Brand counterfeiting and product diversion are part of the growing pains of global development. As a result, brands must protect its products long before any such counterfeiting or diversion occurs. “Brand owners are behind the eight ball, by not acknowledging the problem until it has already happened,” said Carol Glueck of Sekuworks, LLC, a brand protection company. Statistics of brand counterfeiting and tampering are on the rise. Globally, counterfeit trade, including brand diversion, was more than $700 billion in 2001 and expected to exceed $900 billion by 2010, according to the World Trade Organization. How brands plan for inevitability of counterfeiting and diversion can be proactive or reactive, depending on the brand’s initial marketing plans.
Brands who take the proactive approach can use it as a marketing tool with consumers, who will bond with a brand that has their safety in mind. Security measures also limit the brand’s liability should the product be counterfeit. A proactive approach also allows the brand to educate the consumer on the differences between the genuine article and the counterfeit one. “Protecting a brand encompasses many components. Today, many manufacturers are hiring specific personnel to protect brands. Some manufacturers see this as a logical first step – actually putting someone in charge of brand protection, who can develop a strategy and specific means for protecting a brand,” said Jack Walsh, marketing manager, brand protection solutions, Videojet Technologies, Inc.
Sekuworks expanded into its five platform brand protection strategy that includes security consulting, technologies and information systems, security printing, mass-serialization/track and trace, as well as investigation and enforcement. A brand that neglects just one area leaves a chink in its armor.
Follow the Chain
Brands must also continually improve the transparency of its supply chain. “Manufacturers should consider developing or improving visibility in the supply chain; i.e. knowing where products are within the supply chain at any given time. The best means to achieve this is through a track-and-trace system that includes software and product identification technologies,” said Walsh.
With a transparent supply chain, brands can limit product diversion, a process that allows products destined for certain markets at various price points, to be diverted back to an unauthorized market, undercutting the manufacturer’s price point. The industry of product diversion has grown, becoming high-tech, online and extremely sophisticated. Diversion can be limited through brand security measures and various practices throughout the supply chain.
“RFID is one of the technologies that can help manufacturers gain better supply chain visibility, but it’s another option, like print-and-apply labeling, continuous ink jet printing and other technologies. How those options are exercised by manufacturers can make the difference between a successful brand protection strategy and one that is not,” said Walsh. The measures taken to insure supply chain integrity and transparency can distinguish genuine product from the counterfeit.
The challenge of counterfeiting has grown in correlation with advances in technology. Nowadays, it is easier than ever before to recreate the packaging of a brand. At the same time, emerging global markets are making counterfeiting more profitable. “The best solution in preventing counterfeiting and diversion is for brand leaders to be proactive. There are many security features that can be added to a label or packaging that can deter a counterfeiter from copying the label/packaging exactly and therefore deter counterfeiting. The security is added during the printing process and can also be used to track and trace the product throughout the supply chain, therefore deterring product diversion,” said Glueck.
Protection through Education
Yet brand protection that makes the product harder to counterfeit is only half the battle. Brands must be proactive in utilizing security measures within packaging creation, but also in availing themselves of lawful remedies. Brand reputation is harmed by counterfeit products and competition through diversion in various markets. Yet, depending on the country and culture, brands may have a difficult time achieving legal remedies. “Laws and enforcement are different. A company might not necessarily be successful in prosecution without brand protection,” said Glueck. Diversion investigations can be used by a brand to attempt to limit diversion or counterfeiting by following the trail of the supply chain.
Educating consumers on the differences between a genuine product and a counterfeit contributes to a successful brand protection plan. At the same time, brands must protect themselves through authentication measures that allow for genuine product identification. “The most important trend currently is manufacturers creating positions and hiring personnel specifically to safeguard brands. This implies that manufacturers recognize the equity of their brand as an asset, and like any other asset, it needs to be protected, which necessitates the hiring of a point person to head up those initiatives,” said Walsh.
Track and Trace Systems (Contributed by Videojet Technologies)
Digital license plates: Digital license plates validate manufacturing origin and product quality by integrating item-specific data into a unique code format such as a pseudo-random code. The carrier for these license plates can range from human readable characters to a 2D bar code. In addition, the actual mark can meet permanence standards in a covert or overt fashion. Proprietary algorithms: Proprietary algorithms enable manufacturers to create intelligent codes embedded with unique item-level properties, simplifying data mining downstream.
Branding: A growing trend today is creating code images with the look and feel of the brand, designed to meet its unique requirements. Techniques include unique fonts and graphics, colors and special additives for laser marking, along with a mix of overt and covert marking.
In-line verification and compliance: The need to verify code accuracy and repeatability is vitally important in brand protection efforts, so a manufacturer knows (and can verify) what codes have entered the supply chain. Often this requires high-quality results printed at high production line speeds.
Production line controls: Production line controls are often required to create “parent-child” relationships by tracking items into shipping cartons and shipping cartons into cases. Production line controls actually monitor each item as part of the production flow and keep accurate counts while assigning unique identifiers in the process. If required, the controls can interface with in-line vision systems to validate code accuracy or to read and print downstream.
Real Time Protection
Verify Brand and 3M partnered to offer customers the additional capability of confirming product authenticity, location and tracking of products via the Web using secure mass serialization technology.
“Brand owners are looking for a product security solution that is both comprehensive and provides more real time information with which to address their significant brand protection and supply chain issues,” said Bill Markovitz, marketing development manager, 3M Security Systems Division. “We believe that the combination of 3M’s extensive materials security technology and the innovative, Web-based technology from Verify Brand will provide our customers a market-leading solution.”
The integrated and comprehensive solution enables brand owners to serialize products using any method of carrying a unique code on a product, its label or package. Unique codes can be authenticated via the Web using a computer, call center, SMS or text messaging, bar code scanners or RFID tags. The technology has additional benefits of real-time tracking, alerts, field reporting, management of and response to unauthorized events, as well as ad hoc and scheduled reporting on authentication activity. This web-based solution addresses a multitude of supply chain issues, including counterfeiting, diversion, return and warranty fraud, manufacturing overruns, product recalls and field inventory management.