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Counterfeit and Gray Market Flow Chart. A simplified flow chart illustrating the normal flow of products produced by U.S. manufacturers include: Raw material.

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Presentation on theme: "Counterfeit and Gray Market Flow Chart. A simplified flow chart illustrating the normal flow of products produced by U.S. manufacturers include: Raw material."— Presentation transcript:

1 Counterfeit and Gray Market Flow Chart

2 A simplified flow chart illustrating the normal flow of products produced by U.S. manufacturers include: Raw material and component suppliers – These may include international or domestic. Manufacturing – This includes the actual manufacture, assembly and completion of a finished component or part. Distribution Center – Where finished parts are moved for packaging, warehousing and shipping. Owned by the manufacturer. OE Production or Warehouse Distributor – The part is then sold by the manufacturer either for assembly onto a vehicle (OE Production) or into the aftermarket distribution channel (Warehouse Distributor). Parts Store / Jobber / Retail Chain – In the case of the aftermarket distribution channel, a warehouse distributor may elect to sell through a parts store either independent or company owned. Repair Facility – If the part is installed professionally, the part is sold directly or indirectly to a repair facility. This may be independent or a car dealer. End User / Vehicle Owner – The ultimate end-user or consumer of the part. U.S. Automotive and Commercial Vehicle Parts Distribution Supply Chain Model

3 U.S. Automotive and Commercial Vehicle Parts Distribution Supply Chain Model - Simplified Domestic Supplier Domestic Manufacturer International Supplier Distribution Center O.E. Vehicle Manufacturer Warehouse Distributor Parts Store / Jobber / Retail Chain Repair Facility End User / Vehicle Owner MEMA Member Company US Manufacturer Legitimate Raw Material Or Component Color Key: = Raw Materials and/or Components = MEMA Member Companies / US Manufacturers = Original Equipment Channel = Independent Aftermarket Channel = Steps in the legitimate Supply Chain Model O.E. Dealer Independent Aftermarket Channel Original Equipment Channel

4 In the case of counterfeit or gray market products, additional steps in the distribution model may include: Unauthorized Suppliers – Producers of raw materials or components that were not commissioned by the original manufacturer. Unauthorized Manufacturers – Producers products made for the replacement of the original but in violation of the original manufacturer’s intellectual property. “Will-Fit” Supplier – May produce legitimate replacement products will fit and are not in violation of intellectual property but may later be converted to counterfeit by affixing trade marks or other trade dress violations by another party. Master Distributor / Importer of Record – Generally the company that takes receipt of illegitimate products within the U.S. with the intent to distribute. They may also be the converters of legitimate replacement products to counterfeit through the use of markings, packaging, etc. Internet / Web Sites / Mail Order – May also be distributors of illegitimate products and may or may not be located in the U.S. Broker – In the commodities business. Generally not product experts but in the business of selling large quantities of over run, over stock products which may or may not contain counterfeit goods. U.S. Automotive and Commercial Vehicle Parts Distribution Supply Chain Model

5 U.S. Automotive and Commercial Vehicle Parts Distribution Supply Chain Model - Simplified Legitimate w/ Counterfeit and Gray Market Unauthorized International Supplier Unauthorized Manufacturer Internet / web site /mail order Will-Fit Supplier Broker converted to counterfeit Domestic Supplier Domestic Manufacturer International Supplier Distribution Center O.E. Vehicle Manufacturer Warehouse Distributor Parts Store / Jobber / Retail Chain Repair Facility End User / Vehicle Owner MEMA Member Company US Manufacturer Raw Material Or Component Color Key: = Raw Materials and/or Components = MEMA Member Companies / US Mfgs = Original Equipment Channel = Independent Aftermarket Channel = Steps in the legitimate Supply Chain Model = Illegitimate Steps in Supply Chain O.E. Dealer Independent Aftermarket Channel Original Equipment Channel Master Dist / Importer of Record

6 A simplified flow chart illustrating the normal flow of products from international sources to U.S. buyers include: Free Trade Zone – Within international borders. Freight Consolidator – Actual transporter of goods. Customs Broker – Completes necessary documentation for export of goods. The process is then reversed upon receipt within U.S. borders. U.S. Automotive and Commercial Vehicle Parts Distribution Product Flow

7 O Free Trade Zone Freight Consolidator Customs Broker Customs Broker Freight Consolidator Purchaser Legitimate OriginDestination

8 In the case of counterfeit or gray market products, shipments are generally not direct to U.S. borders but may include many stops along the way. There are too many to name but some include: Dubai Paraguay Panama Mexico Canada Where import restrictions are less complicated and the entry of counterfeit goods more likely. The additional paper trail of many stops along the way make origin hard to detect. U.S. Automotive and Commercial Vehicle Parts Distribution Product Flow

9 O Free Trade Zone Freight Consolidator Customs Broker Customs Broker Freight Consolidator Purchaser International OriginU.S. Destination Illustrative of Potential Counterfeit and Gray Market Dubai ParaguayMexico Canada Panama Shipments get “pinballed” around the world prior to final destination

10 To address the serious issue of counterfeiting and other IPR violations within the automotive manufacturing community, the Motor & Equipment Manufacturers Association (MEMA) – in conjunction with its market segment associations to include the Automotive Aftermarket Suppliers Association (AASA), Heavy Duty Manufacturers Association (HDMA), Original Equipment Suppliers Association (OESA) – created the Brand Protection Council to provide a forum for manufacturers to discuss counterfeiting and other IPR violations with a focus on North America. For more information on the Brand Protection Council or for assistance in contacting automotive brand owners, please contact Jack Cameron at or (http://www.aftermarketsuppliers.org/issues/counterfeiting.php)http://www.aftermarketsuppliers.org/issues/counterfeiting.php U.S. Automotive and Commercial Vehicle Parts Distribution


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