Background / Problem to be Solved

Many companies suffer fromcounterfeiting of their products. Thedamage produced by copying brands and their products goes into billions of Euros per year. Technology can provide an efficient and pragmatic solution to solve this problem. In this case study, a Blockchain based approach will show how technology combined with process excellence is able to address the issue of counterfeiting. The study is based on a real case discussed with a large international consumer-goods client and a highly recognized business school.

Physical & Digital Flow of Goods

The considered solution distinguishes between a physical and a digital flow of goods. A mechanism between both flows confirms the authenticity at each processing step of the physical good (e.g. from the distributor to the wholesaler or even to the reseller) and confirms the authenticity by saving the information on the Blockchain. The information at each step of the supply chain is scanned from each product via an RFID chip embedded in the product packaging. RFID allows a mass processing, since the goods do not have to be unpacked nor cartons have to be opened. Once the information from the physical good is scanned and transformed in the system, it can be matched against an authentication feature. Via a validated node, the approved result will then be stored irrevocably. Every step is fully traceable on the Blockchain. Any attempt to counterfeit the product will have to not only reproduce the RFID chip, but also alter the corresponding Blockchain. Mathematically, this is practically impossible to achieve within the counterfeit margin, thus making reproduction unattractive.

End Consumer Integration via an App

The end consumer, who has a high interest in buying genuine products, will be smoothly  ntegrated in this process of the proposed solution. With a mobile app, end consumers will be
able to retrieve product data via RFID to be assured the product is authentic. The app will be linked to all blocks, which document the authenticity of the product along the entire supply chain. Additionally, by adding more relevant information such as the product date, the ecological
footprint or the durability will increase the customer experience on using the app. On the other hand, valuable information such as the date, the repeating times of purchase or the location from clients can be transformed into new marketing KPI’s by using highly interesting technology
such as Artificial Intelligence.

Advantage of the Blockchain Solution

▪ Greater transparency
Every step written on the Blockchain can be traced. Once a block is generated, it cannot be changed. This brings the producer into the position to quickly identify process weaknesses or breaches within the supply chain and enables them to act accordingly in a timely manner.
▪ Enhanced security
The authenticity feature along the chain is based on cryptography, which increases the overall security. Cryptography on the distributed ledger (using either permission-less or permissioned chains depending on how open the data to be saved has to be) is a framework that makes it nearly impossible and economically very unattractive for counterfeiters to manipulate the authenticity features. The onsensus
algorithm ensures that blocks will be  nly completed once the required stakeholders approve.
▪ Faster & has lower transaction costs
The Blockchain transactions or smart contracts can be automated to work 24/7. By adding more and more automation, we decrease the transaction costs

Risk of the Blockchain Solution

▪ Any risks associated with a paradigmchange
▪ Change has just yet started and is notyet fully mature (uncertainty risk)
▪ No fully-established governance models for Blockchain-based business models
▪ Implementing and standardizing Blockchain requires huge invests, including legacy system integration and training of the workforce where ever appropriate
▪ The lack of real-world enterprise testing, and the rapid development of Blockchain applications make it challenging to stay ahead of the curve

About VISION-IO GmbH

VISION-IO is a tech and software company formed by two ESSEC & Mannheim MBA Alumni to address issues of today’s time with technology. We have expertise not only in technology, but also in management and operations, compliance and legal matter. Furthermore, we work together with partners, academia and industry experts to increase our scope and use diversity as powerful instrument for a comprehensive view of the challenges to be solved.
In February 2019 we became an associated founding member of the International Token Standardization Association (ITSA). For more information please mail us at contact@vision-io.com