A stable supply chain for high-end luxury goods is essential for maintaining product quality and brand reputation. Luxury products, from couture fashion to antique collectibles, must meet the meticulous scrutiny and uncompromising expectations of consumers for flawless craftsmanship and certified authenticity.
Risks for luxury goods as they move across the supply chain include counterfeiting, theft, and damage during transit. These risks differ from those in standard supply chains in two significant ways: first, the economic loss is considerably greater due to the high value of luxury goods; and second, damage to brand reputation can be irreparable in cases of inauthenticity.
Ample opportunity exists for improved integrity across the luxury supply chain. Traceability is a key factor. In this post, we take a look at supply chain challenges for luxury goods and how to safeguard their authenticity and safety at every touchpoint by using IoT-enabled technologies such as blockchain and Sensing-as-a-Service solutions.
The luxury goods industry presents multiple challenges when tracking products along the supply chain. Complications stem from the industry’s complex web of global distribution networks, economic pressures to shift to micro-fulfillment models, and mounting threats of organized retail crime (ORC). Furthermore, the upcoming DPP directive mandates that businesses make their supply chains more transparent to customers or otherwise face fines, reputational damage, and loss of consumer confidence.
To help address these challenges, retailers have been exploring collaborative initiatives, industry-wide standards, and investments in innovative traceability technologies to ensure effective product tracking and authentication throughout the luxury goods supply chain.
The benefits of tracking and tracing include:
To achieve these benefits, luxury businesses need the support of state-of the art IoT-enabled technology providing effective real-time intervention strategies that are easy to implement with minimal infrastructural investments: in particular blockchain for authentication and Sensing-as-a-Service for tracking and monitoring.
Authentication in the luxury industry faces challenges as the counterfeiting of goods escalates. Traditionally, luxury brands have relied on certification methods such as holograms, serial numbers, and authentication cards. Unfortunately, counterfeiters have become adept at replicating these measures, thereby undermining consumer trust in certifications.
Fortunately, new technological solutions are now available. Blockchain is a decentralized digital ledger that can ensure the authenticity of luxury goods. It provides a tamper-proof record of an item's origin, ownership history, and transactions. This critical data is recorded cryptographically and shared across a network of authorized participants along the luxury supply chain.
At the source or point of manufacture, each luxury item is assigned a unique digital identity called a Digital Product Passport (DPP). The DPP integrates and preserves accessible information and key attributes about the product’s entire lifecycle: material sources, sales, repairs, transfers of ownership, craftsmanship details, artisans involved, inspection records, and warranty status. This digitally certified information is hosted on numerous blockchain network nodes rather than being centralized. Only authorized participants with network consensus can revise the data on a product's DDP.
In 2021, global leaders in the luxury industry, such as Cartier, Dior, Gucci, and Prada, joined together to establish the Aura Blockchain Consortium, a collaborative initiative advancing the adoption of blockchain solutions worldwide for the luxury industry. By leveraging the power of decentralized ledgers, luxury brands can revolutionize the way they protect their products and build trust with consumers.
A Sensing-as-a-Service solution tracks and monitors luxury goods in real time throughout the supply chain—sourcing, production, storage, transportation, delivery—to foster transparency and uphold the integrity of production and distribution processes. Small, connected sensors embedded within high-value luxury items use IoT-enabled technology to monitor their location, and condition in real-time. These devices provide valuable data for supply chain management and theft prevention throughout the product lifecycle.
Sensing-as-a-Service solutions often use global positioning system (GPS) and near field communication (NFC). These technologies track movement across the supply chain and alert stakeholders to potential theft during transit or storage. They also monitor environmental factors such temperature, humidity, impact, location, light, and unauthorized tampering. Where Sensing-as-a-Service differs significantly from simple RIFD or GPS tracking is in its use of an inconspicuous, stealth form factor that selectively sends data in a random fashion or only when goods are in motion.
The benefits of Sensing-as-a-Service for luxury brands includes:
SmartSense Voyage offers solutions that comply with strict regulatory requirements for storing, handling, transporting, and tracking high-value luxury and fashion products. Real-time visibility into the condition and location of these assets helps companies avoid theft and loss while improving revenue. Retailers can minimize product losses due to route deviation and theft during transit while also ensuring products are available when demand is high, thus increasing revenue.
No additional infrastructure is required to install SmartSense Voyage. The technology seamlessly integrates with existing enterprise systems, anti-fraud solutions, and other case management, fulfillment, and demand management solutions. Watch our video for a brief overview.