3 strategic approaches to combat counterfeit products in the supply chain

counterfeit products

3 strategic approaches to combat counterfeit products in the supply chain

counterfeit productThe widespread presence of counterfeit products has infiltrated various sectors, causing disturbances in the market due to the prevalence of substandard products. Counterfeiting has evolved into a substantial industry, estimated to be valued between $1.7 trillion and $4.5 trillion annually.

This menace poses risks not only to consumer safety but also jeopardizes the reputation of genuine brands. Addressing the issue of counterfeit products within the supply chain requires a comprehensive strategy, encompassing due diligence, vigilant oversight, and the implementation of robust reporting mechanisms.

The threat of counterfeit products

The menace associated with counterfeit products is a significant concern, spanning various industries including pharmaceuticals, fashion, and food supply chains. A particular instance involves an online pharmacy engaged in the unauthorized sale of counterfeit medicines procured from an illicit network of manufacturers and suppliers.

The circulation of counterfeit products in the supply chain, as illustrated in the case above, has the potential to inflict adverse consequences on consumers, thereby damaging the reputation of brand-owning pharmaceutical companies. 

Combating the circulation of counterfeit products in the supply chain faces its own set of challenges, including:

  • Escalating supply chain complexity. The structure of product supply chains is progressively intricate, multi-tiered, and global. This complexity poses difficulties in tracing the origin and movement of products. 
  • Internal complicity. In certain instances, individuals involved in illicit activities receive assistance from internal parties. This collaboration may involve corrupt employees or contractors deliberately introducing counterfeit products into the supply chain.
  • Digital sales platforms. The surge in e-commerce and social media has empowered counterfeiters to directly sell products to consumers. This bypasses traditional supply chains, intensifying the challenge of curbing the circulation of counterfeit products.

The battle against the counterfeit

The battle against counterfeiting presents significant challenges, and companies can adopt the following three strategies in response.

  1. Vendor Selection and Auditing

To proactively address the issue, companies should meticulously vet vendors through background checks and validation of potential suppliers’ credentials. This scrutiny extends to all entities within the distribution chain, encompassing wholesalers, distributors, and third-party logistics providers.

This rigorous process ensures that businesses engage with legitimate partners, thereby reducing the risk of counterfeit products infiltrating the supply chain. While initial screening is crucial, establishing a system of ongoing monitoring is equally vital. This involves conducting regular audits and due diligence on third parties to guarantee their adherence to quality standards.

Facilitating vendor screening and monitoring is the Know Your Vendor by Integrity Asia, which streamlines the process for businesses, aiding in mitigating supply chain risks by offering a comprehensive overview of due diligence on third parties.

  1. Effective Reporting System

Companies benefit from both internal and external reporting mechanisms aiding in the monitoring and identification of suspicious activities. Specifically, in the case of counterfeit drug products, swift resolution is possible through reports received from distributors, wholesalers, pharmacies, and consumers.

  1. Collaboration

Collaborating with law enforcement agencies, regulatory bodies, and other stakeholders strengthens efforts to combat the circulation of counterfeit products. This partnership not only enhances information sharing but also opens avenues for subsequent actions, including conducting raids on warehouses or factories engaged in counterfeit production and implementing takedowns to halt the sale of counterfeit products on e-commerce platforms


Photo by Freepik

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