Counterfeit materials and products pose a threat to any industry. They disrupt the supply chain, lead to a lack of consumer satisfaction and, most of all, can cost billions of dollars total every year. Thus, finding solutions to counterfeit goods is more necessary than ever. The Internet of Things (IoT), when businesses along the supply chain use it with blockchain technology, is that solution. Together, IoT and blockchain offer a way to stop and reduce counterfeits.
As many manufacturers and suppliers have already integrated IoT technology, it’s crucial to get all the benefits. Otherwise, the profit losses turn into expenses quickly.
Ripple Effects of Counterfeits
Counterfeits are not uncommon. They range from tech products to high-end luxury items like purses to pharmaceuticals. In each industry, counterfeits can cause damage across the supply chain, resulting in costs and losses. In 2018, the Global Brand Counterfeiting Report projected that the cost of counterfeiting would reach $1.82 trillion by this year. In 2017, the number was $1.2 trillion.
With this worldwide increase in losses, industries and fields of all kinds see the ripple effects. It begins at the supply chain, where manufacturers and suppliers will need to make up for the counterfeit by buying more materials and producing the object. If a fake item reaches a consumer, the retailer will have to deal with a return, again costing more money.
However, the effects continue to expand outward. The negative impacts can reach even as far as the United States military. If the armed forces receive counterfeit materials of any kind, it may impact their technology, weapons and vehicles. Here, forgeries become an active danger. The same concept applies to health care, government branches and educational facilities.
Fortunately, IoT and blockchain are two relatively new tech innovations with significant power to curb counterfeiting’s negative outcomes.
Benefits of IoT and Blockchain
To create an efficient supply chain, from raw materials to the customer, workers must begin using the IoT and blockchain technology. For suppliers, manufacturers and distributors, especially, this step is invaluable. The process breaks down into simple actions as well.
First, suppliers along the sequence can create a ledger through blockchain. This ledger will store the information that the material or object corresponds to. Typically, the material will have a unique QR code or RFID tags that workers can input or scan to pull up details saved in the blockchain’s ledger.
When the item or material is not at a facility, the IoT tech comes in handy. The IoT uses sensors to transmit information wirelessly and in real time. Most importantly for preventing counterfeits, these sensors will send their location at all times. Workers can use the code from a computer that can find the current sites of the materials they are sending and receiving.
If the manufacturer, distributor or retailer doesn’t receive the product, that’s a red flag of potential counterfeiting. These instances, though, will drastically decrease as the supply chain can now more effectively and securely track products. In turn, industries save more money per year.
These solutions to counterfeit goods offer more visibility across the supply chain as well. Manufacturers and suppliers can collaborate more closely to ensure proper efficiency. Getting a genuine, reliable product to the distributor and retailer is the ultimate goal. Without having to worry about security, workers can focus on efficiency instead.
Alone, blockchain and IoT are powerful. Together with other tech safety and network protocols, they become much more reliable and efficient.
While bringing these two fields together, the supply chain must stay on top of all forms of cybersecurity. While blockchain has layers of encryption for protection, it’s still crucial to cover all the bases. For instance, multi-factor authentication requires several steps of verification and logging in to access the blockchain.
Connectivity is the second field that the supply chain will want to focus on. It’s necessary to transfer data and information instantaneously. Travel plans could change on a dime, and the manufacturer may need to alert the distributor about potential counterfeiting. In that case, having the best network reliability will come in handy.
Now that 5G is rolling out globally, adapting to this new network is crucial to the best connectivity. Since it can be 100 times faster than 4G, communicating across the supply chain has never been more efficient.
A Safer Supply Chain
Counterfeits are disruptive. They throw off the supply chain from raw materials and suppliers to the consumers. When this happens, customer satisfaction is at risk, as are profits. IoT and blockchain are the solutions to artificial goods.
They ensure better end-to-end security and transparency. The location services, especially, make accessing all the latest movements with the materials or objects available instantly. Then, with the right networks and cybersecurity precautions, the supply chain can become more reliable.
The changes will end up saving money in the long run without repairs, replacements and returns. Instead, supply chains can bring businesses into the future with these innovations.