How Blockchain Can Increase Brand Value For Both New And Established Supply Chains
If you sit down at your laptop and Google “brand protection technology,” you’ll receive an avalanche of results with different tactics and strategies for all types of contexts.
The solutions out there are myriad, partly because brands have so much trouble with counterfeits and diversion.
Yet most options assume existing supply chains will stay the way they are.
That’s because the technology and processes making up global supply chains have become deeply ingrained over the years, to the point where change feels nearly impossible.
But with the changes in global trade agreements, political realignments, new technology and consumer demands for local production, supply chains aren’t set in stone. And that uncertainty makes it more crucial than ever for companies to protect their brand and their intellectual property.
One of the major catalysts of change will be blockchain, but it won’t look the same for every company.
Just as major corporations and startups use certain software to manage their businesses, different sizes and types of companies will use unique blockchain solutions.
Here’s how it may look for established companies, as well as those who are just getting started:
For every company, it starts with understanding the nuances of technology and brand value.
There’s so much technology available today for tracking products and creating brand value.
Companies like Arylla are using nanotechnology to power solutions for defending distribution and reducing fraud. And Systech has created a unique fingerprint that uses existing barcodes — a non-additive system.
Technologists have an understandable tendency to believe new and improved tech can fix every problem. Yet each new advancement presents challenges in the supply chain space. Sometimes the solutions that emerge don’t really solve any problems. And many of the most intractable issues stick around because of an unwillingness among participants to fix them.
And without a deep understanding of the technology behind brand value, its potential and its purpose, companies will struggle to innovate their supply chains.
For example, some brand feel imitation is a form of flattery. Others ostensibly want to shut down counterfeiters, but only if the product is inferior. More and more often, many of the fakes out there do look like the real deal.
Recently, the clothing company Levis has had to deal with a plethora of sophisticated fakes that are sold using sites that look legitimate and appear at the top of Google’s search results.
In this type of complex environment, blockchain can help companies define brand value by adding a layer of trust and security to existing technologies — whether through a microchip identifier, DNA microtagging or machine vision that detects inconsistencies in products.
But no two supply chains are exactly alike, and blockchain isn’t something you can slap on like a bandage. Its applications are different in each setting.
Established companies can make improvements without altering their entire supply chain.
Every supply chain is unique.
Take the personal care brand Dove, for example. Their manufacturing process is incredibly complex, and there are plenty of ways their products can end up on Amazon or in an unauthorized marketplace.
When that happens, Dove — or any other major brand — has to find the distributor who diverted the product. However, the size, complexity and nature of their supply chain doesn’t really allow them to make systemic changes in pursuit of the culprits.
Still, large companies can use the combination of unique identifiers and blockchain technology to find where their problems lie.
When a product’s unique ID is linked to a blockchain, it’s possible to track the flow of goods from one party to the next.
Of course, tracking products requires the participation of all the participants in the supply chain, from suppliers to distributors.
To encourage involvement, companies can onboard distributors by offering them a pre-negotiated percentage of sales that’s comparable to what they’d make by diverting the products in the first place.
Once everyone in the supply chain has an incentive not to divert product, diversion will decrease. Lowering rates of diversion will increase brand value, and eventually, the people who refuse to participate in the revamped supply chain begin to fall away.
But this is not the best strategy for every company.
New companies can create a blockchain-based supply chain from the start.
It’s very difficult for a new brand to compete with the larger, established competition. Some, like Warby Parker, Casper or Harry’s, are able to hold their own.
And I think the reason for that comes down to brand protection.
Smaller or newer companies aren’t constrained by supply chains that have grown up over the years and become difficult to change. They have the option to build blockchain solutions into their supply chains from the ground up, and to use them in new and unique ways.
These companies have the opportunity to use blockchain supply chain technology to democratize access to manufacturing.
For instance, limits on the number of design files available can protect a company’s IP by allowing an exact number of products to be made.
This means brands can also produce limited-edition runs and actually prove they’re authentic by linking the products to an immutable identity on blockchain. Instead of worrying about counterfeit products, the companies can focus on building brand value with a specific number of authentic products that can easily be identified.
Right now, so much of the conversation in supply chain revolves around fighting for brand protection. And I think blockchain is uniquely positioned to help us bring that conversation around to a more positive outlook, one where companies are focused on increasing brand value, rather than protecting what already exists.
Thanks for reading!