Traditional methods of supply chain security are best practices often worth pursuing, but they can be expensive and time consuming attempts at mitigating the risks introduced by contract manufacturing and licensed production. Screening, validating, and inspecting raw materials and finished goods help deter piracy and diversion, but do little to defend against infringement that occurs at nominated contract manufacturers or by authorized licensees. These practices also suffer at scale.
For traditional supply chain security methods to be most effective, an agent with your brand's best interests must be physically present at all stages of the production process. While many brands place resources in local manufacturing regions or perform periodic audits, it’s impossible to have a brand resource accompany all finished goods from end-to-end. This traditional approach is only effective for low-volume, high-ticket goods, like diamonds, or for extraordinary circumstances like the delivery of organs for transplant. In large, it's impossible for a brand to place an agent at every contract manufacturer or licensee, every distributor or warehouse, every raw materials supplier, etc.
In 2013, OpSec shipped hundreds of millions of labels for a single brand. The labels were shipped to over 60 brand vendors across 10 countries. Based on those numbers, it would require an enormous investment for a brand resource to screen and validate every shipment of raw materials in and finished goods out of each vendor location.
Given that traditional methods of supply chain security don't scale very well, what can brands do to deter piracy? A lot of brands, particularly technology companies, rely on patents or physically difficult production processes to discourage attempts at counterfeiting. But this is only a temporary solution:
- Proprietary processes can be reverse-engineered.
- More realistically, past vendors will share and/or adopt manufacturing techniques.
- Patent violations and breaches of non-disclose agreements (NDAs) can be hard and expensive to litigate across country borders.
OpSec's expertise is in providing contemporary supply chain security solutions. These solutions combine uniquely serialized labels and tags with digital tracking services, which enable brands to monitor vendor inventory levels and authenticate legitimate goods without the heavy investment associated with placing human capital at various points across the supply chain. OpSec’s physical label security technologies help deter counterfeiting, while our digital solutions allow for labels to be individually tracked through production, point-of-sales, and beyond. Effectively, OpSec’s solutions help brands:
- Reduce the brand’s supply chain/legal brand protection enforcement costs.
- Deter counterfeiting, unauthorized/over-production, and diversion.
- Consolidate brand protection and consumer engagement solutions.
OpSec’s digital solutions can be tailored to help collect data from points through the brand product’s distribution channel, providing insights into vendor efficiency and, ultimately, consumer engagement.