Using Data to Ensure Authenticity in the Supply Chain
Counterfeiting is an ever-growing problem for brands, and no industry is immune to its threat. Within the automotive sector alone, the total global cost of counterfeit vehicle parts has reached , while the global cost of counterfeit electronic components is estimated to be . The huge scale of the problem has significant implications for brands, as not only does it severely impact revenues, but it also has the potential to lead to brand dilution and risks to consumer safety. Therefore, ensuring component authenticity is of critical importance. While consumers can take steps to help verify the authenticity of products before purchasing them, the real action to counter this problem at the source lies with brands.
Fortunately, there are several methods brands can take to ensure authenticity in the supply chain, ranging from using data to track products throughout the chain of custody to adopting a variety of covert, overt and forensic counterfeiting technologies.
Safeguarding infiltration points
Before any product reaches the store or end customer, it goes through a variety of processes and stages, which exposes them to a number of infiltration points and leaves them vulnerable to nefarious actors. As such, if brands are to guarantee the authenticity of their products and understand where the supply chain might be breaking down and enabling counterfeit goods to enter it, they must be able to determine the provenance of their products and trace each item back to every point in chain-of-custody.
Key to the success of this approach is scoping out the many transition points that a product moves through and collecting metadata at each touchpoint. This metadata can range from what raw materials were used and where they were sourced to the factory in which it was manufactured and, further down the chain, the volumes of items per pallet, where those pallets are being shipped to, and the volume of items received at the other end. It is even possible to collect this metadata down to a granular level of detail to track, for instance, the sizes and colours of items included in each particular shipment.
By using solutions that capture all of this data and mine it to identify anomalies, brands can more easily identify any deviation from the agreed route of their products and investigate it further. For example, if a shipment of 47 pallets of a certain product is sent out for shipment, but only 45 end up at the final destination, it will be captured by the data, and the brand can trace it back to identify at which point the issue occurred to more easily resolve it. Similarly, this level of traceability helps to guarantee that the end product has been engineered using all of the specified parts from the required suppliers so brands can ensure it complies with health and safety regulations and any warranty stipulations.
Covert, overt and forensic levels of protection
In conjunction with tracking metadata, brands can also adopt security features at covert, overt and forensic levels to better authenticate and protect their product. This tiered approach allows brands to choose the level of brand protection they require, whether that’s through a tamper-evident seal that is visible to the human eye or a hologram that incorporates forensic detection features that can’t be replicated by counterfeiters.
By adopting such features, brands introduce an extra level of protection against nefarious actors, and it ensures the authenticity of products baring their brand name can be verified, either by the naked eye or by using detection technology. This is useful not only to them and customers, however, can also be used by enforcement officials when products pass through customs. The tracking of these safety features can then become another source of data when monitoring an authentic product’s journey through the supply chain, from factory to being in the customer’s hands.
Substantiating product claims
As well as helping brands to guarantee the authenticity of products and components, in a world where consumers are becoming more aware of the impact of how they shop and who they shop with, complete provenance will also help to build consumer trust. After all, by capturing data about components at their origins and being able to trace them back, it is possible for organizations to answer consumers’ questions about where products originated, how they were manufactured and how they got to them. This will help to substantiate any claims a brand or product makes about being ethical or sustainable and help to instil consumer confidence in their offering and brand at large.
Some brands, such as French brand Veja which uses three recycled plastic bottles in the development of some of its sneakers, are even taking this one step further by tracking recycled products that are used and what they were originally. As sustainability becomes a bigger business objective for brands and manufacturers, this circularity, and the ability to detail it, is becoming more popular.
Gaining confidence in the supply chain
Over the course of the last year, counterfeiting has become an even more prominent concern for brands as more counterfeit goods made their way into the supply chain and ultimately to the consumer. Therefore, brands must begin to up the stakes. By making more effective use of their data and adopting the right strategies and technologies, it will become easier for brands to audit the supply chain process and add additional accountability and rigour to supply chain movements. This will ensure only authentic items make it onto the market, thereby protecting their reputation, revenues and, ultimately, their customers.
Japan Seeks to Revive Stalled Semiconductor Industry
Post-pandemic, Japan has seen the consequences of relying solely on foreign imports for its semiconductors. Over 64.2% of its chips are usually imported from South Korea and Taiwan, leaving the country dependent on its neighbours. Industries from auto manufacturers to consumer electronics firms wait for chips, to no avail. But now, the Japanese government looks likely to put real funding behind its semiconductor industry, with top officials emphasising their support.
Domestic supply chains have never been more important. Rather than remain tied to international shipping routes during shortages and delays, governments are doing everything in their power to develop local lines of supply. But the question remains: can Japan pull it off?
How Will Japan Pay For It?
Herein lies our first issue. Japan’s debt has rapidly increased over the past few years, and the semiconductor industry will need roughly a trillion yen—US$9bn—in this fiscal year alone. This cost, however, pales in comparison to what Japan could lose if it fails to keep up with Europe and the US. Both nations have launched aggressive funding measures to revive their local semiconductor industries. And if Japan refuses to invest due to its debt, it could slow down progress in fields ranging from artificial intelligence to autonomous driving.
According to Tetsuro Higashi, the former president of Tokyo Electron and Japan’s top government advisor in semiconductor strategy, ‘If we miss this opportunity now, there may not be another one’. Yet one advanced wafer fabrication factory can cost more than US$10bn, and any money poured into the industry will go fast. That’s why Japan, rather than invest trillions and trillions in failing domestic firms, is considering a second option.
What Do They Plan To Do?
Japan now intends to look abroad and convince overseas chip foundries to come to its shores. Its past failures mostly centred on trying to merge domestic firms that were already going through tough times. ‘This sort of made-in-Japan self-reliance approach hasn’t worked out well’, said Kazumi Nishikawa, a director at the Ministry of Economy, Trade, and Industry’s IT division. ‘This time the goal is to offer a strong incentive for an overseas logic foundry to come to Japan’.
As follows, Japan will now reach out to industry partners and leaders in other countries, including the industry heavyweight Taiwan Semiconductor Manufacturing Co. (TSMC), to build Japanese bases. According to the South China Morning Post, the heart of Japan’s mission is a US$337.2mn research and development project in Tsukuba that will involve TSMC and more than 20 Japanese firms. ‘I think we need to cooperate with our overseas counterparts’, said Akira Amari, a senior member of the ruling Liberal Democratic Party. ‘[And] TSMC is the world’s top logic chipmaker’.
Indeed, if that’s Japan’s strategy, the future looks bright. TSMC recently set up a venture near Tokyo to research energy-efficient 3D chips with several Japanese partners. And in the future, the multinational chipmaker may consider expanding its Japanese operations—that is, if government incentives pave the path forward.