Counterfeiters are besetting the industrial industry, propelled further into illegally selling part replicas by the pandemic-induced complexity of the trade network and the transition to virtual-first selling.
The next challenge for B2B customers is trying to suppress counterfeiting activity as the shift to remote selling and buying becomes increasingly permanent.
As the unrelenting COVID-19 pandemic carries on, industrial firms continue to be threatened by plant shutdowns if interruptions to the supply of spare parts persist. Faced with a surge in new imposed lockdowns and trade restrictions, many B2B customers resort to virtually purchasing parts from alternative suppliers in regions less affected by the pandemic. This tentative decision inadvertently creates an environment primed for counterfeiting and piracy.
“Fakes cost more,” experts warn. But some firms have yet to recognize the hidden costs of purchasing parts of inferior quality at a lower price. Sometimes, financially affected customers unwittingly facilitate the sale of fraudulent parts as they are more likely to reduce spending and purchase cut-price components—which are often replica parts that perform substandardly, wear out faster, and undermine equipment safety.
Even if firms set out to invest in authentic parts, their task is made harder by the growing spread of organized online counterfeiters who sell falsified parts that may not necessarily be of lower quality. A lot of sophisticated replicas are currently marketed online, making it increasingly difficult to tell counterfeits from legitimate spare parts.
There are, however, some ways to stem the sale and use of fraudulent spare parts.
Use Plant DNA to Create a Unique Mark That Keeps Counterfeiters at Bay
DNA marking is becoming an indispensable tool for industry players vying to defend against counterfeiting. Guided by a DNA-based validation of parts, firms are poised to identify fraudulent components before they perniciously invade supply chains.
This remarkable effort has been launched by Applied DNA Sciences in a move to combat the threats posed by counterfeiting activity:
“The core technologies of Applied DNA Sciences allow [firms] to use the DNA of everyday plants to mark objects in a unique manner that can only be replicated at great expense, and then identify these objects by detecting the absence or presence of the DNA.” — Applied DNA Sciences, Using DNA to Prevent Counterfeiting and Product Diversion
A DNA marking system restricts and deters counterfeiters as it forensically tags parts to verify their source and authenticity. Having the unique ability to accurately spot replicas with the help of DNA marks will enable firms to protect against counterfeits and maximize the supply of authentic parts. Perhaps more remarkably, DNA sequences are uncopyable and extremely difficult to exploit, preempting fraudulent activity in a highly secure manner and helping industry players recover revenues lost to fraud.
Signs are increasing that DNA evidence is a front-liner in the great effort to combat counterfeiting. Applied DNA Sciences notes that DNA is a “form of forensic evidence trusted by law enforcement,” which can be used as proof in international courts. As B2B customers trace the provenance of spare parts to promote supply chain integrity, they can also play an important part in the investigations of counterfeiting schemes. Organizations ought to be committed to reporting illicit look-alike parts to stop aiding the global counterfeit industry and make progress in combating forgery.
Confirm Part Authenticity Through OEM Certificates
An authenticity seal—or, in other words, the Certificate of Authenticity (COA)—is broadly used to aid industrial firms in determining whether their purchased parts are authentic or counterfeit.
Inspecting the COA is therefore an imperative step in the verification of all purchased parts. Even if the B2B customer doesn’t buy directly from the Original Equipment Manufacturer (OEM), trusted suppliers should be able to confirm the legitimacy of components as they own a certificate previously provided by the OEM or authorized distributor. This certificate, which typically contains the OEM’s identification data and, as the case may be, a lot number or production code, has to be provided to every purchaser of parts.
The COA that accompanies each lot of parts needs to detail specific and verifiable information that readily:
- Validates the authenticity of a supplier’s inventory
- Proves the provenance of spare parts
- Builds customer trust and purchasing confidence
Firms purchasing parts from a reliable source should usually have no issues in receiving the COA—which may include a holographic security label to prevent duplication and a unique security ID code that enables customers to verify the legitimacy of spare parts at any given time.
Gear Up for Blockchain Investments to Cut Off the Supply of Illicit Parts
Blockchain technology can be a stepping stone to weeding out counterfeits from the supply chain.
A blockchain-based system addresses anti-counterfeiting efforts by allowing for greater visibility and transparency in supply chains. Some of the biggest names in the industry are leading the way in combating counterfeiting activity through blockchain—a technology that helps in reducing the risk of purchasing replica parts by:
- Tracking the ownership history of parts to confirm authenticity
- Connecting physical parts to blockchain digital ledgers for a more dependable supply chain that routinely improves part provenance
Many experts now suggest that the shift to blockchain technology is imperative to impede counterfeiting:
“Advances in blockchain-with-IoT counterfeit detection provide at-a-glance visibility, tracing, and recording of provenance data from source to sale and beyond. […] To thwart counterfeiting, suppliers and manufacturers join a single blockchain platform and use “smart tags” (unique cryptographic identifiers) to track and confirm the provenance and location of each item.” — BCG, Stamping Out Counterfeit Goods with Blockchain and IoT
Firms will be increasingly better positioned to operate secure supply chain networks via anti-counterfeit blockchain systems. These tools create transparency to greatly improve the industry player’s ability to investigate the origin of the purchased components, impede fraudulent transactions, and lower the risk of counterfeit use.
Put Focus on Assessing Risk Comprehensively and Rigorously
Counterfeiting is an alarmingly common practice in the industrial equipment industry.
While in recent years, more and more firms started raising concerns about forged and pirated parts infiltrating their supply chains, the COVID-19 outbreak has highlighted a grim reality: many organizations still lean on old-fashioned detection techniques to combat a series of increasingly clever counterfeiting schemes.
Smart counterfeiting activities demand smart responses, which often come in the form of DNA-marked parts and blockchain investments. Suppressing counterfeit products is also a matter of assessing risk comprehensively and rigorously. In addition to investing in technology-guided plans, it is persistently important to conduct careful investigations of supplier data and look out for the early warning flags—such as inferior quality, low prices, or suspect lot numbers, suppliers, and locations.