This month, we had the chance to speak with Mark Prokosch, Vice President at Verify Brand. Verify, a Minneapolis-based software as a service (Saas) brand protection company, recently announced enhancements to its cloud-based platform to combat counterfeiting in automotive supply chains. Automotive counterfeiting is a multi-billion-dollar business that affects manufacturers, suppliers, and vehicle owners globally.
What are the biggest risks surrounding counterfeits in the automotive industry?
Prokosch: The biggest risk to consumers is failure within critical mechanical or safety equipment. Everything from brake parts to airbags and more have turned up counterfeit with low-quality or poorly functioning parts. Some tests were run with the counterfeit airbags, with devastating effects on the crash test dummies. But the risks don't stop there. Other counterfeit parts offer long-term risks, like counterfeit air filters that could allow engines to take in dust and dirt over the years, leading to major maintenance issues.
For automakers and auto suppliers, the risks also include long-lasting damage to their brand reputation and their business. One critical auto part being replaced by a low-quality or defective counterfeit could lead to major vehicle recalls and even lawsuits.
Are there "red flags" that manufacturers should be aware of when ordering or installing parts?
Prokosch: There are plenty of amateur counterfeiters who build parts that can clearly been seen as fake, with abnormal or outdated packaging or even parts with obvious manufacturing flaws. But many counterfeiters run their operations like a legitimate business, and they're good at passing off the fakes as real parts. Spotting fakes requires an amazing amount of on-going coordination with brands, parts manufacturers and every employee who might handle those parts. With billions of car parts being shipped across supply chains that span the globe, however, this can be an unrealistic operational challenge.
Software solutions that can uniquely mark each part and also provide traceability and authentication functionality can create the "red flags" for counterfeit parts, regardless of how convincing their appearance might be. The software takes the challenge out of visual inspections by automating the process of tracking and authenticating the part. Everyone from brand owners to mechanics can be setup to get real-time and event-based alerts from a software solution when a suspicious part is identified, allowing them to focus on the highest-risk parts.
Have you seen any changes in the counterfeiting market over the past few years? Are counterfeiters getting better at impersonating the real thing?
Prokosch: Counterfeiting is ultimately a criminal enterprise, so it's a cat-and-mouse game with the authorities and brand owners chasing the counterfeiters. This forces counterfeiters to adapt or be identified and shut down. In the beginning, a hologram might have helped create packaging challenges for a counterfeiter or a simple serial number might create manufacturing challenges. Those days have come and gone. Auto part counterfeiting is a multi-billion dollar business that the auto industry needs to stay ahead of. Now, brand owners and supply chain partners need better technology.
Brands that are less active in protecting their products and supply chains become targets, while brands that implement the best technology send signals to counterfeiters that easier money can be found away from their products. It's not that different from a security system in your home. Criminals are less likely to target you if they know an alarm will sound and if they know their activity is being recorded. While home security records this activity with video cameras, modern supply chain security software uses data to record and archive activities and create alerts.
Can you explain how the Verify Platform software works?
Prokosch: Supply chain security software gathers information from brand owners: what products are made, how many were made when, how those products are identified, where those items are headed, and so on. It's a combination of product information and business transaction information. As the products move through the supply chain, the software captures each event from manufacturing to shipping events to retail sale and more. Products that enter the supply chain with faulty product information, like an unknown unique item identifier, are flagged as suspicious.
Unusual events are also flagged as suspicious, such as a part that was tracked through the supply chain and sold as a new part, but then turns back up at a distributor months later again as a "new part." These events signal the part could be counterfeit. They may even be marked with an outdated identifier in an attempt to mask the part as being genuine. Suspicious events trigger alerts for brand owners and supply chain partners to investigate. A complete audit trail of every event is saved, allowing this information to be used when approaching supply chain partners, manufacturing locations or even local authorities about suspicious goods.
Finally, mobile apps can be used for authenticating parts. We recommend an internal app for investigators, brand owners and partners, plus a customer-facing mobile app. This allows you to collect different information from each group and provide customized, party-specific information back to them as well, since these types of communications are generally sensitive.
For more information about Verify Brand, check out www.verifybrand.com.
Mark Prokosch is a vice president with Verify Brand. He has more than 25 years of experience in the technology field, with expertise in software-as-a-service and content-management solutions. In his role at Verify Brand, he helps oversee strategy development of supply chain security and product-authentication solutions for industries such as automotive, government, high-value consumer goods and chemicals. He received a master’s in business administration from the University of St. Thomas and a bachelor’s degree from Minnesota State University, Mankato.