Offshore Manufacturing Highlights Need for IP Data Security

With price pressures increasingly pushing local manufacturing offshore, Australian businesses are frequently placed in the position of having to share design specs and other commercially sensitive information with overseas businesses as part of the production process.

In such cases, it’s important for those businesses to be able to collaborate with their partners while protecting their Intellectual Property – which in many cases forms the cornerstone of their competitive advantage.

Julian Spencer, Commercial Solutions Manager of Central Innovation’s Solutions Division, emphasizes how important it is to have a system in place that appropriately restricts and manages data access to ensure ongoing IP security.

When manufacturing overseas, the simplest way of protecting your IP is to farm out different steps of the manufacturing process to different businesses, as Julian points out: “Rather than give out your entire CAD file you just provide excerpts as necessary, with one component produced by one company, another by someone else so no one knows exactly what the finished product is – then all the pieces come back to Australia for assembly. So you protect yourself by not putting all your eggs in one manufacturing basket.”

Of course the complexity of the production task often necessitates a closer working relationship between partners, with greater data sharing. “In these cases you’ve got to either build trust with the manufacturing partner or buyer, or limit the information you give them and the way they can access it so you don’t lose your entire IP,” Julian emphasises.

“We hear of situations where someone’s designed a product, for example a case for an iPhone, and has gone to get it made in China and next thing it’s being sold on Ebay – it literally happens all the time because whoever they’ve asked to manufacture it has backdoored it to someone else and by then it’s too late to take action.”

While manufacturing offshore provides a strong example of how you could be putting your IP at risk, the dangers are just as real back home. Julian uses the following real-life example: “You might employ a contractor to do some work, and that contractor has access to all your IP – then there’s a falling out, and the contractor disappears and takes it all with them. We’ve heard of that happening.”

The big potential security risk is when you’re providing other businesses with remote access to your files – such as through a VPN login to your system. In that case, whoever’s logging in can see everything and access whatever they want. Hence the development of Product Data Management (PDM) solutions, which provide a secure environment through password/code protection.

“In this scenario, each user’s passcode only gives access to certain files depending on the permissions and rights that have been allocated to them at setup stage. Those permissions can be customised right down to making certain files or directories not only inaccessible, but invisible to some users. So someone logging in may be able to see, for example, all the PDFs in one folder but not other file types. Or they may be able to view files but not print or download them.” This solution effectively protect your IP by restricting not only the amount of files someone can see, but the type of files they can see.

Contemporary PDM solutions are highly customisable, as Julian explains: “They can be designed to modify with changing workflows, so at one point someone might see some information in a directory they’re pointing to, but then that information may change at a later date, as there’s an automated process of putting information in and taking information out.”

While these PDM solutions are readily available, it’s surprising how many businesses are not yet taking advantage of them. “It’s a majority, unfortunately, rather than a minority,” Julian says. “We have several thousand clients who have purchased the Solidworks product from Intercad, yet only a few hundred have put a PDM solution in place to assist in, among other things, protecting their IP.”

He argues this is not because businesses don’t understand the importance of data security – rather, it comes from a false sense of security arising out of the fact that the information is stored on their own internal servers.

“A few years ago a cloud-based CAD solution came out and the sales spiel was: why store all the data in your business in high end computers, why not access the CAD system remotely, then you won’t have to pay for software updates and so on. And the biggest, loudest voice came out from industry saying ‘if my IP’s going to be on the cloud, it’s not safe.’ So there are plenty of people who worry about their IP being out of their hands. But they believe that because it’s on a server in their business, then it’s safe.

“What they need to be asking themselves is: how many windows are there into that server, letting people in, and what can they see? How many staff have a remote access VPN login from home?

“Data security is something that should never be overlooked. If you have a good PDM tool then you can take advantage of the IP security aspects that are among the many advantages of such a system – if you don’t, you’re leaving yourself open. And if you do have one, you need a good administrator to ensure it’s being run effectively.”

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