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An Examination of Counterfeit Avoidance Programs for Small-Medium Enterprises Using System Dynamics Modeling

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Recent disruptions and shortages across the global supply chain have heightened general awareness of resiliency and security risks for consumers, industry, and governments. 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, leading to 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. Interviews were conducted with industry leaders to understand why counterfeit ICT continues to be purchased by industry. A system dynamics (SD) model is constructed to illustrate the system behavior. The model is applied to a case study based on a US government contract and evaluated. The findings show even short-term use of an untrusted supplier can result in significant quantities of counterfeit ICT being purchased. Finally, a new framework is proposed to support SMEs developing a counterfeit ICT abatement program.

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