Summary of the 1st Product Authentication + Security Summit

The Product Authentication + Security Summit (PASS) was held in New Brunswick, New Jersey USA on September 14 and 15, 2010. PASS presentations gave attendees insightful strategies, tactics, and tools to combat counterfeiting, diversion, and theft. PASS demonstrated the touch points for product security and how authentication can be used as a tool to help detect and deter product security incidents and threats.

David Shillingford from CargoNet presented Detecting and Deterring Crime Through Data Sharing. He demonstrated how data sharing could maximize the use of internal and external resources, connect data points, reveal criminal patterns, and make supply chains more transparent. Presenting case studies from art theft, equipment theft, cargo theft, insurance fraud, bank crimes, and retail theft, he showed how a similar system with investigation support tools with ‘need to know’ sharing internally/externally and with analytics and reporting could be created to combat counterfeiting and diversion with the participation of a few large brand owners or an association.

Clark Silcox from the National Electrical Manufacturers Association presented examples of electrical products that had been counterfeited. Burns, shock, and death are real potential consequences when consumers buy fake electrical products. He shared their success in keeping the authorized distribution channels clean and in training of US Customs and Border Protection to recognize fakes. Training and communication to wholesalers, contractors, and utilities also continues. Challenges of using authentication technologies with breaker switches include having only a very small area on the front of the switch visible to an electrical inspector.  Very tight margins on electrical equipment also allow for little investment in authentication technologies.

Vikki Bresnahan presented J. Paul Mitchell Product’s strategy and tactics for dealing with diversion and counterfeiting which includes product coding, controlled purchase limits, channel education, ad campaigns, and social media. Their product coding technology in combination with a per bottle fine for distributors who violate their contracts has resulted in a 40% decrease of product in the open market.

Mike O’Neil from NASPO, Secretary for ISO TC 247 and administrator for US Technical Advisory Committee for TC 247 and PC 246 talked about industry standards for the user and provider authentication communities. He gave updates on standards development for PC 246 and TC 247. PC 246 is developing ISO 12931 ‘Performance criteria for authentication tools for anti-counterfeiting in the field of material goods.’ The intent of the standard is to recommend specifications for users of authentication technologies for material goods in different user environments, and it introduces life cycle requirements for authentication technologies. Technical Committee 247, ‘Fraud countermeasures and controls,’operates under a broad scope to create standards related to security. Currently it is working on ISO 16125 ‘Security Assurance,’ a management system standard at the same level of ISO 9000. Both of these standards will be available for public comment next year.

David Howard from Johnson & Johnson gave a paper entitled ‘Strategy, Process, Then Tools: Integrating Product and Supply Chain Security into Company Strategy.’ He spoke about Johnson & Johnson’s Safe & Secure Supply Chain best practices, how they do risk assessments, define problems, develop strategies appropriate to a given company and product line, and how they select protection technologies.

Lorne Lipkus of Kestenberg Siegal Lipkus LLP presented how his team developed an effective product security program for the Vancouver Winter Olympics. He spoke about anti-counterfeiting team development, law enforcement training, choosing a series of product technologies and appropriate strategies, internet and field monitoring, and how they were able to shut down counterfeiters at the olympic games and in other parts of Canada.

Jim Rittenburg, Chairman of the International Authentication Association (IAA), presented a paper on ‘The Role of Authentication Technologies and Programs in Managing Third Party Suppliers.’ He showed that authentication serves to assist in the detection of counterfeit products, as an early warning signal of fraud, as a clear indication of fraudulent intent, and as strong tool to support prosecution of counterfeiters. He also spoke about track and trace as tool for the detection of unauthorized movement of products. Both of these tools can be used to manage third party suppliers such as manufacturers, formulators, packagers, and printers. He presented a decision matrix for examining companies, supply chains, and channels to use before determining appropriate actions. This decision matrix also includes how to use authentication and track and trace as tools for monitoring and oversight. His case study involved the monitoring of Active Pharmaceutical Ingredients (API).

Kevin Horgan from deKieffer & Horgan presented ‘Title Retention in the International Sale of Goods to Combat Diversion.’ He demonstrated how adding this clause to a sales contract  gives company lawyers an excellent tool to prevent diversion with new clients with little of no sales history.
Dr. Glenn Wood from Reconnaissance International presented a paper discussing different serialization methodologies, item level ID, and random codes; the characteristics and features of each; and the importance of intimately connecting the code to them item that is to be authenticated. Thus the title of his paper ‘Secure License Plates: Attachment is the Key.’
Ruth Thomson from Cambridge consultants presented a paper entitled ‘Counterfeiting = Threat; Authentication = Opportunity?’ Her presentation reviewed other business benefits of authentication and serialization such as improved stock control, support for recall of products, and identifying occurrences of diversion. She also presented how authentication could be used as a marketing tool to increase consumer interaction with the product.
Tom Grace from EATON Corporation presented ‘Authentication on a Tight Budget Case Study - Electrical Switches. He shared how existing business processes, equipment, applications, features, or product markings could be used as a basis for an authentication program. In developing his program, he involved product line management, supply chain, manufacturing, marketing, and information technology. By using multiple marks, codes, dates, and features and linking this information in a corroborating data base, it is possible to verify authenticity accurately. Covert technologies, overt markings, and features incorporating into moldings, cartons, and labels can often be incorporated into the existing processes without an increase in total cost. He also emphasized the need for training, communication, and media campaigns.

Dave Lukasik from PICA Corporation presented ‘Warranty Fraud: Cell Phone Industry Case Review.’ Warranty fraud comes in four forms in the cell phone industry: counterfeiting, returning out of date and abused products, and altering the returns to receive an upgrade. He revealed that about 10% of the returned product on the case he worked on was counterfeit. Up until they began intervention, this product was exchanged for new and original products equating to a significant loss for the company.

Dirk Rodgers from Cardinal Health presented ‘The Distributor as Security Partner.’ This presentation gave a detailed background of the US based supply chain where 1400 manufacturers  through 32 distributors supply 166,000 pharmacies. Licensing and regulations at the federal and state levels for distributors and pharmacies ensure that many eyes scrutinize the legitimate supply chain. In the USA the source of nearly all counterfeits is the internet or rouge pharmacies which break the law. US distributors have also instituted programs to detect large-scale diversion of narcotics.

Jim Brown, formerly of Canadian Standards Association (CSA), gave a presentation on ‘Employee Based Authentication,’ where he described the very effective ‘Counterfeit Busters’ program at CSA. In this program, CSA employees in areas all over the world were trained to recognize counterfeit CSA marks and given incentives for reporting counterfeits they found in the marketplace.

Caitlin Martin from the International Chamber of Commerce’s Business Association to Stop Counterfeiting and Piracy (BASCAP) presented the new on-line Product Authentication + Security Directory, a joint directory with BASCAP and Reconnaissance International. The directory is designed to become the most comprehensive directory of products and services for product security. It combines the previous on-line directory of BASCAP with the print directory from Reconnaissance International.

Karl Kussow with FedEx presented ‘Distribution Controls - Transportation Issues and Opportunities.’ He presented case studies in cargo theft and methods to maintain security. He also presented and contrasted the issues when using a forwarder model for shipment or a integrator model. With a forwarder model there may be cost savings because of the specialized competencies in each step of the supply chain; but with multiple companies involved in a single shipment, greater challenges to security exist. The integrator model not only offers greater security, it offers the ability to monitor live time temperatures en route, better container positioning, and audit-able temperature and event data.

Mark McGlade presented ‘Developing an ROI Methodology in Brand Protection.’ His presentation examined the costs of diversion and counterfeiting. His presentation demonstrated that in most companies the legal counsel serves as the decision maker for brand protection demonstrating that brand protection is still perceived as a legal task rather than a corporate strategy in most companies. In order to effectively institute an ROI methodology for brand protection it is necessary to obtain a commitment from top level management and build a team which borrows resources from legal counsel but is not driven by it.
Jim Morehouse from AT Kearney presented ‘Ensuring Food Safety and Brand Integrity.”

This paper presented economic adulteration in the food industry, the health risks, consequences, pending legislation, and strategic countermeasures. Not only have food products been counterfeited and falsely labeled, but toothpaste, detergent, and spices have also been counterfeited.

Recommendations for company action included: assess current risk, deploy deterrence measures, enhance detection methods, and implement a formal team accountable to the CEO for anti-economic adulteration strategy. AT Kearney is also working the with the Grocery Manufacturers Alliance (GMA) to: establish a clearing house for sharing intelligence, create a shared supplier audit record, expand ingredient databases, develop a shared library of shared ingredient reference samples, and establish partnerships with state and federal government.

Jim Chamber from JC Authentication presented ‘Change Management - The Overlooked Component.’ This case study examined an authentication pilot program for Sara Lee International’s Kiwi Brand Shoe polish in Africa. The presentation described what went well with the program and the causes of the delays of implementation. There was strong focus on technology but not enough emphasis on the people element of the program. The presentation describes how to understand the change roles, the need for sponsorship, and how to build commitment for implementation.
....from Opulux presented ‘Combined Authentication and Storage Condition Monitoring.’ This presentation discussed the tunable photonic cells that Opalux makes and how they can tuned for multiple temperatures and activation mechanisms to give a message in color contrast. Mechanical compression, peeling stress, temperature, and the presence of chemicals or gases can activate a color change with this technology.

Henry Sohl from Appriss presented NPLEx, the National Precursor Log Exchange that the National Association of Drug Diversion Investigators helps to implement at the state level in the United States to prevent the diversion of pseudoephedrine (PSE) to make methamphetamine. Methamphetamine is related to a great deal of illegal drug deaths and crime. The system alerts pharmacist and law enforcement when individuals attempt to acquire more PSE than a legitimate user needs. The manufacturers of PSE, Schering Plough, Novartis, Perrigo, Reckitt Benckiser, McNeil, Wyeth, and Bayer pay for the system to be implemented so there is no expense for the states that use it.

Zbigniew Sagan from Advanced Track and Trace presented ‘Traceability and Authentication for Wine.’ This presentation examined an effective print based technology which can detect copying. The Seal Vector, a copy-sensitive matrix, exploits the natural imperfections of the printing channel. ATT originates the matrix as a digital image and transmits it to the printing partner who prints it onto a label, carton, or product. Unlike other forms of matrix codes, it is designed at a high resolution to degrade irreversibly during copying. This degradation can be measured, enabling copies to be automatically detected during scanning.

Attendees at PASS were very complimentary toward the content. Few delegates were absent during presentations as many said that they wanted to attend all of the talks. Unlike many events, a very high percentage of the 85 delegates who attended this first time event remained for the final paper.