Fortifying Your Supply Chain Against Counterfeit Goods

By Steve Wood, Covectra President & CEO   

The key to anti-counterfeiting is to prevent false goods from entering the legitimate supply chain. The good news is that you can protect your brand. Starting with your raw materials suppliers and extending down through manufacturing, packaging, and onto distribution intermediaries, today you can track and trace goods safely all the way to the customer. For good measure, authentication facilitates returns processing, and safeguards your work as you restock to avoid reselling fake goods.

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So what’s the key to fortifying the legitimate supply chain to protect it from unauthorized goods entering your normal channels of trade? I believe it's a combination of these three strategies:

  • Establish an Internal Brand Protection Function
  • Implement Supply Chain Best Practices
  • Apply Safeguarding Technologies

Brand Protection

With the proliferation of ecommerce and digital marketplaces, today consumers have no way of knowing if their products are authentic. This is why some of the major online market players are trying to implement programs to assist the consumer, but counterfeit products persistently enter the distribution channel anyway. This leaves the official brand owner and the consumer at risk while the online seller makes the profits. So how can the brand owner provide authentication tools to the consumer to verify their products?

First, the brand owner needs to implement their own brand protection solutions and provide authentication tools to the consumer. This is the only way brand owners can take control of their supply chain. With authentication tools in place, the consumer can return goods back to the online marketer who distributes these elicit products, and directly notify the brand owner. This puts pressure on online marketers to become a part of the solution instead of unwittingly abetting counterfeiters. 

Some online marketers are trying to implement solutions to stop counterfeited goods from flowing through their distribution channels, but they want to charge for this service, passing the cost of these programs on to the brand owner. The flaw in this approach is that the counterfeiters will also have access to these technology tools. So how secure can it be? Consumers are clamoring for ways to verify that their purchase is authentic.

Whether you form a dedicated anti-counterfeiting and anti-diversion organization to lead such activities or disperse the responsibilities throughout the company and beyond to trading partners, it is important to monitor incidents and measure the effectiveness of counter-measures. In reality, we are talking about an enterprise-wide mindset that begins at the highest level of the organization and is committed to a no-tolerance stance against counterfeiters and illegal diverters of your goods.

Supply Chain Best Practices

The days of feeling helpless or an innocent victim of counterfeiters are over. Fortunately, there is no shortage of so-called anti-counterfeiting solutions that can be applied to your products and commercial practices to inform your authorized agents of authenticity. The key to effectiveness, however, is to evaluate your technology plans on the basis of whether they improve the control and visibility of your supply chain.

The concept of supply chain “self-defense” has many proven techniques. Here’s a sample of some best practices:

  • Audit all suppliers and trading partners for safeguarding practices. Ensure that commercial partners only buy your goods from your approved points of supply.
  • Purchase your products from all channels of trade periodically and test for authenticity.
  • Review all product complaints through the lens of anti-counterfeiting and instruct your call centers to question complainants about their purchases.
  • Review commercial data for aberrations in normal supply/demand patterns.

Safeguarding Technologies

Steps to ensure authentication and Track & Trace is critical. Authentication provides a means of interrogating your packages (or the product itself) at any specific node in the supply chain. A solid track & trace strategy, usually employing some form of unique identifiers (e.g., serial numbers) connected to a secure database, allows you and your trading partners to confirm that genuine product is flowing uninterrupted throughout the chain.

For the authentication process, the answer is clear. It comes in the form of a device that most everyone already carries, with no attachments required--their smart phone.  This can dramatically assist in protecting protect brand owners and consumers from illicit trade markets.

A mobile authentication solution doesn’t only benefit the consumer. This technology also enables brand owners to tell if a product is selling in an unapproved location or find out which products may be compromised. In addition, an effective authentication solution should cover processing of returns and recalls.

Today’s authentication solutions must integrate seamlessly into your packaging production line operations, be easy for consumers to use, and provide detailed reports to help brand owners gauge their reach throughout the supply chain. The solution should make consumers feel completely confident, instead of leaving them to wonder if their product is counterfeit. With the simple use of a smart phone consumers are more than willing to be their own brand protection inspector.

So don’t play the victim card when a counterfeiter tries to capitalize on your brand equity. Instead, throw everything you have at the problem to send a clear message that your brand is well protected, and your supply chain is fully illuminated and closely monitored. 

By Steve Wood, Covectra President & CEO

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