November 6, 2018
By Joe Sheeran
In our Product Security Spotlight blog series, we’re covering four key tenets of total product security and traceability. In our first post, we zeroed in on insight. In this post, we will turn our sights to security.
For manufacturers, the idiom “there’s more than meets the eye” is particularly poignant in today’s counterfeit-rife landscape. With an estimated value of over $653 billion annually, counterfeiting accounts for up to 7% of global world trade—and its bottom line impact is only rising. In fact, the average value of identified and seized counterfeit goods is $150. But that doesn’t mean only big-ticket items are at risk. Daily use items, like toys, medicine, and body care products make up more than 25% of all counterfeit goods.
The success of these nefarious efforts often stems from their perpetrators’ ability to effectively adopt and harness advanced technologies. The advanced counterfeiting technologies that pervade the market require advanced security measures. To combat counterfeiting, manufacturers must take security seriously at every stage of production. Product security begins with a phased approach, consisting of multiple security checkpoints at which products are identified and verified.
Which weak points can today’s manufacturers transform into security checkpoints? Let’s explore:
Just because your facility is secured against counterfeiting doesn’t mean that all of your suppliers’ facilities are. For instance, China produces 78.5% of the total counterfeit market and represents the world’s largest manufacturing country. With such profuse rates of counterfeiting, even the most diligent of manufacturers must be wary of the authenticity of subcomponents that are produced off-site.
Not all suppliers are in-the-know that their products may be subject to counterfeiting. Regardless of intentionality, however, the end result is the same. In order to thwart component-level counterfeits, today’s manufacturers must isolate and eliminate subpar items before they’re incorporated into finished goods. To aid with such efforts, guides exist designed to help manufacturers identify compromised goods sent to them from their suppliers. After raw components have been satisfactorily tested, serialized identities can then be assigned to each subcomponent. That way, manufacturers can track their progress throughout the factory floor, guaranteeing that only verified components make their way into finished goods.
In order to thwart component-level counterfeits,
before they’re incorporated into finished goods.
Although it’s unfortunate to admit, not all threats to product security stem from outside sources. Rather, insider fraud and theft occurs in nearly every business model—and manufacturing is no exception. In fact, the prevalence of “super fakes” continues to rise. These products are most often luxury goods that are produced in the very same factory lines as the real thing. Insider theft also feeds the counterfeit market, often in unexpected ways. In one documented case, an environmental services business contracted to dispose of waste material generated during the production of a pharmaceutical good stole over 500 kilos of the substance over a 10 year period and used it to produce $40 million of illegal drugs.
As products move throughout your facility, it’s equally critical to track the who in addition to the what and where. That means knowing who dealt with what products and when. Serialization is a prerequisite for achieving and enforcing this kind of accountability, as is setting up verification at key points in the production process. Should an item go missing, manufacturers are notified in real time. Perpetrators can be immediately identified and issues immediately addressed.
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At the end of the day, not all authentic products make it to their final destination, and not all products at their final destination are authentic. That brings us to our final security checkpoint: the market at large. For today’s businesses, the demand for counterfeits is an unfortunate reality, and the consumer isn’t always a passive victim. In fact, there’s a single counterfeit market in China that serves up to 20,000 customers a day and sells up to $12 million of merchandise a year. Many of these counterfeit goods are produced in the same factories as branded goods, making them even more attractive to consumers. Still, in other instances, such as the online counterfeit market, consumers are altogether unaware of a product’s illegitimacy. Authentication therefore requires manufacturers to look at the global distribution network for both their branded products and their corresponding counterfeits, empowering sellers and consumers to actively participate in validation.
It is critical to note that setting up a scalable framework for validation requires more than a digital record alone. It requires each product to have tamper-proof labels to ensure that a validated product is an authentic one. By affixing impossible-to-replicate labels to each product and linking these labels to serialized identities in a manufacturer’s database, comprehensive and highly detailed product records are but a scan away. Real-time scanning empowers consumers and sellers to verify authenticity with ease, preventing convincing lookalikes from pervading the market and degrading brand value.
Even more, these scans allow manufacturers to identify where a product is in the world—including if it’s somewhere it shouldn’t be. This allows manufacturers to better identify gray market diversion points and shut them down before the next batch of products goes missing.
As threats to product security continue to advance, the key to upholding product integrity is adopting equally advanced solutions. The right solution makes security a priority before production begins and well after it ends. ProLinc, a SaaS-based product security solution from Ashton Potter, places product security at the forefront of your operation. By assigning unique identities to every subcomponent, product, and batch, and building a unique genealogy for each item over time, ProLinc empowers manufacturers with the highly-detailed insights they need to stop counterfeiters in their tracks. Plus, with a Blockchain-enabled database, ProLinc makes sure that your sensitive data is ever-secure and accessible—allowing you to make proactive and strategic decisions that enhance product security and production efficiency.
Want to secure your products without compromise? Contact Ashton Potter to get started, and stay tuned for the next post in our Product Security Spotlight, which will focus on scalability.
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Tags: counterfeiting, security, supply chain