Counterfeit Parts: Would You Know a Fake if you saw it?

“I’ll know it when I see it.” We’ve all said this.

To some extent, we all rely on our intuitive ability to sniff out the good stuff, the genuine article. But if you’re a manufacturer, relying on your nose is not good enough.

Counterfeit parts are widespread in today’s industries, and whether it’s automotive, high-tech or medical devices, there are huge risks and cost associated with counterfeits.

There’s been much academic research in recent years about why individual consumers purchase counterfeit luxury items. Spoiler alert… in most of these studies getting something (status/prestige) for nothing is the obvious motivation. But, that’s not what I’m focusing on here.

I have no empirical evidence to back this up, but in most product development scenarios, it’s my position that well-meaning procurement professionals simply cannot distinguish between lowest-cost alternatives, and fraudulent parts that may be labeled as expected but are completely inadequate to satisfy the desired usage.

Of course, things have characteristics that make them suitable for some usage, or unsuitable for others. But how obvious are these characteristics to a conscientious buyer? And how much less so to the inattentive, over-worked, get-them-to-the-assembly-line-before-we-run-out buyer?

In order to purchase something for a specific purpose, you must have a reasonably concrete idea of what it is you want. If a buyer can compare an item for sale to an item that is desired, the purchasing process can be rather straight-forward – automated searching is facilitated and apples-to-apples comparisons are possible.

But in many situations, procurement departments don’t have complete understanding of what is required of the part being procured. They often rely on incomplete technical specifications and past experience. They may or may not be collaborating effectively with design specialists responsible for specifications.

Documenting part and product requirements takes a tremendous amount of discipline on the part of product development organizations. And, depending on product complexity, managing such technical data can require sophisticated systems and processes.

The right data must be gathered and managed over the entire life cycle of the product. New candidate parts come and go from the market all the time, so it is necessary to monitor and manage changes in capabilities and availabilities. Competing products and suppliers must be evaluated, or products can become technologically out-of-date.

New environmental, safety, and other government regulations are constantly being updated and made more and more strict, posing ever-increasing reporting requirements. Turbulent economic times mean that businesses are constantly entering and exiting market places.

With all this change and uncertainty, it is absolutely critical that manufacturers have complete, specific, and well-managed product design information at their fingertips so that they know what they are looking for.

Manufacturers must also constantly cultivate and hunt for reliable sources of supplier information so that they have a high probability of recognizing a good match when they see it. And, to be effective, procurement professionals must have efficient data to do the heavy lifting of evaluating dozens to thousands of alternatives per part that they are attempting to purchase.

Manufacturer’s prosperity depends on the ability of the supply chain to fulfill product demands. And the marketplace is vast, with many unsavory and counter-productive alternatives.

How would you rate the ability of your business to differentiate bargains from fakes?

Photo Credit: Flickr (CC BY 2.0), Day 174 by Okko Pyykkö

This entry was posted in Best Practices, Supply Chain Management and tagged , , , , , . Bookmark the permalink.

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