How an ECM Helps You Meet Your Flow Down Needs
Flow down helps keep counterfeit parts out and improves supply chain accountability, but it may make your business harder, too.
Accountability for Counterfeit Parts
Flow down requirements came into existence in an aerospace and defense marketplace that is now deeply concerned with counterfeit parts. With heavy dependence on supply chain, these two industries have been especially susceptible to counterfeit parts, with potentially catastrophic effects.
The most recent version of flow down standards places accountability for part credibility squarely with the brand supplying the product. Prior to these standards, brands would simply blame their sub-contractors and wash their hands of the issues. Today, companies can no longer deflect blame to their flow down chain. Companies themselves are ultimately responsible for the quality of their products.
Thus, “buyer beware” was turned on its head. In this landscape, the rule has become “supplier be aware.” Suppliers must be aware of where they are buying from, what kind of quality they’re buying and, perhaps most importantly, aware of the inherent risks of supplying products within the defense and aerospace industries.
Flow Down Clauses
A flow down clause essentially boils down to every supplier in the supply chain being equally accountable for the original contract standards. Sometimes this is called a pass-through or conduit clause, but it always means that the subcontractor is bound to the same provisions as the primary contract. By tightening everyone’s standards, there is no buck to pass for counterfeit parts showing up in a product.
At the same time, these requirements have added difficulties for companies as they search for supply chain partners.
Of course, the potential financial loss of not meeting flow down requirements is a risk to companies. Alongside is the additional burden of new, slower processes that add overhead to the supply chain. And if the supply chain gets more expensive, it kind of defeats the whole purpose of the supply chain.
Some companies have reverted to insources to beat the overhead costs, but more often than not, this move does not pay off.
When it comes finding a way to efficiently produce products in the flow down environment, one of the biggest frustrations is in getting started at all. It has now become very difficult to get quotes for projects or locate a machine shop that is AS9001 and ITAR parts certified.
A strong ECM partner should be prepared and positioned to assist with flow down challenges. And certifications are just the beginning of how an ECM helps you complete your projects within flow down requirements.
Your ECM partner should have and maintain an approved vendor list. The recommended vendors should be scored quarterly for on-time delivery, performance and conformity to flow down standards.
The flow down clause requires contractors to follow a hierarchy when purchasing.
Level 1 – If the part is still in production or in stock at an original, authorized or approved source, then the part must be sourced this way.
Level 2 – If it is no longer in production or no longer in stock at an original, authorized or approved source, then the part must be sourced from a “contract-approved supplier.” In this case, the contractor is responsible for verifying that the supplier meets industry standards and takes on the risk of counterfeit parts.
Level 3 – If neither of the first two levels can be satisfied, if the sub-contractor cannot confirm that the part is new, or if the sub-contractor refuses to comply with the flow down, clause, then the contractor is obligated to notify the company in writing of the part’s sourcing. The contractor then takes on the responsibility for authenticating the parts and the company could refuse to accept the unverified parts.
Your ECM should be able to provide you with its ISO, AS, NIST or ITAR compliance documentation. All of these relate to how well the ECM will protect your information – from your documents and drawings to your cyber security.
ISO 9001 - The International Organization for Standardization (ISO), is an independent, non-governmental organization and the largest developer of voluntary international standards. ISO maintains over 20,000 standards regulating food safety, agriculture, healthcare, manufactured products, technology and others.
AS9100C – AS9100C is the standard quality management system for the aerospace industry. Beginning in 1999, all major aerospace manufacturers and suppliers are required to comply with AS9100C in order to do business in the industry.
NIST – National Institute of Standards and Technology SP800-171 Requirement is a set of recommended security requirements for protecting the confidentiality of Controlled Unclassified Information (CUI). It mostly relates to digital and/or electronically transmitted data. If you want to do business with aerospace and defense industries, your ECM should’ve had an action plan in place by December 2017.
ITAR – International Traffic in Arms Regulations (ITAR) is a set of United States regulatory controls that safeguard national security and foreign policy objectives. These regulations dictate that information and materials related to defense and military-related technology can only be shared with U.S. Persons or with individuals with specific exemptions from the Department of State.
Part Detection and Avoidance Systems
An ECM that is operating within a flow down clause will maintain a system that helps detect and avoid counterfeit parts, using a series of internal policies and procedures.
These processes include addressing areas such as:
- Personnel training and recurring education on counterfeit trends.
- Parts inspection, testing and methods to determine if a part is counterfeit.
- Approved policy for abolishing counterfeit parts, reporting and quarantining counterfeit parts.
- Electronic tracking of parts from the original manufacturer.
Flow down clauses will continue to be a challenge as long as counterfeit parts are being pushed into the marketplace. Unfortunately, we do not see these parts disappearing anytime soon.
Fortunately, Levison Enterprises is here to assist with your flow down processes. To learn more about our counterfeit parts processes and learn about our certifications and trainings contact us today!