The lubricant supply chain acts like a mix-and-pack consumer products supply chain, with multiple third parties and intermediaries included in packaging and redistribution.
At the distribution point of the supply chain, contaminants can enter the product. Many distributors transport multiple types of lubricant at once, some of which can be incompatible with each other such as automotive engine oils and industrial turbine oils. Detergents automotive oil damage turbine oils, as residue left in lines and hoses on the truck can entirely ruin a tank of lube oil.
Improper storage of lubricants can wreak havoc on the product's efficiency and validity. Storing lubricants outside, leaving barrels uncapped, cross-contaminating products, improper labelling or nonstandard transfer containers can all degrade the oil and are more common than they should be. Additionally, storage rooms are not always conducive to a first in first out rotation due to incomplete data and lack of oversight.
Lubricant inventory management can be a unique operational burden:
- Lubricant is packaged and re-packaged as it moves from bulk volumes down to retail volumes
- Multiple distributors, carriers and re-packagers all have distinct IT systems which drives incomplete data, and a lack of digitization and effective communication
This complexity creates a particular visibility challenge as the lubricant exchanges hands and is further split down the chain.
The various disconnects and inefficiencies that could occur along the lubricant supply chain put it at increased risk of counterfeiting or unintentional quality breaches. Lubricant products, being consumer-facing retail items with multiple third parties along the supply chain are particularly at risk.
Providers selling lubricants can incur billions in losses due to counterfeiting, not to mention significant damage to their reputations. As counterfeiters evolve and take advantage of supply chain obscurity, the risk only increases.
Unintentional quality breaches are more likely but almost as damaging. Current ambiguity in the supply chain limits a company's ability to effectively recall goods, and compels them to "over-recall" in the hope that by doing so they will seize all affected product, which has negative financial and environmental impact.