vehicles because of this event.

An Aston Martin spokesperson stated, “there had been no reports of accidents or injuries related to the issue and the financial impact to the automaker was small.” Aston Martin’s reputation as a luxury car company will most likely countermand any negative residual effects of this incident.  Other companies, however, may not be so resilient.

This incident serves as an example and lessons learned for companies to justify and build a supply chain risk management program. This program should include the development of a SCRM Plan, contract language that requires vendors to include supplier assessments into their process and an audit program to verify compliance using industry standards provided through standards based organizations.

Conducting supplier assessments and deploying industry standards are some of the most effective ways to protect your company against counterfeits and other associated vulnerabilities that stem from the supply chain.  These countermeasures incorporate some important supply chain risk management best practice such as:

1. Purchasing equipment from Original Equipment Manufacturers (OEMs) or authorized resellers;

2. Conduct supplier assessments and audits on most critical and higher priority vendors and components; and

3. Defining specific sets of procurement requirements per industry standards.

Supply chains do not end with Tier 1 or Tier 2 suppliers. The complexity of the global market place makes supply chains vast and complex. Because of this, visibility over the supply chain has become a more daunting task.  The Aston Martin incident reveals that supply chain issues are able to transcend a variety of commercial sectors and industries, proving that global companies must find ways to counter this supply chain vulnerability.  

For information on how Interos can help you gain visibility over your supply chain and mitigate this present risk, please request a white paper at http://www.interos.net/papers.php .

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