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Mro Buyer Beware Counterfeit Products May Be In Supply Chain

Release time : 2015-06-15 07:56:49
New reports of counterfeit bearings in the marketplace raise a red flag for maintenance, repair and operations (MRO) buyers. While strong growth in China and other developing regions is impacting energy and steel prices, it also is causing global shortages of some mechanical components essential to industrial production such as bearings. In fact, delivery leadtimes on some bearings such as large bore bearings used in metal processing and mining applications have stretched to up to three years. Needing to purchase these parts, some buyers have resorted to using unfamiliar sources that promise brand-name products but do not deliver the real thing. Inevitably, these counterfeit products fail. Failure can cause a production line to come down, or even more serious consequences, such as an accident that causes bodily injury or death. In one report out of Germany this spring, manufacturer NSK Europe became suspicious when what were thought to be its ball bearing products were not meeting its quality levels in terms of material specification and life. The company has since taken steps to resolve the issue. Another case?athis one is more well known?aoccurred about 18 months ago, when?aafter a lengthy investigation?acompanies that make INA, FAG and SKF brand bearings seized and destroyed about 40 tons of counterfeit rolling bearings at a warehouse in Germany. Bearings manufacturers and distributors say such reports of fake bearings being passed off as genuine are rising, although they are unsure of the breadth of the problem right now. In his role as president of the Bearing Specialists Association, Stephen Durston, vice president of aerospace and purchasing for Jamaica Bearings Co., a manufacturer in New Hyde Park, N.Y., has heard of instances of counterfeiting in Canada. Some companies, he says, have bought bearings with well-known brand names based on a sample they've examined. Once they took shipment, they discovered that it was not the true part. They searched the globe for bearings and when they found what they were looking for, they learned the bearings were customized from another manufacturer and falsely identified. Bill Moore, senior vice president of sales development and channel management at SKF Service Division USA in Kulpsville, Pa., one manufacturer that's experienced counterfeiting of its products, says, Our belief today is that almost any product made is subject to counterfeiting, and industrial buyers need to be very aware of the situation and understand the potential risk to their business as a result of that. We have evidence via our global presence and the case that involved SKF and the Schaeffler Group [maker of FAG and INA brands] that every major manufacturer of bearings has a risk of counterfeit goods in the marketplace. The issue. Moore explains that what's happening with bearings and other industrial components is similar to counterfeiting in the retail business. Manufacturers invest billions in technology, quality and branding and the pricing they set for their products reflects it, he says. Such premium pricing creates a profit opportunity for unscrupulous people to try to take advantage of an unwary consumer. What's more, manufacturers and distributors alike say it is especially hard to distinguish between a genuine bearing and a fake. Advances in graphic design and digital technology make it nearly impossible to tell a counterfeit just by looking at the packaging. As for the product itself?athe bearing cage could be manufactured of a different material than what a buyer usually sources, say, steel instead of brass. But most people can't tell the difference by sight. What we believeMoore says, is that there are manufacturers selling products to middlemen, and, it is at that point in the supply chain where we have found counterfeiting structures occur. Based on the understanding we have, it's not happening at the manufacturer.??? These middlemen, dealers or importers, hire people to remove the original brand name, replace it with a fake brand name and sell them up through the supply chain to people who may not know they are buying a counterfeit product, Moore explains. And people buying the product are not paying a discounthe says. They are paying market price as if the product were genuine From his experience, Moore says the counterfeiting involves not only large bearings that weigh more than 1,000 lbs. and stretch four feet across, but also smaller bearings including those as that measure not more than the size of a person's thumb. What buyers can do. Putting in place processes to verify the product is genuine and to sequester products that may be fake (to return to the manufacturer if necessary) are ways companies can help combat counterfeiting internally. One of the best ways to significantly reduce the risk is to purchase through an authorized distributorsays Moore. Distributors authorized by the manufacturer should be able to produce documents or signage that they are indeed authorized by the manufacturer and have that manufacturer's support Jeffrey Ramras, vice president of supply chain management for Applied Industrial Technologies in Cleveland, has had some experience with counterfeiters recently (see sidebar). He says, Buying from an authorized distributor is really the closest you can get to assuring yourself you are going to get the product manufactured by the manufacturer Applied's goal as an authorized distributor for SKF and other manufacturers, Ramras explains, is to work with the customer to identify their product needs and, when there is a critical application, make sure the buyer plans accordingly and either stocks the product or has Applied stock it. If the buyer is doing that, then I would say he or she is protecting himself against counterfeit productshe says. At Motion Industries in Birmingham, Ala., another authorized distributor for SKF and other manufacturers, Bob Summerlin, executive vice president of sales and marketing, says, While we have heard the reports, we are not aware of any customers receiving counterfeit product. We certainly support SKF's effort to improve awareness of this issue. Customers buying from authorized distribution can minimize the opportunity of acquiring counterfeit product For their part, purchasing professionals have counterfeiting on their list of concerns and realize they have a role to play to ensure that fake products do not enter the supply chain. Forty-two percent of buyers responding to a Purchasing reader survey earlier this year said counterfeiting is a serious problem?aand 34% said the practice is widespread. Respondents also said that as supply chain professionals, they have a leadership role in helping to combat counterfeiting. Buyers need to be more diligent than ever regardless of product and have patienceMoore says, advising, Buyers should try to wait to get the right stuff. I would almost encourage purchasing another brand. I would rather lose the business than take the chance of having a counterfeit product come in. We've seen it happen, and everyone on the floor is mad at us because all they remember is that it's SKF. They send a message back the buyer not to select SKF again. That isn't good