Counterfeiting continues to be a problem in many U.S. supply chains. In the electronics industry —which has been tackling this problem for some time now — counterfeit components continue to turn up despite the best efforts of manufacturers and their distributors.
Counterfeits are slipping into the channel through returned products. Many manufacturers will only take back products from authorized distributors — resellers that source directly from the factory. These distributors are accountable for the product and manufacturers can be certain that any products that are retuned are authentic.
However, a lot of excess electronics inventory is sold to brokers that deal in the open market. Brokers don’t necessarily source factory-direct. These products end up in the hands of end-customers that may want to return them for any number of reasons. If the customer has enough clout, most manufacturers will take these products back even if the customer hasn’t sourced through authorized channels.
Manufacturers are ending up with products they haven’t made and have to absorb the cost of testing or scrapping these products. This increases costs throughout the supply chain.
Some manufacturers are refusing the take back products that weren’t sourced through authorized distributors. That doesn’t always go over well with customers, but manufacturers say this is one way to keep the supply chain pure.
Does your company take back products unconditionally, or have a “you buy it, you own it” strategy? Can you recirculate returned products? How would your customers react to a change? If counterfeits have turned up in your industry, it may be time to revisit your return policies.