Fighting the good fight: Keeping counterfeits out of the supply chain

Steve Paterson

(Arbeadie Consultants) as Co-chair introduced the workshop by highlighting that counterfeiting is still an issue, particularly in the oil & gas industry where an increase in activity in a costconstrained business has resulted in end users looking to source cheaper, good quality products from low-cost suppliers and countries. The workshop was an opportunity to develop an integrated approach across the entire supply chain from manufacturers to fabricators and through to end users. The invited panel included representatives from two industry associations: the Steel Alliance Against Counterfeiting (SAAC), and the Engineering Equipment and Materials Users Association (EEMUA) which acts on behalf of the end users.

He added that wider use of industry standards such as the recent ISO 17781 for duplex stainless steels would also be addressed. Finally, he explained that counterfeit in the context of the workshop meant any delivered product that was fake or did not meet the required quality. Steve then introduced the panel who would each speak about different aspects of the counterfeiting issue.

Costly to fight

Michael Kremmel

described some experiences with fake products which were mainly found in the Middle East and Asian markets, particularly in UAE, India, Iran and South East Asia. He reported a large increase in the number of fake products and materials certificates in the last two to three years. There was a significant increase in requests to verify material certificates, 90% of which were from the Middle East area, and approximately one-third of all checked certificates were found to be fake.

While there have been recent improvements with fewer fake certificates, approximately 10% are still fake. Michael showed some examples of fake certificates and product marking which were very good imitations. He then gave an example of a fake website in which an exemployee had started his own business in India with a similar company name, which was a copy of the Erne Fittings website. Erne Fittings took legal action and the bogus company had to change its name but is still using images from Erne Fittings on its website. Such an action is costly and timeconsuming. Michael described a number of actions taken by Erne Fittings against counterfeiting:

• co-operation with end users, e.g. Saudi Aramco require contractors and fabricators to check certificates with the original manufacturers,
• joining the SAAC initiative,
• implementation of dedicated email address with documents checked within 24 hours, 
  legal action if there is serious counterfeiting,
• implemented QR codes in certificates
• development of further measures for actual products.

ISO 17881

Joelle Greenwood

described the approach taken by duplex stainless steel manufacturers and end users to create an industry standard that established common test methods for quality control of duplex and super duplex stainless steels. This enables manufacturers to apply the same test methods for all clients in a consistent manner and allows end users to get the quality they need in line with industry agreed requirements. She reported how ISO 17781 provides robust test methods and acceptance criteria including direct assessment of microstructure of duplex and super-duplex stainless steels and correct etching methods to reveal what is potentially undesirable in the material.

EEMUA 224

Alan Cockerill

spoke about the EEMUA 224 publication which is a guide to risk-based procurement. Working with a number of member companies EEMUA developed this document based on the procurement of subsea equipment where nothing can be left to chance because of the inaccessibility of the equipment once installed. He also emphasized the significant consequences of coming across fake or sub-standard materials during the construction or commissioning phase of such projects.

The risk-based approach uses an overall criticality factor determined from the likelihood of the risk and potential consequences, to allocate different regimes of quality processes. At the lowest level of risk, normal commercial quality is acceptable as there is low impact on the project if the sub-standard or fake equipment is delivered. At the highest level of risk where quality is vital and cannot be compromised, more stringent quality and inspection requirements can be applied. If used rigorously this method reduces the risk of poor quality or counterfeit equipment but cannot eliminate it completely. Having good quality procurement processes is also necessary to reduce the risk.

SAAC

Carlo Farina

spoke about Steel Alliance Against Counterfeiting (SAAC) which is trying to unite major manufacturers of pipes and piping products against counterfeit goods. It was started in 2015 and today has 18 members, all manufacturers of steel pipes and pipe connections.

The manufacturers are concerned about the quality of materials that are produced and used by industry. There are critical segments such as pipelines, subsea, and refineries, where counterfeiting creates not only financial or economic risks but more importantly safety and environmental risks. The main goal of the initiative is to increase awareness and the following three groups have been targeted:

The Alliance has had some meetings and participated in two conferences. It has been mainly active in the Middle East but recognizes that Asia and South America are markets which are engaged in counterfeiting. The Alliance has met with the Dubai police in the Middle East, with the customs authority at the European Commission, and has had meetings in Europe with the United Nations to raise awareness of the issue.

The Alliance would like to promote technical solutions to minimize counterfeiting, whilst recognizing that it is almost impossible to prevent counterfeiting completely.

Jared Ayres

compared counterfeiting to someone having spent a lot of money on tickets to the 100 meters sprint final at the Olympics, a great sporting event, only to find out afterwards that the race was won by an athlete using performance enhancing drugs, i.e. you feel cheated. He emphasized the need to focus on removing this corruption from our industry and for everyone to work together to find ways to eradicate fake products.

Lively discussion

The presentations were followed by a lively question and answer session. One participant stated that his purchase orders for piping specifically require the

origin 

of materials

to be North American, Western European, South Korean or Japanese, but then you have to rely on the integrity of the supply house for the source. It is expensive for manufacturers to monitor or enforce where their products are delivered to, and for every individual company to have a quality program to check every stockist or supply house. He asked whether there are other ways for manufacturers to reach out to end users.

The Panel responded that engineering companies could go directly to the manufacturer and ask for type 3.2 certificates but that is not always possible because of end users’ demands. An option would be to implement a QR code on material certificates which you can verify on a website. Another option in development is to tag the product in such a way that it is difficult to fake it. Or manufacturers could only supply to authorized distributors and traders who have the full trust of the manufacturers, end users, and engineering companies.

In response to a question asked about the basis of the

QR code 

implementation

Michael Kremmel replied that Erne Fittings currently only implement a QR code on the materials certificates and not on the product. Technologies such as chips or laser marking exist but are difficult to implement.

In response to a question about the

position of officials

in countries the SAAC Alliance is working with, Carlo Farina stated that laws and norms against counterfeiting exist in most countries. In the Middle East, these are extremely tight for fake products but the problem is that the quantity is so large that it is impossible for customs to control every container, and not every country has the same level of concern about the problem.

The Alliance has concentrated on the Middle East because that was the first market where the issue was raised, but it happens elsewhere. It was emphasized that the Alliance, which includes Asian manufacturers, does not have anything against the origin of the material, provided it is good quality.

Summary

Finally,

Thomas Ladwein

(Aalen University) as Co-chair gave a summary of the key issues raised in the workshop discussion: