In an
article in Supply Chain Management Review's July/August 2014 issue,
researchers from Penn State's Center for Supply Chain Research
outlined their study on counterfeiting. The article looks at the
causes and consequences of counterfeiting, and at what companies can
do, and are doing, to mitigate counterfeiting and its effects.
Intellectual property theft and
counterfeiting are important risks—costs—to consider in any supply chain, especially a globalized one. It is a risk that can affect
up- and down-chain businesses and ultimately end consumers: there are
recent counterfeiting cases whose consequences have even been life
threatening. Further, it is a TCO cost that can have negative
repercussions on other variables,
including by impacting innovation, quality, the image of the company,
cost of replacement parts, and lead time, among others. Thus IP theft can have a cost-multiplying effect on your company’s
TCO and is a serious risk of offshoring which needs to be identified and
addressed rapidly and thoroughly.
The authors of the Penn State study provide several graphics
demonstrating how counterfeits can arise and cause unnecessary costs and loss at
various parts of the supply chain, laying out a useful basis to begin
critically examining your own supply chain for counterfeit risk and
potential IP theft cost.
Further, they provide a variety of
proscriptions for combating counterfeiting in your own supply chain.
The diagram below outlines how to combat counterfeiting in your own
organization by working within the existing supply chain by boosting
communication and accountability:
In addition to addressing potential
problems within the existing supply chain, as the authors of the
article suggest, IP theft can also be combatted by restructuring the supply chain to include lower-risk,
onshore, local suppliers.
Only 8% of cases in the ReshoringInitiative’s library (as of August 2014) cite IP theft as a reason to reshore: this
suggests there is a gap in awareness about how this issue can affect
the bottom line, especially considering the potential cost
consequences of IP theft risk in a global supply chain. A recent
study from Kaspersky Lab found that 21% of businesses
(about 20% of those surveyed were manufacturing firms) suffered some
kind of intellectual property compromise or theft in the last year:
IP theft can be financially and otherwise dire, but it is a risk that
can be easily diminished or mitigated altogether by reconsidering the
location and the constituents of your supply chain and by
reconsidering its effects on your TCO.
Interesting article. Nowadays with the fast technological developments intellectual property (theft) is becoming a hot issue. It is becoming much easier to steal IP from other firms. This makes it more important to protect your IP.
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