Fighting the Fakes: Supply Chain Counterfeits

What is the supply chain? 

The active management of supply chain activities is known as supply chain management (SCM), and it is done to increase customer value and create a long-lasting competitive advantage. It shows a deliberate effort on the part of supply chain management companies to create and manage supply chains as effectively and efficiently as they can. Product creation, sourcing, production, logistics, as well as the information systems required to coordinate these activities, are all covered by supply chain activities.

Counterfeit in the supply chain

Supply chain fraud affects practically all industries and is a widespread issue. There are fake pharmaceuticals, consumer products, electronics, automobile parts, and even wines. While counterfeit goods cost manufacturers and distributors billions of dollars every year, hazards to consumers may be far higher. Each year, more than 1 million people pass away as a result of counterfeit pharmaceuticals, which often have flaws that cause them to overheat or catch fire
Although producers, distributors, shippers, and governmental organizations aggressively seek to eliminate counterfeit products from the supply chain, it can be difficult to spot fakes. In 2018, counterfeit products cost international brands more than $232 billion. More than $200 billion is spent each year on the market for fake medications alone, which could buy 13 new pharmaceuticals every year. Without accounting for losses due to safety concerns and legal liabilities, losses from counterfeit vehicle parts are projected to total $2.2 billion annually. Consumer electronics that aren’t authentic cost more than $100 billion annually, and fake computer chips cost American businesses 11,000 jobs and $7.5 billion.

Finding fake products that enter the supply chain can be challenging, if not impossible. Applying a flawless method of certifying items from their origin to final delivery is the only way to defeat counterfeiters.

Why Fake Goods Are Difficult to Spot

Unfortunately, it is the responsibility of the suppliers to protect shipments of goods and parts. Governmental organizations and law enforcement are not equipped to deal with counterfeit goods, and there is no unified structure or agency that can.

For instance, despite recent crackdowns by government authorities, China is one of the top makers and the world’s largest source of counterfeit goods. Since there is no centralized agency to oversee the shipment of goods, it is up to each nation to take the best possible measures to weed out fake items from imports and exports.

The caliber of exported items is another issue. Factory rejects are frequently sold as high-quality products. For instance, in the Chinese wholesale market, Grade-A items can be produced in facilities authorized to create genuine branded products, whereas lesser-grade goods might be repurposed as factory seconds or produced in the same factories using inferior materials. Even individuals in charge of the supply chain are blind to fake goods when low-grade units are sold as high-quality goods.

The most effective strategy is to track manufactured items because there is no way to control counterfeiters. Suppliers can authenticate shipments from any vendors who are a part of the authentication ecosystem by developing a safe, open ecosystem for goods authentication that is simple to access and simple to use.

Identify and combat supply chain fraud

The problem of supply chain counterfeits has grown significantly over time and will only become worse. Unfortunately, the increase of markets and opportunities have also fostered the theft of intellectual property from businesses and the production of counterfeit items. Just a few instances of how fake goods and intellectual property theft harm businesses and customers include false product labelling, the use of phony materials and components in the manufacture of items, and the improper use of other’s trademark.

The questions that will help you determine whether or not your business has a counterfeit problem are:

• Do you have an established or developing brand?
• Is the profit margin on your goods high?
• Are there more returns or complaints from customers than usual?
• Does your brand have a presence in markets where you aren’t active?
• Have you seen a decline in market share for a well-known product in that area?

Education – Through education, people can become more aware of the risks associated with consuming fake goods and better understand what makes the company’s products unique. An illustration of this would be to post articles on the business website instructing customers to spot and stay away from counterfeit items. In addition, the company may train border agents, law enforcement, and distributors on product authentication so they would know how to spot fake goods.

It will be attempted to lessen the desire to use counterfeit goods by educating consumers about the company’s products, reminding them of intellectual property rights, and warning them about the possible negative effects of using fake goods, such as legal action for infringement. In addition, education can help customers by providing answers to frequently asked questions, advice on recognizing counterfeit goods, and the contact information of a source who will respond to any inquiries they may have. This enables businesses to take charge in preventing the purchase of fake goods.

Partnership – Companies can resist the sale of fake goods by forming alliances with law enforcement, taxing authorities, and the police. For example, businesses can offer training that includes advice on how to spot a fake product, as noted. After that, they can give law enforcement agencies samples of their authentic goods to help with the investigation.

The training and education of law enforcement groups, business associations, and clientele advance when the company’s labs or facilities are made available.

Practical Steps – Anti-counterfeiting processes can be highlighted through doable steps. The most excellent method to combat fakes is using technology. Smart cards, holographic pictures, color-shifting inks, RFID tags, ultraviolet inks, digital decoding, electronic tax verification systems, special identifying codes on packages that match the code on the packaged items, and tracking and tracing systems are some examples of what can be incorporated. Smart cards could take the place of paper tickets and cardboard passes, which are likely to be copied. Holographic imaging, color-shifting inks, and UV inks are some techniques for preventing currency fraud.

RFID tags with distinctive physical properties can be integrated into objects for marketing and secure identification. Most businesses that deal with pharmaceuticals for human consumption have a track-and-trace system that keeps track of and assigns serial numbers to packages that can be sealed. Manufacturers can find out where a package has been sold or delivered thanks to this method.

Checking in with the company’s representatives, distributors, suppliers, and other significant actors aware of the regional circumstances around the products and services are other valuable actions you may take. They can come up with preventative measures and assist in identifying potential risks for counterfeiting.

Manufacturers are almost always in the best position to spot fake goods immediately. Additionally, you can set up audit controls to make sure the supplier isn’t acting as an enabler as well; create a product purchase program for randomly purchasing samples to help identify issues; keep an eye out for potential fake product sales on the internet; follow up on quality control issues to find such goods, and have a product library set up with marketing materials and products for potential use in subsequent infringement actions.

Enforcement – Enforcement is the final element. To do this, you must register your intellectual property, including your trademarks, and record them with the relevant customs authorities. Provide training that aids in identifying and preventing the sale of counterfeit goods, as well as help law enforcement and regulatory organizations. When phony products are discovered, notify the counterfeiters and take legal action against them to safeguard the company’s brand and products.