Counterfeit Crisis: How Negligence Allows Tainted Goods to Enter the Supply Chain
The global trade in counterfeit goods is a multi-billion-pound problem that poses significant risks to consumers and businesses. While criminal networks are responsible for producing these fakes, their success is often helped by negligence within the supply chain. When companies fail to exercise adequate due diligence, they can allow dangerous products to slip through the cracks and contaminate the market.
Stopping these counterfeit items will need a constant duty of care throughout the supply chain, with workers needing to pay close attention to what’s coming in and out of their shipments. With negligence, there are more errors throughout the entire supply chain process, which is why there is currently a counterfeit crisis all over the world.
This guide will analyse why negligence is the leading cause of counterfeit goods entering the global market, so continue reading to learn more about how you can prevent this.
How Negligence Occurs in the Supply Chain
Lax Vendor Vetting
Screening processes for third-party suppliers can be inadequate and lead to failures in spotting supply chain errors. When companies prioritise cost savings, it can mean that they neglect thorough checks that could be used to spot errors. This allows manufacturers with questionable track records to easily get into the supply chain and get their counterfeit goods into the market.
Poor Warehouse Security
Poor inventory control and insufficient security can create opportunities for legitimate products to be swapped with counterfeits. This is particularly problematic at major international hubs where volume and speed are prioritised over high-quality processes. Warehouses can improve their security measures to ensure that less counterfeit goods are entering the supply chain, taking more care of what comes in and out.
Lack of Traceability
Companies often fail to implement good traceability systems. Without clear records, it becomes impossible to quickly identify where a counterfeit entered the chain which can lead to more confusion. This absence of visibility is a form of negligence that stops internal investigations that could help to spot any false goods.
Insufficient Quality Control Audits
Relying solely on a supplier’s internal reports without conducting regular surprise audits is a form of negligence that can increase the amount of fake goods that are shipped to different countries. Counterfeiters often produce a small number of legitimate samples for initial inspection, only to switch to substandard materials once production begins so it takes a keen eye to spot when this happens.
The Consequences
Consumer Safety Risk
In industries like pharmaceuticals and food, counterfeit products can be life-threatening, as they can contain toxic ingredients that can be bad for people’s health. Fake medicines may also contain no active ingredients at all, which can lead to patients receiving medication that fails to work for its intended purpose.
Financial Losses
For legitimate businesses, the presence of fakes will make customers lose faith in a brand and cause distrust, which can reduce revenue. A high-profile incident involving a dangerous counterfeit can cause damage to a company’s reputation and lead to lawsuits and product recalls, if the fake products are noticed.
Regulatory Penalties
There’s now high penalties on companies found to be negligent in their supply chain management, as it holds them accountable for regulatory breaches. When businesses show non-compliance with quality standards, it can put the whole supply chain at risk. This can lead to businesses folding due to the penalties being unaffordable.
How to Reclaim the Chain
Embrace Technology
Technologies like blockchain can help businesses keep a better track of each product’s journey, helping them see whether or not it’s legitimate. AI technology can be a huge help with this too, as AI-driven analytics can flag any suspicious vendor behaviour which can increase the chances of goods being counterfeit.
Mandatory Audits
Conducting more frequent and random audits of all suppliers can help catch illegal manufacturers off-guard, which can help to spot any wrong doings. This can ensure that businesses comply with the safety and quality standards beyond the initial inspection, so there’s less chance of something bad happening within the supply chain.
Employee Training
You can train employees on how to spot red flags, such as unusually low pricing or suspicious documentation, which can be a clear sign of counterfeit items. Empowering your employees to report concerns without fear of reprisal can boost their confidence in being able to spot when fake goods are coming into the market.
Final Thoughts
Companies who have suffered demonstrable losses due to poor professional duty may need to seek advice from professional negligence solicitors to pursue accountability and compensation from the counterfeit goods entering the supply chain. A duty of care is owed to every consumer and demanding the highest standards from every partner in the global trade network needs to be normalised to keep up with regulatory standards.
