Feb 15 2011

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Advanced Tracking and Tracing to Fight Counterfeiting

Having just attended a presentation on this topic, I now have a new realization at the depth and scope of this problem. By some estimates, up to 10% of all manufactured products worldwide are now being counterfeited. According to a High Beam research paper, this figure could total $670 billion on a global basis. Our customer BAT believes there could be as many as 660 billion cigarettes every year that are illegally produced, smuggled or diverted to avoid proper tax payments, potentially costing governments $20-$40 billion dollars in lost tax revenues. Hardly a minor number, especially considering the dire straits of so many government finances.

Here is another way to view it. What if your vice president of sales announced the presence of a new competitor that had a 5% market share with no marketing costs and an operating cost structure 40% of yours? Would that get your attention? That is how Ron Guido, vice president global brand protection at Johnson & Johnson, explains the problem to those unfamiliar with the size and scope.

A part of the problem is structural. Our supply chains were designed for speed and efficiency, not security. As a result, the opportunity for goods to be diverted or the notorious “4th shift” is high. This problem can’t be solved by just going after the bad guys … it is too prevalent and occurs in regions where law support doesn’t exist.

One approach that seems to be gaining traction is to implement more comprehensive tracking and tracing, what some are calling “mass serialization.” This, coupled with real-time visibility could make a significant impact. The implications are that every part of every product must be serialized with a unique tracking code, building a history of authorized products, which must then be scanned or authenticated at time of purchase to ensure the product is genuine. This means a closed loop process would be necessary, which includes end user participation. The cigarette industry may be ahead of the curve here, in that governments are very focused on enforcement by the retailers to “close” the loop.

Not worried about counterfeiting? Think it is only happens with fake watches? Think again. Next time you are in your local pharmacy and need some medicine, realize that no products are immune, and that by some estimates, 1 in 10 could be illegitimate.

How closely are you tracking your production processes, including what each of your suppliers are producing? What are you doing to attack counterfeiting in your industry?

Permanent link to this article: http://www.apriso.com/blog/2011/02/advanced-tracking-and-tracing-to-fight-counterfeiting/

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