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Posted on : Thursday 2nd July 2020 02:56 PM

What Manufacturers Need to Know About Countering Counterfeits

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Imagine purchasing some Windex from an online marketplace only to discover that what you were actually sold was a crude mixture of rubbing alcohol and blue dye.


Would you buy from that marketplace once again? Most likely not.


For online retailers, there are a handful of surer ways to lose your consumers’ trust and their business than by unwittingly trafficking in fakes. But regrettably, the problem of pirated and counterfeit goods is reaching a fever pitch in the U.S., and manufacturers face mounting pressure to evolve their methods of reducing counterfeits from their supply. This problem highlights the need for next-gen solutions, and points to the emerging role of smart sensors.


Elevated Scrutiny for Manufacturers


On April 3, President Donald Trump signed a presidential memorandum aimed at eliminating trafficking in fake and pirated goods. It defines the federal government’s plans to double down on its efforts curbing the spread of fake products.


In addition, the memorandum commissions the composition of a Report on the State of Counterfeit and Pirated Goods Trafficking, to be prepared and issued within the next seven months. That report could be followed by more stringent enforcement actions, along with the implementation of regulatory and policy changes that could hold third-party intermediaries like Amazon and eBay, and the manufacturers on their supply chains, accountable for fraud.


White House National Trade Council Director Peter Navarro called the memorandum a “warning shot across the bow” for e-commerce leaders like Amazon. But manufacturers should consider it the same way.


Countering Counterfeits With Strategic Solutions


Faced with higher government scrutiny and pressure from online marketplaces, today’s suppliers have to make sure the legitimacy of their entire output.


While trailing every single item produced might not have been justifiable from a cost perspective even a few years ago, the situation is different now. With fraud running rampant (the market for brand counterfeiting is projected to reach $1.82 trillion globally by 2020) the onus is on manufacturers to make every product provably legitimate. The alternative is potentially massive product recalls alongside the looming threat of federal regulations and fines.


With a 210-day interim before the federal report is released, it pays to be proactive.


Here are the three steps I’d suggest manufacturers take during that time to get ahead of the problem:


•             Evaluate existing quality control processes: If ever there were a time for manufacturers to take a close look at how they’re curbing fraud in their supply, it’s now, before potential enforcement actions force the point. By convening an internal power team of decision makers to proactively track down weak points in existing processes, manufacturers can take a critical first step toward evolving their fraud prevention tactics.


•             Look into smart sensor technology: Fortunately for manufacturers, tech providers can provide increasingly sophisticated tools to fight the rise of counterfeiting. Especially, intelligence-driven sensors are emerging as the manufacturing industry’s best bet at eliminating fraud. These embedded sensors have the potential to confirm the legitimacy of every item of a manufacturers’ output. And because they’re being developed to be both tiny (smaller than a pencil tip) and cost-efficient, they are poised to be industry standard across manufacturers of all sizes.


•             Closely follow government actions and align with law enforcement: As President Trump’s memorandum makes clear, the federal government will build up a centralized role in checking for fraud, and potentially hold both marketplaces and manufacturers accountable as well. As a result, manufacturers should find opportunities to work proactively with government agencies to retain fraud at bay. While not every manufacturer will be able to launch large-scale fraud prevention initiatives like Alibaba, these types of efforts will serve manufacturers well.


By approaching the problem of counterfeiting with a proactive eye, manufacturers can take an essential step toward protecting their output — and their brand identity — against an rapidly sophisticated and pervasive threat.


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