In today's era of the price-sensitive consumer, counterfeiting isn't just limited to luxury products. Today, the problem is rampant in the FMCG industry, which has now become a global concern. With a large range of counterfeit products constantly entering the marketplace, companies find themselves struggling to track and trace them. The inability to curb their movement across the supply chain impacts business revenue and profits. It also puts consumer health and safety at risk.
Why product counterfeiting is a growing challenge?
For the FMCG industry, counterfeit items are increasing at an alarming rate. The number of incidents are now breaking new records. The presence of millions of counterfeit products is causing disruption not just in the lives of citizens, but also in the economy as a whole.
Today, counterfeiting has become a global phenomenon. Criminals taking advantage of supply chain loopholes to introduce fake products into the market. As they use sophisticated, high-tech machinery to produce seemingly genuine goods, it has become increasingly difficult for brands and consumers to tell them apart.
At the same time, the growing trend toward online shopping has made it easy for counterfeit products to be introduced into the supply chain. Low-cost production and global distribution have opened doors to unscrupulous manufacturers. Although consumers unwittingly pay for cheap imitations, they receive less than they bargained for, sometimes putting their health at risk.
Here are the top three ways counterfeiting impacts the FMCG industry:
- Puts consumers at risk: The use of poor-quality products and ingredients in fake FMCG products can severely impact consumer health and safety. Counterfeiting has further grown since the pandemic, thanks to the increasing demand for hygiene products and health supplements. However, they put the lives of consumers at extreme risk.
- Impacts brand integrity and reputation: Consumers buying counterfeit products without realizing it often end up with a bad product experience. Fake cosmetic products, for instance, can cause rashes and fake food products can lead to allergies or other disorders. Such consumer experiences can negatively affect the brand's reputation.
- Affects compliance posture: With counterfeit products becoming so widespread, they have an immense impact on the compliance posture of companies. As FMCG companies need to adhere to stringent compliance requirements, the presence of fake products can result in severe non-compliance fees and lawsuits.
Ways to curb counterfeiting
Consumers today expect to receive both quality and reliability in the products they purchase. If the product fails to meet their needs or puts their health at risk, it can prove to be very costly for the brand. Brands must get real-time insights into the various steps and stakeholders in the manufacturing process. Only then they can improve processes, resolve defects, ensure compliance, and protect brand integrity.
There are several ways in which companies can curb product counterfeiting:
- Increase awareness: Increasing awareness and bringing authentication solutions to the forefront is a great way to curb the growing instances of counterfeiting in the FMCG industry. Such awareness can help consumers, brand owners, and regulatory authorities to more easily differentiate between genuine and fake products. Such products can then be quickly removed from the supply chain network.
- Embrace track and trace solutions: As counterfeiting becomes rampant, the FMCG sector can benefit greatly by embracing track and trace solutions. These advanced solutions can help identify the source of counterfeit products, monitor their movement across the supply chain, and ensure the genuineness of every product. Even if counterfeit products get detected after customer shipment, you can still achieve the visibility to contain the risk to a smaller sample of finished goods. It also helps in greatly minimizing the effort, time, and cost of recalls.
- Constantly monitor the supply chain: Constant monitoring of processes can also help uncover inefficient processes that lead to waste, errors, and non-value-adding activities. In addition, they can set the lean manufacturing ball rolling, helping reduce total product cost by a large percentage. By identifying and isolating counterfeit raw materials or components in time, brands can safeguard customer health. It can also help them reap substantial direct and indirect cost savings while protecting their reputation.
- Carry out frequent assessments: Carrying periodic risk and vulnerability assessments across different stages of the supply chain is another great way to minimize the probability and impact of counterfeiting. By identifying stakeholders who are part of your network and assessing the level of vulnerability associated with each one of them, you can drive focus towards people or processes that need maximum oversight
As counterfeiting seeps into the FMCG industry, the risk day-to-day items present is growing manifold. To avoid health hazards, protect brand reputation and integrity, and maintain compliance posture, companies need to increase awareness at all levels, embrace advanced track and trace solutions, and carry out frequent assessments.
Learn how QodeNext's traceability solution can help deal with counterfeiting across increasingly complex FMCG supply chains.
