3 Industries being disrupted through track-and-trace technologies

by Banu Ozkaya

Traceability in supply chains implies the potential to track materials, products and goods along the value chain, from the origin to the end consumer. This is sometimes necessary for certain products and industries such as pharma, aircrafts and food where the visibility can deliver considerable value to both the company and the end consumer. This concept has been around for some time now but it would be fair to say it has gained more traction in recent years. Companies whether due to regulation or social responsibility are now increasingly interested in track-and-trace systems that make their supply chains more transparent, traceable and visible to partners.

Let's take a deep dive and try to understand the concept of traceability in the context of some industries or products.

1. Pharma

So looking at it intuitively one can assess that with the inclusion of traceability into the supply chain of drugs and relevant products would have a direct impact on reducing fraud, smuggling and theft. However, in addition to that, a positive effect on productivity can be realised as well. Ideally with the information obtained from these track-and-trace systems pharma companies and their partners would share considerable visibility of products along the value chain. In addition to managing the potential risks and vulnerabilities that are a constant threat with the complex supply chains of pharmaceuticals and medical devices, traceability offers potential for lowering costs,better inventory management and monitoring product quality.

2. Tobacco

The tobacco industry is a multi billion dollar per year industry that has sustained high revenues even as regulations and barriers have affected the consumption over the years. Health concerns became a starting point for the major disruption in the tobacco industry over time and now as a result we see the rise of products under the ‘E-cigarette’ or ‘E-smoking’ umbrellas. While these do offer opportunities for big tobacco names to expand into in the coming years, there is still the issue of managing the problems related to the supply chain of conventional tobacco products that have continuously been pushed in through illegal channels around the world making the counterfeit trade amount upto 10-12% of the global trade(1). The possibility for illicit trade and fraud is quite similar to pharma and hence the tobacco industry is also gearing up for regulations that require companies to honor national track-and-trace initiatives for combating the highly negative externalities that come with smuggling and black market trade.

3. Cannabis

With the ongoing wave for legalization of cannabis and related products around the world, there is an increasing need to be proactive and avoid any potential problems in this particular supply chain. As it is still a controlled substance it definitely needs to be regulated, monitored and dealt with in a precise and safe manner. The ideal system should trace the movement of the substances or products from ‘seed to sale’ and in addition should also keep track of the quality and safety factors. The industry is experiencing strict regulations which could be a deterrent to growing the legal market at a fast pace especially if there is a lack of enforcement or failure to thwart the black market for cannabis. However, these tight controls will ensure that the industry operates in a manageable and secure way. That however doesn’t mean that it is any easier for business operation in this industry to comply with every regulation. Traceability offers a solution in this regard as ideally it should be able to assist with proper inventory management, safety, quality assurance and licensing issues.

Many more sectors like food, alcohol, firearms etc. have the potential and need to integrate traceability into their supply chains. There are genuine obstacles such as possible slowing of production and security concerns with digital and barcode systems however the immense benefits that can be delivered across the board to partners from production to sale can be realised by pairing a comprehensive vision and roadmap with the right mindset.

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(1) https://www.gs1uk.org/~/media/documents/white-papers/gs1_uk_and_kpmg_track_and_trace_in_tobacco_may_2014.pdf?la=en

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