While most are familiar with the high-profile cases of counterfeiting among high-end consumer fashion brands and accessories, a serious counterfeit and grey market problem exists for manufacturers of high-tech components parts and consumables. The U.S. Chamber of Commerce estimates the auto industry alone loses $13 billion worldwide from counterfeit auto parts.

As a result, manufacturers are turning to digital signatures and other encryption technology to secure distribution channels, profits, and brands in everything from auto parts to printer cartridges. Specifically, leading companies are using digital certificates and signatures to authenticate component parts through a highly automated, policy enforced system. While encryption has traditionally been used to protect data, manufacturers can now use the technology to ensure authenticity in their products -- and in turn maintain brand reputation.

Organizations can take the offensive in a streamlined and cost efficient manner. Across the enterprise, from IT to product managers to manufacturing operations, and even channel partners, benefit from encryption technologies that bring new levels of authenticity and trust to business around the world.

In the past, manufacturers have tried to address this problem through traditional marketing, labelling, loss prevention, and channel management. RFID, holograms, and even complex bar codes have been tried recently. But, all of these methods are simply band-aids and do not address the authenticity of the products themselves.

Scope of the Problem

In recent years the cost to manufacture complex products, including replacement parts –has gone down drastically. This shift allows counterfeiters and off-brands to quickly ramp-up and flood with market with cheap, non-authorized replacement parts. In the United States, the Chamber of commerce estimates that counterfeiting totals up to $600 billion annually in lost sales And Eight percent of IT products worldwide are sold through grey markets (KMPG). According to recent news reports, Ford loses $1 billion annually from outright counterfeit replacement automotive parts.

The three common challenges manufacturers face today are:

• Non-original components and consumables (off-brands) are eating away at margins and market share with prices unsustainable for branded products.
• Grey markets are finding ways to spoil successful channel partnerships and damage customer trust.
• Counterfeiters are assembling fakes that look and operate like originals, from chips to consumer electronics to mission-critical computing components.

These problems persist because manufactures, distributors, retailers, and consumers are unable to validate, identify and trust products components and consumables. For decades, manufacturers have responded to counterfeiting by managing the supply chain, verifying channels, and recommending original components. Meanwhile, counterfeiting, grey markets, and off-brand competition have all continued to grow. Instead of monitoring the problem and trying to apply a temporary fix, manufacturers need to stop the problem at its source. Non-originals can’t hide from technology that validates the authenticity of components and channels, and ensure that only authentic parts work with the branded systems.

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