Sydney J Harris, American Journalist for the Chicago Daily News quoted “Men make counterfeit money; in many more cases, money makes counterfeit men.” This is absolutely apt for the supply chains related to counterfeit drugs, brands, reject products etc. This is what is actually termed as a “Parallel” Supply Chain. Such supply chains have existed for long and would also continue to exist in the future causing irreparable damage to the economy, consumers, brands, organisations, environment and finally the human beings themselves.
Simplistically, a supply chain of genuine products would consist of raw material suppliers, manufacturers, warehousing, distribution channel and a set of customers. As long as the product is genuine, the above supply chain is fine; however in cases of reject or counterfeit products, the supply chain would consist of an alternative or parallel distribution channels as stealth to beat the regulatory eyes, eventually finding its way into either the same markets or entirely different markets.
Counterfeit money is something which we have heard quite often... The supply chains of counterfeit money include counterfeit manufacturers and distributors of these currencies who try to mix these currencies with genuine currencies and try to push use them at petrol pumps, restaurants, small vendors and businesses. The Financial Express, FE editorial published in Dhaka (August 2012) indicates the growing presence of counterfeit currencies in Dhaka and indicates “Counterfeit currency notes generally enters the supply-chain once it is accepted by banks and retail stores and then it can change several hands until someone gets caught, much to his or her surprise and embarrassment. There are allegations that money withdrawn in bundles from banks or from Automated Teller Machines (ATMs) at times contains one or two fake notes. People having in their possession such notes are left with no option but to suffer financial loss since the banks concerned would flatly refuse to admit their folly unless the clients show the presence of those to bank officials standing right at the counter. In fact, banks here are very much vulnerable to the attack of currency racketeers for most of their branches are not equipped with counterfeit money detectors. Hand count by bank officials, not by counting machines, can help detect fake notes. But it is difficult for the cash officers to count by hand such a large volume of bank notes every day. So, it is essential on the part of each of all bank branches to install counterfeit money detectors.” The same article indicates that the US government reportedly removed recently fake money worth $261 million over a three-year period. The same issue holds true for India in its fight against counterfeit currency aided by supplies of counterfeit currencies manufactured both within the country as well as across the border. Published reports suggest the supply chain for such counterfeit Indian currency comprises of manufacturing in Pakistan (NWFP) and then stocked in Dubai and then pushed to use through in Nepal casinos and money exchange centres and through the use of Indian underworld spread across various countries.
The effect of counterfeit currency on the economy is through increased inflation (more money circulation), decrease in acceptability of cash transactions, financial loss to individuals and organisations who are victims of counterfeit currency. Technology development and availability aids such counterfeiting practices, however responsible technology and software developers such as Adobe Photoshop have modified their software to obstruct manipulation of scanned images of banknotes.
Have you ever heard of a “Rolex” watch being sold for $9 per piece? Well, time to ponder, however consumers lap it up thus creating a demand for fake brands. The flow of rejects back to customers is another cause of concern. China is the world factory for manufacturing goods. What exactly happens to the “rejects’ is still a mystery. Since the Chinese manufacturing is based on the unique proposition of low cost, thus recovering costs from recirculation of rejects is an enticing option in-view of low operating margins. In case of textile products, such as branded shirts, rejects are again found in the retail stores selling with huge discounts, thus negatively affecting the brand in the long run. I still cannot forget the quote of one of the buyers in a retail store in Sri Lanka, while buying a high end brand of shirts “These brand shirts are so cheap, hope it is not made of paper.” While the effect of rejects does damage the brand, the bigger challenge is countering the counterfeit drugs which can cause harm to the unsuspecting lives of the patients.
As per Wikipedia “A counterfeit medication or a counterfeit drug is a medication or pharmaceutical product which is produced and sold with the intent to deceptively represent its origin, authenticity or effectiveness. A counterfeit drug may contain inappropriate quantities of active ingredients, or none, may be improperly processed within the body (e.g., absorption by the body), may contain ingredients that are not on the label (which may or may not be harmful), or may be supplied with inaccurate or fake packaging and labeling. Medicines which are deliberately mislabeled to deceive consumers—including mislabeled but otherwise genuine generic drugs—are counterfeit. Counterfeit drugs are related to pharma fraud. Drug manufacturers and distributors are increasingly investing in countermeasures, such as traceability and authentication technologies, to try to minimise the impact of counterfeit drugs.
Counterfeit illegal and recreational drugs range from products which do not contain any active ingredients, as in cases where lactose powder is sold as heroin, or dried herbs such as oregano are sold as cannabis, to cases where the active ingredients are "cut" with a diluent (as in cases where cocaine is mixed with lactose powder), and cases where the claimed active ingredients are substituted by something cheaper (e.g., when methamphetamine is sold as cocaine). Dr. Hirsch, the New York Medical Examiner, claimed that buying illegal drugs is "... like playing Russian roulette," because "there is no way of knowing just what a heroin dealer has slipped into the packets." In some cases, if a dealer does not take the time to dilute the drug with lactose or other fillers, a "very potent blend of heroin" is sold, which can lead to overdoses.”
These illegal or so called counterfeit or parallel supply chains can only be disrupted or eliminated with effective regulations, technological help, knowledge dissemination and creating awareness. Actions such as regulatory mandating physical destruction of such goods, manufacturers focus on quality and improving process capability, postponing the final product assembly / packaging etc. near to the consumer / consumption area, could help disrupt the “parallel” supply chains and minimise impact, however to truly eliminate such parallel supply chains, a behavioural change in human beings is required. Had human beings been truly honest, we would not have been discussing this topic at all!!! Sydney J Harris was absolutely right!!
Also read:
Also read:
1. Supply Chain Pilferages!! Wasseypur Gangs &.......
http://www.supplychaindiary.blogspot.in/2012/08/supply-chain-pilferages-wasseypur-gangs.html
2. Reverse Supply Chain!!!
http://www.supplychaindiary.blogspot.in/2012/08/reverse-supply-chain.html
References: http://www.thefinancialexpress-bd.com/more.php?news_id=139437&date=2012-08-08, Wikipedia,
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