TT Talk - Counterfeit Goods in the Supply Chain

The continuing challenging economic climate across the globe has intensified the temptation, personally and corporately, to purchase goods that suggest they are the real deal, at seemingly bargain prices. The degree of risk involved may depend on the nature of the goods, but counterfeit goods will almost certainly be devoid of regulatory approval, which typically involves rigorous tests for health and safety, as well as IP (intellectual property) compliance. In some cases there may be a direct hazard to public health, as in the case of fake pesticides entering the entire food chain.

It can be expected that established procurement entities would take steps to ensure that they purchase genuine and credible goods, since brand reputation is at stake.

  • Consideration, particularly in the case of raw materials, will be given to composition, certificates of analysis, samples (which can be thoroughly tested), in conjunction where possible with physical visits to production facilities.

  • For manufactured products, samples can be sent for standards agency testing – although this presupposes that consistency between samples and the goods ultimately supplied.

This may not be the primary concern of smaller organisation, struggling with cost pressures, but nonetheless some basic suspicions should be aroused, not least how well you know your supplier.

Whilst all this may seem remote for freight forwarding and logistics activities, there are many lessons that can be drawn, reasonably summarised in the basic premise of

‘know your supplier’

. In addition to this, carriers in unitised trades will inevitably carry rogue products, quite unsuspectingly, where most units remain unopened.

While there can be no culpability in inadvertently carrying such goods there are wider ramifications as goods seized by enforcement agencies will necessarily result in:

  • Inconvenience

  • Loss and cost, including freight payments

  • Destruction costs

  • Carrier and port detention fees

  • And, in the case of consolidated units, delays to other shipments.

Supply chain security and compliance measures have become more stringent with improved awareness developed over the last decade. The introduction of AEO (Authorised Economic Operator), more demanding Aviation Security processes, and procedures such as 'known shipper certification' have all reduced the ability to accept goods for shipment without detail or pre-advice.

Random examinations by enforcement agencies help to tighten security and ensure adoption of appropriate processes. AEO in particular encourages parties involved in the international supply chain to achieve a specific certified standard, which in due course may become an internationally recognised quality mark, evidencing attainment of a defined high standard in supply chain security, financial stability and compliance with customs procedures.

International initiatives concerning security or simply good standards certainly tighten the net, as do the efforts of enforcement agencies. However, the continuing and disturbing prevalence of crime - and here in relation to counterfeiting goods - requires all those involved in the supply chain to be diligent, most particularly those who are most closely associated with the entry point, as well as the exit point. Declining a price in our local market that is too good to be true restricts the unjust reward.

Staff Author

TT Club