Counterfeiters have been helped by the growth of the internet, making it far easier to distribute fake goods through unofficial channels. More worrying is that counterfeit products are now spreading to legitimate supply chains, as counterfeiters become more security savvy. From the perspective of brand reputation, from luxury goods brands to the electronic component suppliers, the consequences of illegitimate products being distributed by official resellers are obviously dire. More pertinently for consumer-facing brands, the same is true for the reverse: if genuine products are being diverted to unofficial sources, the luxury experience of buying the product is at risk, as well as the business potentially losing revenue.
Again, to reference statistics from the Homeland Security report, while the number of individual cases of IPR seizures decreased from 2011 to 2012 by over 7 percent, the total Manufacturer’s Suggested Retail Price (MRSP of goods seized actually increased. This shows that while every effort is being made to bring cases of counterfeiting down, the achievements to date are not helping brands protect their revenue streams. This consistently high amount of counterfeit crime is putting continuous pressure on brands to protect their products and the users of these products through more sophisticated covert technology solutions.
However, the majority of existing overt and covert anti-counterfeit technologies rely upon adding physical features to an item or product that are secure only because the genuine manufacturer can do something that the counterfeiter cannot. Whether it is because the technique is too difficult or the capital investment too high (holograms), the materials are hard to obtain (colour-shifting inks and taggants) or the information is secret (encrypted bar codes), the security feature is valuable only as long as the counterfeiter’s knowledge and resources do not equal those of the legitimate source. Unfortunately, history has shown that the counterfeiters are smart and motivated; if a method exists to produce a security feature, then the counterfeiters can replicate it.
We must start to see more advanced methods of securing our products. Technology must be more influential in making the supply chain more accountable, particularly as brand owners look to adopt a more innovative and covert approach. I’ve mentioned the issue of diversion being a potentially damaging one for brand reputation. Being able to identify when legitimate products are in the wrong place can be just as important as identifying when counterfeit products are in the “right” places.
The importance of being able to trace products throughout the supply chain has strongly increased in recent years. The ISO 17367:2009 standard, introduced in 2011, has helped manufacturers and distributors track products and manage their traceability thanks to standardised RF tags. However, is this enough?
The answer is simply no, with many geographically priced items like perfumes, luxury goods and consumer electronics, diversion is a massive issue. Again, codes are added to enable the individual items to be traced through the supply chain, and even though these are often hidden, they are found by the diverters and removed, ending all opportunity for tracing and interrogation of the supply chain.
There are too many gaps in this area that are, as yet, unfilled. When we examine how organisations are managing their supply chains it is clear that the world is crying out for better, more sophisticated solutions, which include better visibility, better transparency, better enterprise resource planning systems, and generally better best-in-breed solutions.
Technology vendors are producing even more precise tracking systems, and with the increased demand for such technology, it seems the industry has acknowledged the need to provide transparency. Consumer’s needs are starting to be met and now it’s down to the technology companies like us to stay one step ahead and ensure that track-and-trace systems are continually brought to market.
Innovation in supply chain technology has helped improve processes such as packaging production, design, printing, processing and distribution. However, given that mass seizures of fake products occur with such regularity on a global scale, the full extent of how these innovative new technologies can protect supply chains against counterfeit crime have clearly still not been explored.
Over the next year or two, new technologies will begin to play more of a part in paving the way for anti-counterfeiting and anti-diversion solutions for manufacturers and brand owners. Using these new methods alongside traditional means of authentication and tracking, organisations must find a way to fully integrate security solutions into the entire supply chain to ensure consistency and accountability at all times whilst keeping one step ahead of the criminals. That’s no easy feat, but with the evolution of security options available we are now more equipped than ever.
Great leaps have been made in anti-counterfeit technologies during the last five years. Using innovative authentication technologies and intelligent databases to crowdsource codes that can be authenticated against by cutting-edge scanners, it is possible for distributors within the supply chain to authenticate and track items through every level of the supply chain. This is a significant improvement on relying on simply checking that a batch reaches its final destination, by which time, if there is a discrepancy, it is far too late to track at what point the system was breached.
That is why a multi-layered approach is crucial to brand protection and anti-counterfeiting as a general initiative. The idea of installing advanced pieces of technology into distribution channels is not to replace existing measures, but to complement them. Each industry requires different levels of specialization in terms of the technology and it is still important that products and batches are regularly checked manually, to ensure that an automated system has not been disrupted. Ultimately, the more hoops counterfeiters have to jump through, the more time and resource they have to spend on overcoming anti-counterfeit measures – making the game less worthwhile and far more difficult to succeed.
Source: Ingenia Technology
Keywords: supply chain risk management, supply chain, supply chain management, supply chain solutions, anti-counterfeiting strategies