There are counterfeit products in the supply chain worldwide. This is clearly a huge problem for manufacturers who are not being paid for their patents. Buyers may not be getting the built quality or performance that was expected. It is also a potential security risk for critical infrastructure.
Repair technicians and businesses are not the source of counterfeit products. They are just as likely to buy a counterfeit as unwittingly as any other party in the distribution channel. It is a massive challenge for repair businesses that are prevented from buying parts through the authorized distribution network to vet alternative suppliers in order to support their customers. Manufacturers can help by making parts more readily available as they have the means to police their own supply chain.
Who are the Counterfiters? :
For a counterfeiter to make money selling counterfeits – they need both a source of product and a marketplace. Unlike counterfeit currency – the products themselves cannot be made in a basement – they require a huge capital investment. There is no need to build a factory to make counterfeits – all it takes is so find one person to corrupt within an existing component factory or assembly facility. Counterfeiters therefore have partners within existing facilities to source their products.
The complicit factory may be selling some of their output to counterfeiters in addition to their contracts with OEMs. They may be collecting and reselling defective products rather than destroying them. They may be substituting lower cost parts in order to shave costs. These products may pass basic testing and look correct but may not perform as intended. Or they may be just as good.
For these reasons, counterfeits are hard to detect even by the OEM. Counterfeits have to function or the business of counterfeiting will not work. Many counterfeit parts are functionally identical because they are identical. The paperwork trail (provenance) may be clean and the parts and function correctly. It takes considerable effort to detect counterfeits.
The big money in counterfeiting is made in Asia where the parts and products are made and sold in huge volumes. Domestic counterfeiting is rare although the purchase of counterfeit parts is not rare. Both the secondary market for parts and machines and the repair market are concerned with parts and authenticity.
Domestic Parts Availability
Tear downs of any product to the printed circuit board reveal that hundreds, if not thousands of parts are assembled to create the finished product. Not all of the component parts have model numbers or even manufacturer names printed on them making it hard to locate the legitimate supplier of the OEM original part.
Parts availability has become a huge problem for repair worldwide as OEMs hoard parts to themselves. When the OEM decides to be the only source of parts, and parts assemblies, they will contract with suppliers to refuse to sell parts outside of their unique contract. This refusal to sell parts immediately creates an incentive for illegal supply of parts.
There are many sources of parts in Asia that are not legitimate in our world view. Repair is a business that cannot be profitable without being able to acquire parts. If the only way to run a repair business is to import parts and not ask questions – that will happen. The more any OEM restricts access to parts – the more attractive the alternatives. If there is money to be made – it will be made – kosher or not.
Once OEMs provide reasonable access to parts at reasonable prices, the incentives for questionable sourcing will be reduced. OEMS that want to police their supply chain and root out counterfeiters can work with repair providers to help locate the many possibly sources of illegal activity around the world.