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Counterfeit risk management

Discover how to identify counterfeit material in procurement and supply

What is counterfeit material?

Counterfeit material can be described as a material, origin, age, composition, configuration, certification status or other characteristic that has been falsely represented. This could be by:

  • Misleading marking of the material through labelling or packaging
  • Misleading documents
  • Physical products that are of inferior quality passed off as being original
  • Failing to disclose information
  • Software counterfeit, such as illegal copies being made of computer software. This is particularly important if you’re implementing e-procurement systems

Counterfeit goods and services can create huge problems, affecting a wide range of industries around the globe. For example, if a pharmaceutical industry is buying or using counterfeit medicines, it creates huge health and safety risks for the consumers who have access to it. Whatever industry you’re in it’s important to keep in mind the price and if it seems too good to be true.

Challenges of counterfeit in procurement and supply

The challenges of counterfeit goods in procurement and supply varies between organisations and the industry you’re operating in. However, there are some common challenges of counterfeit in the processes you choose to adopt.

  • Sourcing: The risk of counterfeit goods in direct sourcing is particularly high. Maintaining regularly quality control and supplier checks in advance and throughout the contract term will help you to mitigate these risks.
  • Reputation impact: If you are supplying counterfeit goods then the impact on your reputation can be huge.
  • Equipment: It’s not just goods and services that can be affected by counterfeit, but the equipment and machinery you use. It’s important to check that the parts are not counterfeit. You can check to see if any Original Equipment Manufacturer (OEM) or item part numbers are featuring on any counterfeit registers.

Hints and tips to avoid counterfeit products in procurement and supply

To avoid counterfeit products in procurement and supply it’s important that there is a company policy in place, so that the whole organisation is aware. This encourages collaboration and the sharing of knowledge to help mitigate risk. Here are some hints and tips on how to avoid counterfeit in procurement and supply.

  • Review websites and registers regularly. Research to see if any of the goods are now at a higher risk.
  • Regularly check regulations and the market as things may have changed since the last time you checked.
  • Make sure that your organisation has the skills in knowing how to detail with counterfeit occurrences. Consider implementing some required training to help with understanding counterfeit and how to spot it.
  • Understand the legal implications of dealing with counterfeit goods and services and how to report it to the authorities.
  • Identify high risk countries that are susceptible to counterfeit goods or services.
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  • What is counterfeit material
  • Challenges of counterfeit in procurement and supply
  • Hints and tips to avoid counterfeit products in procurement and supply
  • Expand your risk management skills