Product Labeling … a Tool for Managing Supply Chain Visibility Paul Chamandy Prepared For: AAFA Knock It Off! Brands & the Counterfeiting Quandary November

Product Labeling … a Tool for

Managing Supply Chain Visibility

Paul Chamandy

Prepared For:

AAFA Knock It Off! Brands & the Counterfeiting Quandary

November 11, 2008

Information and Brand Management Division

Why Brand Owners Should Contemplate a Brand Protection Strategy

• Manufacturing has moved from domestic owned & operatedfactories to full package offshore contractors resulting in potentialloss of control over your intellectual property

Changes in brands trim sourcing model have resulted in thequalification of additional suppliers

• Brands have attempted to cut their inventory liabilities by allowingcontractors to place orders directly with suppliers and thus reducingvisibility over contractor activities.

• Multiple sourcing strategies have created subtle inconsistencies inthe trim & packaging products

• What does this mean to a brand as they try to police and protecttheir Intellectual Property Rights?

The Changing Market Dynamics


• Avery Dennison offers a comprehensive set of labeling solutions that allow the brand to monitor and protect their assets as they travel through the global supply chain.

• We are strategically positioned to serve the apparel and retail markets wherever their goods are sourced.

• Our secure, global manufacturing capabilities allow us to supply labeling with the highest degree of consistency, while seamlessly integrating security technology into the RBO’s existing branding program.

• By combining anti-counterfeit labeling solutions with our web-based track & trace applications, Avery Dennison can deliver unprecedented control, visibility, and access to information globally.

Global Scale, Presence & Resources to Best Serve the Market

Avery Dennison now operates in over 40 countries including all the major apparel & footwear sourcing locations


Diverted by a Legitimate Customer

Accumulation

Dumping

• Examination of the product quality• Validation of the brand security features

• Maintenance of tighter control over sundries• Better monitoring of production activities

• Monitoring account sales activity• Tracking through unique ID or special markings

• If product is uniquely identified then the approximate location of accumulator can be identified

• Age of product/packaging can be a determining factor

Over-Production by a Vendor

Validating Authenticity of the Product

❧

Authentic

Gray Market

CounterfeitCounterfeit

?

?

Copy of Design & Packaging


• Brand Protection Solutions don’t have to be expensive or disruptive to the business process.

• Avery Dennison typically collaborates with the brand to develop a comprehensive anti-counterfeiting program.

• We are constantly evaluating new security technologies to deliver the latest in innovative anti-counterfeit labeling solutions.

• Having extensive expertise in the apparel & footwear industry uniquely positions us to deliver individualized brand protection programs built around:

– Production requirements (washability, fade resistance, abrasion & environmental stability)– Cost-effective integration over a wide range of core ID products– Ease and practicality of detection– Multi-tiered security options– The ability to deliver the solution in the most efficient manner based on the business need

Authentication

Brand Protection Solutions for Every Budget and Objective


Criteria for Evaluating & Selecting a Security Technology

Authentication Technologies


Product Security Portfolio

Delivering a Range of Security Options Across All Product Categories

Micro-PrintingHolograms

Special Security ThreadsInfrared Luminescent Inks & YarnsUV Florescent Covert Security Inks

Color Shift InksXMARK Covert Security Ink

Sequential Numbering - Woven & PrintedPrinted & Demetalized Security Threads

Verification Service & TrainingTracking & Verification Tools


Real or Fake?


Accumulation

Dumping


• Monitoring account sales activity• Tracking through unique ID or special markings




Authentic

Gray Market

Counterfeit






Capturing Unique Identification Through the Supply Chain


Item Level Bar Coding - An Interim Step


Item Level RFID - The Holy Grail

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Radio Frequency Identification offers the ability to seamlessly capture unique item level information at the point of distribution.

Although it is perceived as costly, it offers measurable business value throughout the supply chain.


AccumulationAccumulation

Product Labeling as a Tool to Help Manage Supply Chain Visibility

• Monitoring account sales activity• Tracking through unique ID or special markings• Works best when it involves direct shipment from the factory


Accumulation

Dumping





Authentic

Gray Market

Counterfeit






Avery’s Web Solutions Help Provide Visibility to the Brand

On-line solutions for tracking and tracing labels back to their source

– Allows the brand to capture and store data about label production

– Enables tracking of items through the supply chain with on-demand reports regarding orders and shipments

– Improves stock control by monitoring material usage

– Helps ease product identification and authentication by field investigators

– Verifies specifications of authentic items including details as to the origin of

products - this can be used by brand owners and enforcement officials.

– Information is accessible 24/7 via a secure internet connection

– Cost effective and easy to implement


• The unique ID or “license plate” for each garment and links to a database containing particulars such as the vendor, PO#, production location, run size, mfg. date, fabric lot # and any other information that would be useful to the brand in tracking the pedigree of each item they procure.

• It further allow the brand to monitor production coming out of each authorized factory

• The unique # could further help the brand in complying to the impending HR 4040 CPSC Legislation recently passed into law

Unique Serialization of the Core Product Labeling

CPS# BRSCD9LC00154

CPS# BRSCD9LC00154

The visible ID# can be used to access information about the product on the web based using the data captured in the Avery Dennison database

A duplicate ID# could be buried in

the seam should the consumer (or diverter

remove the label after purchase


D2Comm compiles data from a brand’s various data sources

(CONTRACT Info)

RBOData Feed

To AD

RBOData Feed

To AD

(SKU)

(PO)

D2CommD2Comm

In-PlantPrinting

In-PlantPrinting

ServiceBureau

ServiceBureau

VendorDataInput

VendorDataInput

Any data provided by a brand or their vendor can be tied back tothe unique ID# printed on the label.

Managing Data Through D2Comm


• When factories log in to download print jobs or place label orders to be delivered by AD Service Bureaus, D2Comm collects data.

• The Data can include anything that the RBO initially downloads to AD and it does not have to just be information that is physically printed on the labels.

• The vendor can append the data file prior to printing with time sensitive information that may not be something the RBO holds in their files (i.e fabric lot # or actual mfg. date or any other information as required by the RBO to ensure compliance with CPSC guidelines or their own internal tracking needs

• The logged file contains all printing activity tied to a particular vendor

• Customized reports and analysis come from this data as required by RBO

Date, time, quantity, machine etc. for each batch of data printed

TheRBO,D2comm, Care Label,7/8x2.0,08/19/2008, 22:44:43, 500, (300DPI),2,220,BRSCD9LC,236,n,243-761,CCS-100,MADE IN CHINA, 3T,UPC716042511021,Lot14721,Line23,Fab8942-BL07 TheRBO,D2comm, Care Label,7/8x2.0,08/19/2008, 22:46:13, 500, (300DPI),2,110,BRSCD9LD,120,n,243-761,CCS-100,MADE IN CHINA, 4T,UPC716042511022,Lot14721,Line23,Fab8942-BL07 TheRBO,D2comm, Care Label,7/8x2.0,08/19/2008, 22:47:21, 500, (300DPI),2,360,BRSCD9LF,380,n,243-761,CCS-100,MADE IN CHINA, 6T,UPC716042511023,Lot14721,Line23,Fab8942-BL07 TheRBO,D2comm, Care Label,7/8x2.0,08/19/2008, 22:44:43, 500, (300DPI),2,220,BRSCD9LC,220,n,243-761,CCS-100,MADE IN CHINA, 2T,UPC716042654024,Lot19721,Line18,Fab7842-GR01TheRBO,D2comm, Care Label,7/8x2.0,08/19/2008, 23:21:43, 500, (300DPI),2,360,BRSCD9MD,400,n,243-761,CCS-100,MADE IN CHINA, 3T,UPC716042654025,Lot19721,Line18,Fab7842-GR-01TheRBO,D2comm, Care Label,7/8x2.0,08/19/2008, 23:22 :12, 500, (300DPI),2,180,BRSCD9MF,220,n,243-761,CCS-100,MADE IN CHINA, 4T,UPC716042654026,Lot19721,Line18,Fab7842-GR-01

Complete label data is archived by

Avery Dennison for easy access by the brand

How it Works


Accessing Product Information Via the Web

Information retrieved from the database enables identification of the: • the print location

• production date/time• production volume• evidence of over production• other customer specified data that is not printed on the label but valuable in helping to track the pedigree of the product

Ramatex220081214200417_11491.golRamatex2TheRBOAZB_IP_LABEL_PRINT1_AP11491BRSCD9LCTheRBO_Tops7/8x2.008-19-2008-22:44:43500, (300DPI)222023683618974243-761SCCS-100MADE IN CHINA 5UPC016042526476 437194-1

Lot14721Line23Fab8942-BL078-21-08

Log file:Username:

Site:PCID:

Tag Security ID:Format Set::

Label Size:Log Date:

Printer:Comm:

Order Qty:Download Qty:

Batch ID:Style No.:Item No.:

Origin:Size:

UPC Number:Customer P.O. #:

Lot No:Production Line:

Fabric ID:Mfg Date:

Summary - PCMate Platinum Online Log

The 13 Digit ID# code is entered from the care label

Serial# BRSCD9LC000154 13 Characters

Lookup Back

Web based with secure log-in by a Brand’s IP users

Brand Owner


The unique ID# number can offer multiple benefits to Brand Owners

• For monitoring factory label production– Monthly Audit reports to compare what was requested to what was ordered or printed.– Exception reporting (i.e.over production)

• Supplies usage reports– Identifying and monitoring factory supplies usage (for in-plant applications)

• Label authentication and pedigree– Identifying the manufacturing source– Providing pedigree information easily accessible over the web– Capturing data that can be used as a foundation for developing a product specific

consumer facing website– Using the ID# to selectively identify and recall products in

the event of quality issues

Supply Chain Visibility


• Label solutions offer the most cost effective tool to assist IP enforcement in the detection of counterfeits and identification of diverted products

• Through data tracking tools, labels can provide production visibility as it relates to label usage, potential overproduction or factory leakage.

• They can be delivered through global service bureaus or with the proper controls - in-house printing can offer greater flexibility to meet quick turnaround requirements.

• A well thought out and implemented program can result in decline in products showing up in the grey markets as well as increasing your confidence relating to IP enforcement activities

In Summary


Thank You

Paul ChamandyVice President of New Business Development

Avery DennisonInformation and Brand Management Division

1 Wilcox StreetSayre, PA. 18840 USA

Ph. (570) 888-6641 Ext. 2613Fax (570) 888-3332Mobile (607) 342-2346

[email protected]


Documents

Product Labeling … a Tool for Managing Supply Chain Visibility Paul Chamandy Prepared For: AAFA Knock It Off! Brands & the Counterfeiting Quandary November