A system dynamics approach to building counterfeit avoidance programs

Abstract

Recent disruptions and shortages across the global supply chain have heightened awareness of resiliency and security risks for consumers, industry, and consumers. Of particular concern is the rise in counterfeit information and communication technology (ICT) products. Commonly used technology solutions to avoid counterfeit are cost prohibitive to small-medium enterprises (SME), leading to an increased security, cost, and reputational risks to these firms. This research develops a novel mathematical model to illustrate how minor purchasing decisions can compromise the integrity of a supply chain and network infrastructure. We conduct interviews with industry leaders to understand why counterfeit ICT continues to be purchased by industry. We then construct a system dynamics (SD) model to illustrate the model is applied to a case study based on a US government contract and evaluated. The findings show even a short-term use of an untrusted supplier can result in significant quantities of counterfeit ICT being purchased. Finally, we propose a new framework to support SMEs developing a counterfeit ICT abatement program.