The Very Real Problem with Product Authenticity

Alexander Dance
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Cannabis, Technology
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So you’ve just ordered a new iPhone. Exciting times! 

The phone is delivered. You open the box, take out your shiny new phone, peel off the protective plastic and turn it on. 

As that famous apple silhouette loads up on the screen the last thing you’re probably thinking about is where all the chips and circuits powering it up came from or who put them together. 

Most of us know that products like the smartphones we carry in our pockets were made in factories with conditions so bad that they have ‘suicide nets’ attached around the outside. While 70% of us say buying ethical products matters to us, year on year people continue to buy smartphones and companies like Apple and Samsung continue to make billions of dollars.

And herein lies the dichotomy of the modern consumer. We are both more interested in where our products come from and, thanks to an expanding global supply-chain, less able to work it out.

Why certificates of authenticity aren’t the answer

For many people the solution for the above problem seems simple: just buy products with some type of certification of authenticity. 

Unfortunately that isn’t always the answer.

While, there are a lot of great organisations that do excellent work to make sure companies are acting rigorously and ethically in their supply-chains, in the end they are all just as fallible as any other organisation.

Right now, we as consumers are putting a lot of trust in the information brands are presenting to us. We are essentially trusting any claims that companies make about our phones, food, cars, medications and more. 

Whether that is a fairtrade certification on your chocolate bar, an energy rating on your washing machine or a ‘Made in Australia’ on your cereal box or even just a brand’s own claim about its product, we often take this information at face value. However, when you scratch a little bit beneath the surface a lot problems start appearing.

Problem #1 – Brands rarely have full supply-chain visibility

The one big issue with relying purely on trust, is that not all brands put time and care into monitoring their supply chains to ensure product integrity. This can depend on a brand’s inadequate internal controls, or that they simply don’t have power over key stages in their supply chain. 

Because supply chains are so complex, many companies have compromised supply-chains without even knowing it. Even if a business actively seeks to obtain an ethical supply-chain, there are so many factors that go into the process which makes it near impossible to reach 100% ethical practices. 
According to Geodis’ 2017 Supply Chain Worldwide Survey, out of the 623 companies that were surveyed, supply chain visibility and transparency were their top priorities but only 6% said they actually had achieved full visibility.

Problem #2 – When trust is a commodity businesses will exploit it

Authenticity, sustainability and ethical production have all become more and more valuable commodity for business.

However, from a company’s point of view, the value comes from people thinking they have these characteristics. Whether it is true or not is often irrelevant.

Time and time again, companies have been found to exploit the trust of the consumer at different stages of the supply-chain. The examples are endless. In 1995, Safeway was sued for selling counterfeit Similac baby formula. Cosco was told to pay $5.5 Million dollars for selling fake Tiffany’s engagement rings in 2016. In 2015, the Volkswagen emissions scandal made global headlines when it was discovered they were falsifying emissions testing on their ‘Clean Diesel’ VW Golf and in 2017, over 16 thousands tonnes of soybeans were imported into California with fake ‘organic’ certifications.

This demonstrates how easy it is for even legitimate retailers to fall victim to counterfeit products and sends alarms from knowing how easy it is to manipulate the supply chain. It also demonstrates the need for a better method of tracking and authenticating products to create a fully transparent industry.

Problem #3 – Certification organisations are a business too

As already mentioned, many product certification programs are run by people operating in good faith. They are trying to make a difference in the world for the better.

But at the end of the day all it means to the consumer is a badge on their packaging which leads to some interesting problems when it comes what that actually means for the product at hand.

  • Some certifications are ‘better than’ others: The value in product certification means that the number of organisations that offer these type of badges has exploded. However they all use different criteria to allow brands to qualify and unless consumers spend the time researching each one, certifications become just another level of ‘trust’ than companies are doing the right thing.
  • Not all certifications are completely transparent: Again, unless consumers know exactly what they are looking for they can be easily fooled by any number of the hundreds of certification bodies that are created purely for commercial gain and require only minimum standards to be met to qualify
  • The verification process is limited in scope: Certification organisations have a certain set of standards they have to meet before a brand can use their logo. But the brand only has to meet those standards when they are being monitored. This opens the door to allowing companies to manipulate their practices and doesn’t guarantee 100% compliance.
  • The process can be expensive – Even the most rigorous certification programs are problematic for the cost involved in carrying them out, both on the side of the organisation and for the producers themselves. This can often lead to smaller producers forgoing certain certifications because it isn’t economically viable.

A study on consumer understanding and comprehension of nutritional information concluded that “by placing information onto a package panel, we engage in printing, nothing more. The contention that this act of information provision is equivalent to communicating with the consumer represents an unverified assumption” (source). 

If the same can be said to be true of any type of product authentication there is a real problem with the way we certify products.

How blockchain can be the solution to verifying product authenticity

The key problem we are facing now when it comes to traditional methods of product verification is that consumers don’t have access to the information about the products they buy or, when they do, they have no way of verifying it.

That’s where blockchain can step to the plate.

With Parsl technology users are able to scan the NFC (Near Field Communication) badge on the products with their phone. This will then bring up the entire history of the product and all relevant information. This data is 100% authentic as it has been verified using intelligent blockchain technology, which is secure and allows the supply-chain of all products to operate transparently.

So how does it actually work?

Each product is represented as a token which is placed on the blockchain and with this token comes a chain of custody. 

What does that mean? Well everytime that token (product) is handed from one person to another in the chain of custody (supply-chain) the data is added onto the blockchain detailing:

  • what has been done to the product
  • who was involved in the process
  • where it has come from 

This means that the end user can access all of the data added to the blockchain, and similarly, the producer of the product can access data to see who their end user is and where their product has ended up.

The Parsl badge has the potential to become a valid sign of trust because it gives users fully verified authentication of products every time, allowing users to trust the services and potentially form a lifelong connection with brands who are using the badges. This is an efficient way to gain customers trust in products. 

Through providing the entire history of products, Parsl technology has the ability to significantly reduce the possibility of counterfeit products through the ability to immediately pinpoint exactly where something may have gone wrong in the supply-chain and notify all users who may be affected. 

The technology can also benefit customers and law enforcement in a different kind of way. As customers are able to claim ownership of a product, in the circumstance that a product needs to be verified by the police, customers are able to show that the product rightfully belongs to them through providing its verified history. 

While Parsl is currently implementing this solution to solve key issues in the cannabis industry our technology can also extend to any industry where authenticity is important (and really what industry wouldn’t?). 

This will ultimately ensure MRBs are able to prove the quality of their products, the potential for counterfeit products is easily contained and customers can rest knowing that the products they are investing in are high quality and most importantly, authentic! 

Author: Alexander Dance
Alexander has worked in marketing and content creation for 6 years with a strong focus in the digital space. He has a strong grounding across all marketing channels with a specific focus in SEO, copywriting, video, conversion optimisation and design. He is passionate about evidence-based marketing.

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