“There's no silver bullet for counterfeiting,” says Phil Huff, CEO of Brandwatch Technologies, a provider of brand security and product authentication solutions. The electronics industry knows this all too well.
While leading companies in the industry are enacting their own anti-counterfeiting measures—such as attaching identification numbers or ID tags to track their components and products—the supply chain as a whole relies on the practice of buying and selling directly from suppliers or through authorized distributors to discourage bogus products from entering the channel. There is no industry-wide technology or standard that addresses the needs of all the products and services throughout the electronics supply chain.
The need for a security standard or an automated identification system has been raised from time to time within the electronics supply chain. In addition to the logistics of identifying and tagging the millions of components that pass through the channel every day, the issue of an equipment-based solution poses a problem. If the supply chain adopts an authentication system, there's nothing at this time that prevents unauthorized suppliers or distributors from using that same system. The development and adoption of a proprietary system could be too costly for small and midsize companies in the supply chain.
Organizations such as NASPO – the North American Security Products Organization — are working to develop national and international fraud countermeasures and control standards. NASPO would also certify compliance with those standards in the areas of finance transactions, identity management and material goods.
Brandwatch — which is active in NASPO — uses proprietary technology and best practices to secure its customers' products and supply chain. Brandwatch manufactures microtaggants—invisible particles that have specific properties that are recognized by scanners and machinery used in the field—to identify and authenticate products. The taggants can be embedded into paper, substrates, polymers and inks. Brandwatch's solution focuses on securing supply chains, reducing liability, detecting counterfeits, implementing track and trace, identifying grey market diversion and verifying product recycle chains.
The company’s technology originated in military research.
In addition to the technology, the company recommends a multi-layered approach to anti-counterfeiting. It begins with an assessment of a company's practices; addresses a specific problem identified by the organization; and then incorporates the taggants into the manufacturing process of the product. “In many cases there is an IT aspect as well; there is a lot of information surrounding the identification of products and the tracking of products through the supply chain, so the IT piece compiles and analyzes the data,” says Huff. “This is data is crucial to the final part of the solution, which is assistance in enforcement. We provide the evidence and information to substantiate a claim.”
Huff says Brandwatch customers don't necessarily require their supply chain partners to adopt the technology, but better practices and procedures help in the overall security of the supply chain. “Any organization that provides brand security incorporates a chain of custody (COC) policy that mandates both upstream and downstream views in terms of governance [with the COC policy],” says Huff. “By practicing our recommendations, customers and their partners adhere to this chain of custody. This has a 'viral' effect both upstream and downstream in terms of improving the overall security of the supply chain.”
Huff says the best anti-counterfeiting systems incorporate a defensive mechanism—a proactive approach to security—as well as a tracking and tracing aspect. “Companies will come to us and realize there is a specific problem, and we will address each unique situation. But we also recommend defensive measures in addition to tracking and tracing their products. When companies incorporate a defense, they are no longer the low-hanging fruit. Companies with this strategy as less likely to have their products diverted,” he says.
“The thing we have learned there is no single perfect solution; there is no silver bullet — the companies that are most successful in combating gray market diversion and counterfeiting are those that incorporate a defense mechanism vs. piecemeal approach,” says Huff.
Should the electronics supply chain develop a standard anti-counterfeiting system? If so, should it incorporate hardware as well as best practices?