Fighting counterfeits

You know your added value

Your approach to the issue of fakes will be entirely different depending on your value chain. To illustrate summarily:

• a retailer's value is in accessibility. The retailer is most worried about goods assumed by consumers to be safe because they are on its shelves.
• a brand will worry about safety and also lower (or same) quality goods showing up with its logo: its value is in the brand symbolised by the logo.
• industrial goods producers will worry about product reliability if fake parts are used in maintenance: their value is in the technical service rendered.

Your own value chain shapes how much and which fakes will be a concern to you, and how you will confront the issue.

Faked image

A product that is based on a good idea (patentable or not) will attract a price premium. 
Unfortunately every good idea attracts its share of copies and outright fakers, especially if the product is easily replicable, i.e. made with cheap and easily accessible materials such as fabrics, easily formed plastics or metals.

To keep ahead a brand will prominently display its logo on consumer products, perhaps more than once. It is only logical that the logo, correctly identified by fakers as the key store of value, will be copied.

The brand may be tempted to work with especially designed logos (eg: metal signets, especially cut fabrics or varying colour combinations, difficult / expensive shapes such as for example the crown holograms and more recently laser engraving on the glass of Rolex watches) but will find that since these were mass manufactured for the brand, mass replicas can be made just as easily.

A Rolex logo - laser etched in the watch glass

Logo solutions

• Make bad logo copies evident, and make good ones expensive to produce. This has to some extent worked for Rolex as etching the flange and glass is doable but expensive to do well.

• Aim for uniqueness. 
  • For example it was recently found that the antenna of no two RFID chips are produced exactly the same, and so signal processing varies slightly between two units, unpredictably. RFID is gaining widespread acceptance in retail for inventory management, and the tracking functions have always been of interest.  Associating the product code programmed on the chip with the antenna profile makes the product arguably unique.
  • Another technique based on the same idea is to use a randomly selected section of DNA code.
  • The issue in both cases, and the focus of current research, is to give the consumer access to this data at the point of sale. It is currently a perfect solution for critical, high end or simply expensive products tracing (think luxury products or aero engine parts for example) and with the right cost level could be adopted for cheaper consumer goods.

• Add the logos after production, in the brand's own factory. Produce them under strict and direct brand control. By reduce the brand's supply chain you immediately reduce exposure to agency issues (see next article). Unfortunately in a razor sharp margins world this may be too expensive for many brands.

• Consign the logos to the factory, but attach a high price tag to them by contract: loss by the factory entails a stinging penalty. While this is sure to attract attention it will reduce the risk of "loss" of the kind that happened recently to the metal signets used by one of our Italian fashion clients.

Beyond the logo, design solutions

Counterfeighters are like everyone else: they go for the low hanging fruit first. 
In addition, and to some still limited extent even in China, counterfeighters know that their business can be shut down overnight and will need very quick returns on low investments. 
So all you have to do is be less easy or less cheap to copy than your competition.

• Rapid development to keep ahead in an endless race, making the fakers "last season"
• Expensive / complicated parts or exotic combinations of parts and materials, for example in the headlights and bodywork shapes of luxury cars

Fakers in your inner circle

The people closest to you may be the most likely to turn on you.

Manufacturers that you have trusted with your drawings, parts and methods are most likely to see the added value of your product and think that they would like to have a bigger share of that slice. And if not them, one of their contractors.

They will compare the retail value of your product (often easily found on the internet) with the cost of their components, and think that their hard work is not paid justly. Or one of their staff will just turn out to be a born criminal entrepreneur. Either will entirely disregard the years of hard work you have put into building a reliable product, a good sales network and a brand. This perception gap will be especially high if you contract work in the developing world with low wages and very different purchasing power parities to the USD or Euro.

Most simply in the case of prints, metal and plastic parts, suppliers may not be able to resist the temptation to run a few more products off your tools, for their own use and sales.

You will be confronting a nightmare scenario: your own product, sold cheap, by someone else.

Supply chain solutions

• This issue is most likely in factories where the end product is ready to use or distribute and so final assemblers would be higher risk, but even parts can be impacted. Still, if you subcontract both, priority goes to control of the end product contractors.
• Keep tools under watch to make sure that they are not used without your knowledge. This can mean keeping tools under lock at the factory when your representatives are not there to control usage.
• Keep logs of component supply, production, scrap and consumption and match them to physical stock takes that you conduct.
• Focus on factory QC departments (at all stages) and bad parts disposition processes. Demand records and check stocks yourself.
• As you would do inside your own company, split responsibilities and build firewalls between suppliers.