In part 1 of a series on supply chain risk, Russ Berland begins a discussion addressing supply chain risk: the gaps, the frauds, the disconnects, the counterfeits, the gray market. Consider: to the extent that these are our supply chains, they are someone else’s distribution channel.

A mother in Kenya has a child who is sick with malaria; he is listless and has a high fever. She goes to the local drug market to purchase malaria medicine and gives the medicine to her child, but his fever increases and he dies. The drug she gave him was a counterfeit. If she had had the real drug, his life could have been spared. This situation happens daily, as drug counterfeiters and gray markets infiltrate the pharmaceutical distribution channel and, in this case, this woman’s personal supply chain.

Counterfeit goods are just one risk in supply chains and distribution channels. Besides counterfeit drugs, we see counterfeit athletic and fashion shoes, computers and server parts, consumer electronics, personal care products, wallets, watches and jewelry, food and even automotive parts.[1] Gray market goods are real goods that leave the distribution chain under some reduced pricing program for specific markets – think HIV drugs for Africa – and re-enter a higher-cost market to compete on…

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