Within your manufacturing organisation, your employees work with a wide range of product parts and components each day. And although these small pieces may seem insignificant to the average person, your workforce possesses the unique skillset to manufacture these separate parts into a unified, high-quality product for consumer use. But what would happen if one of those parts was a fake?

The risk of receiving fake or counterfeit parts is on the rise, and now accounts for more than 2 per cent of global economic output, totalling a price tag of nearly £1.3 trillion, according a joint report from the Organisation for Economic Cooperation and Development and the European Union Intellectual Property Office.

Allowing fake components to end up in your organisation’s final products can result in costly ramifications. Especially for electronics manufacturers, the smallest faulty component in a final product can injure or even kill someone. Between product liability claims, legal expenses and reputational downfall, your business can’t afford to ignore the risk of counterfeit components.

So, what can you do to protect your organisation?

Secure Your Supply Chain

Preventing counterfeit components from sneaking into your final products starts with establishing a safe and secure supply chain. It’s crucial to ensure your suppliers are trustworthy and genuine, or you could end up partnering with counterfeit companies.

Consider these tips to find safe suppliers:

  • Always exercise extra caution when working with foreign suppliers. If possible, only work with suppliers that are regularly audited by an independent third party, and choose components which have already been tested and certified, and have compliance documentation to prove it.
  • When searching for suppliers, be sceptical of parts that have a severely reduced price. These ‘too good to be true’ offers are often a fraud.
  • Before creating an agreement with a supplier, ensure that their organisation is legitimate and has a good reputation by using business information agencies and reviewing Companies House
  • Establish a clear, written contract.
  • If the supplier is foreign, be sure that they understand how their parts must comply with your organisation’s local standards.
  • Conduct scheduled quality control checks.
  • Rely on anti-counterfeiting technology, such as blockchain, track and trace, and holograms or marking to protect the integrity of your final product.
  • Perform risk assessments and audits on all suppliers, or at least on those who supply you with safety-critical parts such as fuses or electrical cables.

Inspect Product Parts

It’s important to carry out robust inspections on the components your organisation receives to ensure they are proper quality. Use these tips:

  • Visual examination— Pay special attention to differences to the sample supplied
  • Further testing—Depending on the product part, your organisation can conduct further testing

Purchase Robust Cover

Apart from using these risk management methods to prevent counterfeit concerns, you can ensure ultimate peace of mind with proper cover, such as products liability insurance. Be sure to understand how your insurance responds to counterfeiting risks and recall procedures.

For more detail on the above risk management techniques or information about insurance solutions, contact AP Insurance Brokers today.

 

© Zywave Inc.