This study presents a real-time system for detecting sheath damage in multicore wire production, addressing the limitations of conventional high-voltage testing. After evaluating multiple sensing techniques, laser-diffused reflection emerged as the most reliable, non-intrusive, and effective for continuous monitoring. A calibrated system combining a laser source and photodetector was implemented and tested on a live production line, achieving 83.75% detection accuracy. The system maintained consistent performance across wire colors and insulation conditions. This advancement offers a safer, more efficient alternative for in-process quality control. Future work aims to enhance robustness and incorporate intelligent algorithms to further optimize detection accuracy.