The Problem of Counterfeits in the Supply Chain
Blog | March 10th, 2023

The Problem of Counterfeits in the Supply Chain

Brands are built on the premise of quality. Even if it attracts a premium, customers are willing to pay it for the sake of the quality of the product, which can translate into longevity, safety, and performance. These factors may become life-critical, as in the case of automobiles, medical devices, and even cosmetics and pharmaceutical drugs, among others. Any compromise on quality can lead to injuries or, sometimes death.

Unfortunately, where there is a brand, the risk of counterfeits also co-exists. Even during the Covid-19 pandemic when the world was struggling to contain the virus and protect people from getting infected by using personal protective equipment and clothing, counterfeit PPEs flooded the market, endangering users.

The problem of counterfeiting creates multiple challenges. On the one hand, the product comes cheap and therefore may attract a large number of users who may not be willing or able to pay the original price. The second is the difficulty in identifying the counterfeits and causing a loss to the purchaser in terms of money as well as satisfaction. Of course, there is also the risk to health and safety.

This results in the third problem of damage to the original brand. The users may blame the poor performance of the product on the original manufacturer, who may not even be aware of the existence of the counterfeit.

And, fourthly, of course, the ethical and regulatory aspects of controlling the counterfeits from entering the supply chain.

Identifying and preventing the circulation of counterfeits can be difficult as counterfeiters are also using next-generation manufacturing and printing techniques to create counterfeit products and use labels and security codes that are very similar to the original and hard to spot.

Quality Management System to Control Counterfeits

Manufacturers are taking cognizance of the risk of counterfeit components in their supply chain and taking efforts to fight it by investing in anti-counterfeit packaging and protecting their brands. The demand for such packaging is expected to go up from USD 117.2 billion in 2021 to USD 211.3 billion by 2026, growing at a 12.5% CAGR during the period.

In addition to this, manufacturers must also tighten their supplier management program and quality management processes to ensure their supply chain is not compromised. This makes it critical for manufacturers to know their suppliers well and evaluate their products and quality conformance periodically.

cta the problem in the supply chain

A three-pronged approach will help ensure the genuineness of the components being supplied. We urge supply chain and quality leaders to focus on the following:

Well-documented Quality Standards & Expectations from the Supplier: Setting the right expectations from the word Go is essential to ensure the quality of the components. Define the quality standards, which can be based on the best practices followed in the industry. Share this with employees and potential suppliers for transparency and accurate assessment of the supplier’s capability.

Quality Assurance Process that checks for Counterfeits: Quality assurance workflows must be put in place so that suppliers supply the right components, as per the specifications, to reduce the risk of non-conformance. This is also critical for regulatory compliance, product performance, and customer satisfaction. Additionally, it is important to have a process in place to check issues related to counterfeits entering your supply chain – especially if this is common in your industry.

Quality Control with the Power of Data: Quality control processes help prevent any poor quality of components from entering the supply chain. Inspections are a critical part of the QC process, and periodic inspections must be performed with support from the right set of digital tools – so the entire inspection process can be powered and supported with access to data and documentation.

Supplier Management Best Practices

The following five aspects of supplier management will ensure that issues and challenges related to supply chain quality are minimized. Be it counterfeits or other quality issues – plan a robust supplier quality management process to mitigate supplier-related risks.

Supplier Onboarding: Ensuring the supply chain remains uncompromised begins with choosing the right suppliers. The suppliers must be selected with care, after much due diligence and ensuring they have the right certifications. Inspections, audits, and interviews will form a critical part of the onboarding process.

Periodic Inspections: Once the supplier is onboarded, the story, unfortunately, does not end there. Audits and inspections must be conducted periodically to ensure that the standards are maintained throughout, without any slackening.

Supplier Score Card: Suppliers must be rated on various performance parameters so that any dip can be found immediately and corrective action is taken.

Communication and Collaboration: Constant communication and close collaboration with the suppliers is essential to keep them informed of any changes in requirements in a timely manner. This will also help forge deeper relationships with critical suppliers so that they continue to maintain and improve the quality of their products.

Training: Constant training of the personnel is important to make them aware of the potential risks caused by deviations, how to identify them, how to process that information, and take further action as appropriate. It is not uncommon for untrained or unaware employees to turn a blind eye to deviations. Setting thresholds and communicating them along with the implications for the product quality is critical for preventing counterfeits from entering the supply chain. The standards and SOPs must clearly delineate the process to be followed for obsolescent parts and for testing raw materials to detect any deviations.

Automating Supplier Management with a Next-generation EQMS Solution

Manually managing suppliers can be tedious and prone to errors. Automating the workflows can reduce the burden and free up resources to add value to the organization. Further, automating the processes will also:

    Provide access to valuable data on the different suppliers
  • Help to identify critical suppliers to prioritize performance monitoring
  • Create a list of potential suppliers for future reference
  • Schedule inspections, document, and share observations, and take follow-up actions in case of any deviations
  • Use the data to generate reports and continuously improve the process

Ultimately, this will help to spot counterfeits and defects quickly and eliminate them to ensure product quality and safety.

ComplianceQuest’s cloud-based, scalable and flexible quality management solution integrates a supplier management solution to:

    Provide a consolidated, 360-degree view of your supplier engagements
  • Manage and control all elements of your supplier interactions
  • Provide supplier and partner visibility and access to all your departments throughout the supply chain
  • Ensure supplier compliance and reduce risk

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