Action needed to stop fakes in the supply chain

2 October 2013

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3 October 2013 | Andrew Pring 

Manufacturers must exercise greater vigilance over their supply chains to stem the flood of counterfeit goods reaching consumers.

It is estimated criminals rake in $650 billion (£400 billion) per year globally in counterfeit goods. Of these, $250 billion (£154 billion) worth of fakes pose health and safety risks to an unsuspecting public, which believes it is buying legitimately manufactured products such as alcohol and pharmaceuticals. 

Companies are seeing their brand reputation being damaged and their revenue stolen by their lack of knowledge of what’s happening in today’s highly complex supply chains, says Mark James of PwC's anti-counterfeiting team.

“It’s no coincidence that counterfeiting sometimes increases when manufacturers move production overseas. Many of the manufacturers we talked to have a very real concern about ‘backdoor production’ where orders are placed with a supplier for, say, 10,000 items, but an extra 40,000 are made and sold separately. In some cases, the people from the suppliers use the knowledge gained in manufacturing and set up their own factories.”

PwC said it is most prevalent with manufactured goods and luxury items, and increasingly with counterfeit alcohol. This is particularly alarming given the obvious health risks of ingesting/consuming these products. 

James said: “Industry bodies are requesting tighter, more transparent best practices and ‘know your client’ polices to ensure that legitimate shipping and delivery companies don't unwittingly transport counterfeit goods for counterfeiters".

D’Arcy Quinn, an anti-counterfeiting advisor to brand owners, commented:

“Brand owners see a lack of ‘know your client’ precautions in the shipping industry as a key contributor to the transport and delivery of counterfeit goods to the UK.” 

James added that pan-sector sharing of data would be a useful step in combating the problem. “In our experience, data on counterfeiting (seizure data, investigation data, web data) is extremely fragmented and there is little intra/inter industry sharing.”

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