Safeguarding the lubricants supply chain from fakes

Counterfeiting is a serious global issue, with demand largely driven by the continuous consumer search for high quality and affordable products and met by rapidly evolving tactics from counterfeiters in fast-growing global digital marketplaces. The lubricants industry, which produces many goods that are difficult to inspect and verify once packaged, is one of the most vulnerable markets for counterfeit goods.

These counterfeit lubricants can cause major damage to the supply chain – but brands can take action to adjust their labelling practices and improve proactive counterfeit product detection to better safeguard their products and brand reputation.

Counterfeit goods – a global threat

US Customs and Border Protection (CBP) data shows over $1.5bn of counterfeit goods were seized in the 2019 financial year alone. CBP data also indicates a significant proportion of counterfeit products are produced outside of the Western markets many are destined for, with China and Hong Kong being the source of 83 per cent of all seized counterfeits.

Over the past decade, the number of customs seizures of counterfeit and intellectual property-infringing goods worldwide has consistently exceeded 100,000 per year. These products are typically substandard and do not comply with the quality and safety regulations of their respective industries.

As digital marketplaces operate on a global scale, consumers are exposed to discount counterfeit goods more than ever. Swift analysis of China-based marketplace Alibaba shows consumers searching for motor oil lubricants span Europa, Asia, North America and Africa.

The essential yet understated role of lubricants

Lubricants are an essential product that play a central role in supporting continuous operation of machinery, with common applications across manufacturing, refrigeration, automotive and HVAC. They are typically used in highly specified roles, tailored to individual pieces of machinery and their functions. Each product must possess properties to ensure operation in the intended manner. This means substitution of genuine products for unapproved, non-specified alternatives can have a significant operational impact.

Counterfeit lubricants routinely cause more than material damage to machinery and equipment, destroying brands’ reputations, severely impacting consumer faith and disrupting the entire supply chain.

Genuine versus counterfeit: the label is the differentiator

Counterfeit lubricants pose a variety of issues to manufacturers and distributors, as counterfeiters commonly use a variety of counterfeiting tactics such as the use of unapproved base oils or formulas, altering additives that fall short of performance requirements, and reusing old, dirty oils and lubricants.

Through the printing of counterfeit branded packaging, these are then falsely represented as genuine products. The inability to directly inspect and test the contents of each product makes identifying counterfeits before they infiltrate the supply chain a challenge.

Many counterfeit goods are identifiable through poor quality labelling and packaging. If counterfeit products attempt to imitate authentic brands through packaging replication, clear and consistent labelling which provides full product and manufacturer details can be the differentiator.

Closing weak links and inconsistencies in the supply chain

Most lubricant companies use third-party printing companies to print their consumer-facing labelling. These organisations can be particularly vulnerable to leaks or theft, which could fall into counterfeiters’ hands. Greater control and management over label design and print can be established in-house with labelling and artwork solutions, in which approved labels are stored in the asset manager and the third-party printer is granted access, eliminating the risk of emailed variants as only the most recent, approved version can be printed.

Such solutions can also provide centralised management to ensure all relevant safety and regulatory compliance symbols are accurate and legible, and capable of being updated at short notice.

Beyond tackling counterfeiting, this frees employees from the burden of manual labelling to focus on other important tasks, reduces the often-huge financial outlay of artwork creation and management by bringing the processes in-house and ensures consistent, high-quality label placement in the correct proprietary font to eliminate human error. This is a key differentiator from counterfeit products that often feature poorly placed, low-quality and inconsistent labelling in generic fonts.

Weaknesses open the door to counterfeiters

Brands with easily mimicked labels and packaging are easy targets for counterfeiters to pass their products off as legitimate, often infiltrating the supply chain through routes such as online storefronts or unfamiliar sellers unlikely to recognise fake products.

Trusted brands are often taken at face value by consumers and their products consumed, resold or shared with little afterthought. Consumers routinely lack detailed product knowledge when it comes to chemical composition or industry regulations – they simply locate and purchase the recommended product for their needs.

The distributed global nature of many supply chains also poses a challenge. Weaker copyright laws, regulations and enforcement mechanisms overseas make it difficult to identify and shut down counterfeit production and sales.

Enforcing the rules on those that slip through the cracks

There are several common trends which expose counterfeit lubricants available on many online marketplaces.

Inconsistent placement and quality of packaging is common and a tell-tale sign of counterfeiting, often featuring incorrect language and grammar while omitting key product information. These counterfeits are often then sold at significantly lower prices to undercut genuine sellers.

From a marketing perspective, the product, its quality and expected performance are routinely overstated while supporting imagery is unprofessional and fails to meet the photographic standards of the brand on official distributor sites. Implementing consistent, high-quality product labelling and packaging artwork is a key anti-counterfeiting measure.

Brands must routinely search across online marketplaces to identify suspect sellers and publicise counterfeiting operations, once shut down, as a deterrent.

Don’t underestimate counterfeiters – tackle them at the highest level

On a global scale, it is vital to identify counterfeiters and their products on the market, prevent them from transacting sales and enforce brand protection. Although it can be easy to dismiss counterfeiters as a minor nuisance, brands must detect and defeat ‘pop-up’ counterfeiting operations in near-real time, tracing thousands of links from global digital marketplaces such as Alibaba, Amazon and eBay. Taking these actions to harness technology for detection and enforcement purposes can help lubricants brands safeguard their intellectual property, reputation and bottom line.

Image by Skica911 from Pixabay

Gurdip Singh is CEO at Kallik and Brahmpreet Gulati is CEO at BrandCares.