In 2019, NSK reported the seizure of counterfeit NSK packaging and labels in Hebei Province, China. During the seizure, more than 23,000 fake boxes and cartons were discovered in Linxi County, Xintai City. With bearing counterfeiting seemingly on the rise, how can we combat the risks of this damaging practice? Here Chris Johnson, managing director at specialist bearing supplier SMB Bearings, investigates three benefits of blockchain to increase traceability in the bearing supply chain.
According to the World Bearing Association (WBA) the total cost of counterfeit bearings to the global economy is around 4.2 trillion USD, putting 5.2 million jobs at risk worldwide. While each manufacturer has its own unique stamp and etched part number that is standard across their bearings, detecting a counterfeit bearing can be challenging. Often, only the smallest discrepancies may unveil the difference between an authentic and a counterfeit component.
Although the visible inconsistencies in counterfeits may be small, the potential consequences of installing such a component in an industrial machine is high. Could blockchain solve this problem?
Blockchain is a Distributed Ledger Technology (DLT) that is gaining traction as a tool to fight product piracy in the bearing market. The technology acts as a database made up of a sequential chain of blocks, each with timestamped data. It consists of a digital ledger for data validation, without centralized control, containing all the transactions made by the users of a certain network. This results in a historical trail of records or transactions.
Blockchain offers a way to guarantee all the steps of the process have been done according to the specifications and associates a digital token with the physical good which makes it impossible to clone it.
While counterfeit bearings may look like the authentic component, quality and lifespan are often severely compromised. When bearings are produced and sold, companies have unique identifiers that can be verified with a dedicated service that is associated with data certificates, using timestamp, on blockchain. The buyer will therefore know automatically that a fake bearing has been offered to them if this information isn’t available.
Smart contracts are self-executing contracts stored on a blockchain with the terms of the agreement between buyer and seller directly written into lines of code. They are commonly used to automate the execution of an agreement to ensure that all parties are absolutely certain of the outcome. This occurs without any intermediary’s involvement or time loss. Smart contracts deployed to blockchains render transactions traceable, transparent, and irreversible.
Smart contracts are also used to automate a workflow and trigger the next action when conditions are met. For example, if an EZO bearing is designed and manufactured by Sapparo Precision Inc in Japan, the provenance of the bearing, along with its manufacturing process would be recorded digitally. Traditional paper-based systems see forms pass through multiple hands between manufacturer and end-user, but with smart contracts, all the steps are recorded and stored on a blockchain.
Trust in the supply chain
Blockchain’s versatility means it has been attracting attention as a valuable technology for supply chain distribution. When supply chains are fragmented, information about the provenance of a component can be diluted over time. Blockchain’s ability to handle secure and traceable transactions could strengthen trust among supply chain participants because they can keep track of shipments, deliveries, and product quality during transport.
Ultimately, if there seems to be something different about a stamp or part number on your bearing, it may be a counterfeit. The best way to safeguard authenticity is to buy directly from the manufacturer or from a distributor authorized by the manufacturer. However, when this isn’t possible, blockchain is proving to be a useful tool to ensure quality assurance and transparency in the bearing supply chain.