Authored By:
Brian Monks, Ovidiu Munteanu, Noe P. Navarro
Underwriters Laboratories, Inc., Northbrook, IL USA
Summary
Counterfeiting is a widespread problem that affects every industry and which has the potential to significantly erode a company's bottom line. According to the International Anti-Counterfeiting Coalition (IACC), the global trade in counterfeit products has increased from $5.5 billion in 1982 to approximately $600 billion annually today. In the U.S. alone, counterfeit goods cost businesses between $200 billion to $250 billion annually.
The impact of counterfeit products is not just about tangible financial losses. Counterfeit products can negatively impact a company's brand, reputation and perceived commitment to quality. Because counterfeit products can also expose consumers to potential safety hazards, their availability may carry legal ramifications for companies.
The good news is that companies can assess the risk of being targeted by counterfeiters, and can implement a plan to protect against such risks. By following the appropriate steps, companies can determine how to protect their physical and intellectual property assets, identify the elements of an anti-counterfeiting program and implement an anti-counterfeiting plan. However, any anti-counterfeiting plan must be tailored to a specific company's needs, based on size of the company, the type of products, the complexity of the supply chain and the markets in which the company does business.
Many companies have taken rigorous steps to protect their intellectual property, the quality of their products and their reputation in the marketplace. These steps include the introduction of holographic labels, the use of special color schemes to identify specific product types and the application of overt and covert security coding. In addition, a number of companies have partnered with customs officials in anti-counterfeiting efforts, resulting in the seizure of millions of counterfeit products, including electronic products.
Conclusions
The rapid increase in worldwide counterfeiting over the last few decades is definite cause for concern. Counterfeit products represent a significant cost for all parties in the supply chain, and unreliable, low-quality products can expose consumers to potential safety hazards, resulting in loss of revenue, brand value, and reputation, as well as exposure to investigations and legal actions. However, companies can assess the risk of being targeted by counterfeiters, and can take rigorous steps to protect against such risks.
Risk assessment includes analyzing the industry, the products, the product demand, and the product distribution channels. Risk mitigation involves a plan that incorporates a good communication strategy, a controlled distribution network, integrated security features, and collaboration with customs and border authorities. Ultimately, there is no off-the-shelf plan that can guarantee 100% positive results for all manufacturers. But, given the prevalence of global counterfeit trade, having no plan presents too great a risk.
Initially Published in the IPC Proceedings
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