How can RFID and innovative electronics make authentication easier?

Based on 2019 data from the OECD (Organisation for Economic Co-operation and Development), the international trade in counterfeit and pirated products is estimated to have been around 2.5% of world trade that year, in the EU fake goods were 5.8% of imports. The levels are roughly the same as in previous years, as fast as the authorities manage to close down one source, others appear to take their place.

The problem is widespread: clothing, footwear and luxury items are the obvious ones, but there are also many business-to-business products: spare parts, consumables, and so on. Fakes can have serious health, safety and environmental risks. Recently the biotechnology company Gilead announced an alarming seizure of counterfeit HIV-1 drugs across nine states in the US. Over the course of a two-year investigation evidence showed that more than 85,000 fake vials were sold by distributors who were not even authorised.

The COVID-19 pandemic has driven a measured increase in the purchase of medicines on-line, both prescription and over-the-counter (or OTC); but with an estimated 96% of the websites offering pharmaceuticals operating illegally the problem of fakes is bound to grow. Although the impact is difficult to measure precisely, fake medicines can lead in the worst cases to preventable deaths.

Brands also suffer from another persistent problem, the grey market – which is defined as goods that are not counterfeit but are sold outside approved supply agreements. In general, the goods are bought in a low-priced region/country, and then sold in another, where they command a much higher price. Other examples are goods that are meant for use in service outlets but then appear on supermarket shelves, as illustrated by Unilever’s action against Target in the US.

Whilst it isn’t illegal to buy from grey market sources, consumers often find the experience less than satisfactory when the goods come without local language instruction manuals, the usual accessories, or when the brand owners refuse to repair or replace the item when something goes wrong. And for the brands – this often results in bad publicity and damage to reputations and customer relationships.

It isn’t just a problem for high value, luxury goods, it is also common in FMCGs (fast-moving consumer goods), the challenge in these cases is to find out where the supply chain has been disrupted especially when there are many different parties in the process who are all working on tight margins. The expectation is that the brands should be responsible for closing down grey market channels, but if the intermediaries are unwilling to co-operate, or indeed are the problem, what can brands do?

The simplest option, it may seem, is to have a unique serial number on every product, as in the EU Falsified Medicine Directive for prescription medicines. On the surface, this appears to be a no-brainer, but the mass production of boxes and labels on traditional high-speed packaging and printing lines cannot handle individual codes, so new digital printing lines would be required, which is often out of scope for many converters, those who make the packaging, who work on extremely narrow margins. In addition, as barcodes, or 2D/3D codes, are visible to everyone, they can be easily copied by counterfeiters, or in the case of grey market diversion, will be valid codes anyway!

RFID (radio frequency identification) technology is now widely used by brands to improve their stock control – companies like Marks and Spencer, Macy’s and Decathlon have successfully deployed systems and seen positive results[7]. Rather than biannual stock-checks, a whole stockroom can be scanned in a matter of minutes and anomalies immediately highlighted. RFID could be combined with blockchain and cloud-based services to track goods from manufacture to end consumer, ensuring a secure supply chain, and therefore authenticity[8]. A combination of long-range and short-range RFID solves many stock monitoring and consumer engagement issues. And once embedded into a product it can be used to deliver many other services: including consumer engagement, loyalty programmes, enhance recycling, manage decomissioning and correct waste processing.

If it is such a perfect solution, then why have we not seen more of it? In the early days of RFID there were technical teething problems, which have now been solved. The challenges of converting to true omnichannel selling due to the pandemic highlighted that companies who had already started on their digitalisation journey adapted much better and industry experts are now convinced that the era of RFID has firmly arrived.

Whilst this is true for high value goods (such as clothing), for FMCGs – like food, beverages, toys, personal/healthcare and everyday pharma products, the unit price of each product is less than 10 pounds/euros, meaning it simply cannot support the price of silicon-based tags. Traditional silicon integrated circuit (IC), or 'chip', manufacturers focus on delivering complex solutions, to get the cost per function lower with the advancing technology nodes, they pack more and more into each chip.

That is great for the processors that power our smartphones, tablets and PCs, but when only a small amount of intelligence is required, as in the case of RFID, this chip paradigm breaks, and the chip price bottoms out.

What is required is a technology that is designed to be low cost with  a manufacturing technique that can cope with ultra high volumes, without the massive capital outlay that silicon fabs need. Accordingy, PragmatIC manufactures flexible ICs (FlexICs) that are ultra-low cost and are perfect for integration into the packaging of consumer goods. FlexICs open up the possibility of adding intelligence to everyday items, going far beyond the boundaries of traditional electronics and making product authentication far easier than ever before.