Clepa Aftermarket Security Infrastructure by Jürgen Buchert Sergej Toedtli CEO – TecCom CEO - Vesdo 1 MEMA Brand Protection Council Meeting March, 12th 2008 Agenda Introductions Clepa – Aftermarket Security Infrastructure Questions & Answers 2 TecCom…was formed by the Industry 1 2 3 4 5 6 7 8 9 10 Beru Bosal Bosch Continental-Teves Delphi Federal Mogul Hella Herth&Buss Johnson Controls LUK Aftermarket 11 12 13 14 15 16 17 18 19 20 21 Magneti Marelli Mahle Aftermarket Mann+Hummel MSI (Kolbenschmidt Pierburg) Siemens VDO Automotive Tecdoc Tenneco TMD Friction TRW Valeo Service ZF Trading © TecCom GmbH, 2007 3 Confidential. The Contents may only be passed on, used or made known with our express permission. All rights reserved. Customers - a growing network 90 100 75 55 40 Manufacturers 25 2001 30 2002 2003 2004 2005 2006 2007 10.2 7.5 6.3 5.0 3.5 1.5 © TecCom GmbH, 2007 0.6 Wholesalers (000) 2001 2002 2003 2004 2005 2006 2007 4 Confidential. The Contents may only be passed on, used or made known with our express permission. All rights reserved. No. of wholesalers (incl PoS) by regions status 2007: 10.186 WD new 2007 Europe 9.640 2076 South America 266 108 Asia 127 36 Middle-East 109 73 South Africa 44 19 © TecCom GmbH, 2007 Regions 5 Confidential. The Contents may only be passed on, used or made known with our express permission. All rights reserved. TecCom Solution Portfolio Inventory Management F/cast, planning and replenishment process Collaborative Managed Inventory (CMI) Order Management manage order to pay process Collaborative Managed Order – incl. electronic invoicing wholesaler supplier Category Management synchronise master data Collaborative Managed Data (CMD) © TecCom GmbH, 2007 After Sales Management manage claims and returns Collaborative Managed Warranty and Returns (Pilot 2008) 6 Confidential. The Contents may only be passed on, used or made known with our express permission. All rights reserved. Vesdo Ltd. … • …is a company located in Wollerau near Zürich • …is a joint-stock company, registered under Swiss law • …has its roots in the Swiss security tradition and security industry • …active in the brand protection industry since year 2000 • …delivers engineering services also in general applications of : – Barcode technology and deployment – Track- and Trace technology – Optimization of business processes 23.03.2016 Page 7 Competencies of Vesdo Ltd. Security: • Track- & Trace Concepts/ needs/ specifications • Security technologies for Technology: • Barcode - Standards/Printing/ Reading/ Verification • Supplier evaluation – • Specifications/ RFI/ RFP Testing – own lab authentication Inf. technology: • Database Concepts/ • needs/ specifications Communication for security and T&T landscapes Business processes: • Modeling - Methods & Tools • Simulation - Partnership • Validation / qualification – FDA compliant 23.03.2016 Page 8 Vesdo Ltd. services The backbone of our business: Engineering • Confidentiality in all activities Consulting Implementing Testing • Independence of any suppliers • Creative solutions (6 patent applications in Security Track and Trace) • 7 years of practical experience in Security Track and Trace • Projects in the automotive, pharmaceutical, fragrance and tobacco industry 23.03.2016 Page 9 The Vesdo Ltd. laboratory Our highly specialized laboratory: The solid base for technical statements • Evaluation of coding technologies and its impact on the coded substrate • Feasibility of RFID deployment • Readability (Verification and Validation) of barcodes • Evaluation of physical security elements • Basic research and testing of new technologies • Documentation of proposed solution 23.03.2016 Page 10 MEMA Brand Protection Council Meeting March, 12th 2008 Agenda Introductions Clepa – Aftermarket Security Infrastructure Questions & Answers 11 An Industry Approach to Authenticating Automotive Parts Experiences out of various projects in the European automotive industry by Sergej Toedtli Page 12 23.03.2016 Page 13 The dimension of product piracy in this industry • Liability in case of quality problems (accidents) can be extremely costly • Brand image is affected with disastrous long term effects. • Lost revenue. Difficult to quantify, however a significant loss for the company 23.03.2016 Page 14 Criminal activities are growing on an exponential scale Gray market diversion Illegal repackaging Changing expiry date Recyclin g used packages Smuggling Sales of rejects Sales of used parts Guaranty fraud Brand owner Tampering Theft Upgrading in product family Counterfeitin g 23.03.2016 Page 15 Customs seizures statistics 9000 Seizures German Customs 8000 Growth rate 27% 7000 y = 585.7e0.2364x 6000 5000 Reihe1 Exponentiell (Reihe1) 4000 3000 2000 1000 0 1 2 397 498 5 99 6 007 01 8 029 03 10 04 11 1995 96 05 23.03.2016 Year Page 16 23.03.2016 Page 17 Problems for dealers in selling counterfeits • Primary victim of counterfeiters is the dealer as he pay with hard currency for a wothless product • Liability problem: Cheap products generate technical problems and guaranty claims. The dealer has no backup in form of a responsible supplier • Bad quality ruins the reputation of a dealer. • The dealer breaks hin contract with the original product manufacturer. • Selling counterfeits is illegal A tool for easy authentication is needed Page 18 Page 19 Main objective of fight against counterfeiters 1st Priority 2nd Priority Ruin illegal business Send crook to jail Business action Legal action Page 20 Access to the supply chain has to be strictly controlled • Code is the “ticket” for using the supply chain. Access control • Security has to be integrated in logistical code. • Computer system can only handle authentic products. Supply chain Page 21 Enabling business partners Providing a tool to the dealers & distributors to allow for: • • • • simple fast reliable cost effective authentication of products Page 22 Page 23 Required properties of an anti- product piracy system • Effective against specific form of fraud • Protection against reproduction/ destruction • Technical deployability Benefit = Protection degree of security device Number of authenticated items in relation to the total amount of items x Control density Cost Investments and running cost 23.03.2016 Page 24 Basic principle of logical security and barcode structure Every item gets an individual code Today Future Anonymous mass of items Every item gets its own identity 246 248 438 686 Code structure (01) EAN 13 13 digits ……Free space…(21) Data Matrix 9 - 20 digits Serialization Page 25 Key elements of the coding recommendation • Allows every CLEPA member to use codes for authentication/ tracing without having the danger of interfering with others • Recommendation based on global coding standards • Coding tailored to the specific needs of the aftermarket industry • Recommendation approved by standard organizations GS1 and ISO • Coding discussed/ synchronized with ODETTE and VDA • Leaves room for company specific adaptations • Parallel initiatives in the pharmaceutical industry Page 26 Benefits of combining logistics and security functions PROFIT • With one single scan in the supply chain, logistical needs (e.g. materials entry) and security requirements can be covered. • Existing scanning infrastructures can be used. • Printing of the security element (barcode) on a logistical label does not create additional running cost of label stock. • The Data Matrix code can also be marked on parts directly, allowing for optimizing internal processes. Logistics Security • The security of the solution is given by a highly protected database. The combination with logistical functions is not affecting the over all system security. Page 27 Typical operational savings (examples) by direct marking of parts • Identification of manufacturing site, subcontractor, manufacturing line • Support pairing of selected items during assembly • Simplifies callback actions • Permit permanent wait time analysis • Allow for batch identification across complex manufacturing structures • Simplifies management of assignment stocks • Allows for authentication of returned goods • Reduces/ eliminates guaranty fraud • Country of origin marking (Ursprungsbezeichnung) • Marketing opportunities in form of a Bonus Programm (e.g. Rep Page 28 Expert) Security levels Basic security level Higher security level Direct marking of parts Coding folding boxes ? Additional security Features on folding box Page 29 Comparison label/ hologram vs. barcode deployment Barcode Label / Hologram Security (Combined with logistical code) Counterfeiting and diversion Counterfeiting Application Package and product Package Specific readers Not required Required for sufficient security Secured supply chain Not required Required Investments In IT-Infrastructure In secure supply chain Running cost per label None Additional 3-5 € Cent Industry solution Company specific Combination is possible Page 30 Pilot project label 23.03.2016 Page 31 Track- and Trace reality – Protect the supply chain Distributor Dealer Original manufacturer Trusted supply chain End user Trusted supply chain Mandatory scanning (Time/ location) ? Unknown source Distributor Dealer 23.03.2016 Page 32 Why an “industry solution” • Cost sharing allows for: – Minimized investments per user – Low running cost for IT infrastructure • Coding recommendation prevents chaos on barcode level • One single access point to the system allows: – Dealers to authenticate a mixed basket of products without problems – Protection of the database being “mimicked” by crooks • Training of people working with the system will be facilitated – Dealers – Customs – ….. Page 33 Architecture of an authentication system If each manufacturer is operating his own track and trace system: Business processes at the POS will be very complicated. Using a hub as unique certification authority in an given industry: Business processes at the POS will be simple and easy. Page 34 Authentication process single online mobile pallet local online batch Confidential.The Contents may only be passed on, used or made known with our express permission. All rights reserved. 35 © TecCom GmbH, 2007 2D matrix code local data base central “www.tecidentify.com” © TecCom GmbH, 2007 36 Confidential.The Contents may only be passed on, used or made known with our express permission. All rights reserved. “www.tecidentify.com” © TecCom GmbH, 2007 37 Confidential.The Contents may only be passed on, used or made known with our express permission. All rights reserved. Screenshot TecIdentify © TecCom GmbH, 2007 Confidential.The Contents may only be passed on, used or made known with our express permission. All rights reserved. 38 First Movers target 2008: 25 1 Bosch 13 Contitech - March 2 Continental Teves 14 ThyssenKrupp 3 Federal Mogul 15 Knorr Bremse - March 4 GKN 16 Osram - March 5 Hella (2008) 17 Valeo 6 Mahle (2008) 18 VW 7 Mann + Hummel (2008) 8 Schaeffler, LuK, INA Int. trade Groups 9 Tenneco Figiefa 10 TRW MEMA 12 ZF-Trading Decision open 39 Confidential.The Contents may only be passed on, used or made known with our express permission. All rights reserved. © TecCom GmbH, 2007 11 Wabco (2008) MEMA Brand Protection Council Meeting March, 12th 2008 Agenda Introductions Clepa – Aftermarket Security Infrastructure Questions & Answers 40 Thank you! Jürgen Buchert Sergej Toedtli CEO – TecCom CEO – Vesdo juergen.buchert@teccom.eu +49 (89) 321 216 150 toedtli@vesdo.com +41 (44) 787 39 55 41 Back up © TecCom GmbH, 2007 Confidential.The Contents may only be passed on, used or made known with our express permission. All rights reserved. 42 Architecture of global IT- network Public authentication Public hub PSTN Internet Authentication within supply chain Secure hub T&T T&T T&T Page 43 The only function of the hubs is routing the queries Customer Public hub / Secure hub Manufacturer DB Company 1 Company prefix Address registry +Location Address: Company 1 Query Registering query & GLN Accepted Yes/No DB • No sensitve company (sales) data stored on hub ! • High security and high performance due to distributed architecture. Company 2 Company n 23.03.2016 Page 44 Manufacturers cost for operating the CLEPA security system Product coding Level of functionality Investments Running Cost Buy labels from external printer ------ 1.75€/ 1000 Stand alone printers & manual data collection € 1’600.- 1) per printer (SW) € 500.- per printer (SW) Managed printing: Central console for internal and external printing incl. automatic data collection € 100’000.- to € 150’000.- Reduction of label printing cost Track- & Trace on package level 6 digit € 5 digit € Direct coding of parts, coding folding boxes and Track- & Trace functionality 7 digit € 6 digit € 1) Reduced price for software in larger quantities to be negotiated. Clearing hub Functionality Clearing center TecCom Investments € 9’000.- Cost € 9’000.-/ Year Page 45 Project time table First contact Draft of recommendation Approval IT-Concept CLEPA decision Clearing center realized Roll out “first movers” 2006 2007 2008 Page 46 Participating “first movers” companies 1. Bosch 11. TRW 2. Continental Teves 12. ZF-Trading (Präs.11.10.2007) 3. Federal Mogul 13. Wabco (2008) 4. GKN 5. Hella (2009) 6. Mahle 7. Mann + Hummel (Präs.10.10.2007) 8. Schaeffler, LuK, INA 9. Tenneco 10.TRW Page 47 VESDO: toedtli@vesdo.com +41 (44) 787 39 55 Page 48