Albeit an unpleasant truth, the consumer market is filled with counterfeit products that customers have bought both knowingly and unknowingly. In fact, the problem has become so widespread that major online retailers like Amazon have sold products from knock-off brands to gullible customers, who have no way of verifying the authenticity of the products before they purchase.
The cost of counterfeit and pirated products
The International Chamber of Commerce has estimated that by 2022, counterfeit products will seize as much as $4.2 trillion from the global economy, putting 5.4 million genuine jobs at risk. This price is too heavy to pay, but many online retailers are unwilling to spend time, money and effort to authenticate the products they market and sell.
This is where blockchain technology can come to the rescue, and help supply chains validate products before they reach the end consumer.
Using blockchain technology to verify products
Most people associate blockchain with cryptocurrencies like Bitcoin. This technology creates a decentralised ledger that stores the entire history of any transaction completed within the shared database. The record can be accessed and verified at any time and from any geographical location. It is this ability to authenticate records that makes blockchain a valuable technology for supply chain.
Blockchain technology can bring about transparency in the supply chain, something that is required in a globalised market. It is common nowadays to find a product with parts originating from different sources. As a result, it can be tough and time-consuming to coordinate different sources to confirm whether all elements are genuine. Even if a company follows ethical practices, it can often end up with a counterfeit product in its portfolio.
However, this can easily be avoided with blockchain technology, where the details of the product are stored in the decentralised ledger. So, each time the product switches location, the information is seamlessly recorded. Supply chain professionals can check the records to ensure each part is genuine – from where it is sourced all the way to the finished product. They can curtail any pirating or counterfeiting efforts within the supply chain by making vendors and suppliers accountable.
Using blockchain technology throughout the supply chain can function as the first line of defence against manufacturers and suppliers attempting to make quick money with substandard products and counterfeits. The technology does away with manual inspection and allows sourcing professionals to work in a more productive manner. This, in turn, helps the organisation to reduce cost while helping ethical brands to consistently offer authentic products to customers.
Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.