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Question-time at the Annual General Meeting. "I wonder which difficult questions will come up this time. Last year was crazy", the CEO thought to himself.
Two questions dealt with. Third question. Microphone delivered to an old geezer in the fourth row: "Recently, I read an article in Automotive World about how Daimler deals with the gigantic problem of fake replacement parts. Do you have similar challenges and what do you do about it?"
Yes! Great question to which he had a just as great answer up his sleeve. The CEO took a deep breath and delivered his answer:
Counterfeiting is a real problem
"Thank you, I’m really happy you ask that question," the CEO started.
Counterfeit replacement parts are indeed a major issue in the automotive industry. And in ours too. The pirates make products that sometimes even look better than our original parts. As does the packaging.
But their quality is as low as their price, or lower.
This creates many problems and risks. Not only for us.
But not only the problem we think of spontaneously
The obvious problem is a loss of sales for us, of course. But that might be the smallest problem.
We must keep in mind that most customers buy these parts in good faith, believing they are genuine. (Even though they often should have wondered about the surprisingly low price…)
A greater problem, a long-term problem, is the erosion of brand value and of confidence in our products. Because when those parts break, many customers believe it is our original parts and turn to us. It causes complaints and claims for compensation, extra service costs, and a loss of confidence in us, our brand, and our products.
However, that is still a problem only for us. There is an even greater issue – public safety.
The problems caused are not only problems for us, our company
Our parts are often used in equipment that, if it fails, pose a danger to health and safety, and sometimes indeed to public safety. If our customers run a schedule for preventive maintenance based on the reliability of our original parts but instead use inferior counterfeit components, you don’t need much imagination to see which consequences it could have.
Solutions are around, but most of them don't fit all industries
For some time, there have been solutions to authenticate products to ensure that they are genuine. But most of them have either been geared towards the luxury industry, which makes them too expensive for us, with our high volumes and smaller value per item. Or they have required adding extra steps to the production line with long installation times and expensive standstills that are hard to absorb financially.
IsAuthentic makes product authentication easy for more industries
Luckily, we have found a system called isAuthentic which works also for our industry. It works for high volumes too and causes no extra outage in production to install. Authentication is just as easy. You just use an app on a mobile phone.
During the past year, we have tested the system. It has performed wonderfully and just a month ago, the board approved a full-scale roll-out throughout our entire business.
As we’re a link in an entire chain of production and logistics, we have also decided to require such product authentication from all our suppliers.
Through these measures, we are confident that we will safeguard customer trust, our brand, and public safety too, as well as reducing costs of service and customer claims for compensation.
So, I am very pleased you asked that question. I hope you’re as happy with my answer."
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