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Daniel Stanton speaking at South Dakota Mines in 2019. Image: Courtesy of South Dakota Mines

Supply chain expert: Watch for counterfeit goods and start managing risks around Coronavirus 

RAPID CITY, S.D. — The run on toilet paper, hand sanitizer and face masks at retail outlets around the nation is one example of the kind of supply chain disruption businesses need to prepare for as the coronavirus outbreak evolves.

The public fear around the coronavirus is coupled with the closing of factories and ports at major manufacturing centers around the world. The resulting supply chain disruptions have sent a shock wave through markets. All of this is leading to significant uncertainty for investors, managers and owners.

Daniel Stanton, author of the book Supply Chain Management For Dummies, is an entrepreneur in residence at South Dakota School of Mines & Technology. He says it’s never too late to start managing risks. 

“Right now, every manufacturer, distributor, retailer and logistics company should have a rapid response team in place that is monitoring the news and keeping track of their supply chain,” he said. “These folks need to connect the dots quickly to identify how the coronavirus is evolving and respond in ways that minimize the impact to your supply chain.”

Stanton says business owners and managers should strive to get one step ahead of the evolving situation. 

“I think too many leaders are taking a ‘wait and see’ approach, instead of responding proactively. Yes,” he said, “there are a lot of unanswered questions. But there are also a lot of things that we’re pretty sure about, such as how the disease is being spread. We also know it is going to get worse before it gets better.

Stanton continued: “The good news is that most companies have a lot more inventory in their supply chains than they realize, and this acts as a shock absorber when there’s a short disruption. But the longer that the coronavirus outbreak goes, the more likely we are to start seeing shortages of all kinds of products. Small companies in particular are going to run into financial difficulties if their cashflow is disrupted for a long time.”

Stanton is the company president and cofounder of SecureMarking, Inc. His business provides a powerful new tool for manufacturers, distributors and their customers to combat the growing threat of counterfeit, black market and grey market products in global supply chains. The technology behind SecureMarking Inc. was developed at South Dakota Mines. 

Stanton said the supply chain disruption opens the door for more counterfeit goods. This doesn’t just mean brand name items. It could also threaten important safety components inside the electronic goods we use every day.

“Any time that there are shortages of legitimate products in the marketplace, it creates an opportunity for counterfeiters,” Stanton said. “Companies become desperate to fill orders and may “relax” their procurement rules and quality standards. That creates the risk of contaminating the entire supply chain with fake and low-quality materials, which can do even more damage than the original disruption.”

For average consumers, this also means uncertainty. Stanton says the public often takes supply chains for granted. 

“People don’t realize where the things we buy come from, and how many people are involved in the process,” says Stanton. “When there’s a disruption that prevents people from coming to work, sooner or later that gets felt by their customers — the folks downstream in the supply chain. But it also gets felt by their suppliers — the folks upstream in the supply chain. Because if your customer isn’t making and selling their own products, then they aren’t going to buy materials from you, either.”

—News release from South Dakota Mines