How to combat counterfeits

Counterfeit is a serious supply chain risk since it not only hurts company revenues and global tax receipts but can also have severe health and safety implications. The estimated total global economic value of counterfeit and pirated products might be as much as US $650 billion  every year based on a February report by Frontier Economics for the International Chamber of Commerce.

Recent stories we have covered tell of fake Apple stores  and Italian furniture in China  as well as GAO claims that 40 percent of the US Department of Defense’s supply chain is adversely impacted by fake or defective parts .

There are several ways to combat counterfeits through implementation of supply chain practices and technology:

1) Rigorous supplier selection and parts purchases directly from authorized distributors while avoiding middle parties.

2) Marking products in a difficult to replicate way – for instance holograms – see the Canada Goose story (link)

3) Encoding the packaging or products with RFID or 2D bar code tags

The approach taken depends on the industry, level of risk and cost of the solution. In the “Risk Mitigation Strategies” chapter of Operations Rules  there is a more complete analysis of the various technologies and tradeoffs.