This article first appeared in Consumer Goods Technology on February 20th, 2018.
In all aspects of life, transparency is important in establishing trust. People feel secure when they have ready access to how products are made or see how contracted services are performed.
Consumers are increasingly concerned about their health and the products they use. Food and beverages with simplified labels, easy-to-read ingredients and clear windows have gained popularity as consumers demand more information to prove that products are exactly what they claim to be.
For example, in 2014, a grocery retailer known for premium options received backlash when it mislabeled non-GMO products. Before the company could make the appropriate clarifications, it was slapped with a class-action lawsuit — which quickly made transparency a big priority for its business.
Prescription medications are also affected. A recent Fox News article cited data from the World Health Organization that 10.5% of drugs in low and middle-income countries are fake; with pharmaceutical sales totaling $300 billion a year, the fake medicine business is calculated at approximately $30 billion dollars.
Demand for transparency now flows from regulatory bodies, too. The European Union is implementing the Falsified Medicines Directive, a mandate to serialize all pharmaceutical packaging by February 2019. The directive created an end-to-end verification system wherein unique, serialized codes are printed on every medicinal package and each code links back to the EU’s main database. At the point of sale, pharmacists scan the codes, verifying the authenticity of each package and sending results back to the database in real time. Using serialization, data is created that provides evidence of authenticity not just at the point of purchase, but also at key points in the supply chain.
Moving products through the supply chain requires aggregation, which essentially is a method that ensures a parent-child relationship between the serialized product and its shipping container. For instance, an entire pallet (the parent) of packages could be scanned with one click instead of 12,000 clicks for each individual, retail-sized box (the child). Aggregating the codes is a crucial data challenge that must be solved for manufacturers to continue to get products to market in a timely, efficient manner.
Complying with the serialization regulation is operationally painful for pharma companies. Previously, they embossed and labeled packages and implemented a visual inspection of the packaging line, but the new regulation requires the implementation of more complex solutions. In the EU, the packaging line must now label, check-weigh, print, pass multiple visual inspections, and scan for tamper evidence.
With the desire for product traceability, manufacturers must implement a trackable system for all pharmaceutical products throughout the distribution chain. This is a true transformation of operations, as companies seek to execute all these functions within the same manufacturing footprint they had before in order to not increase the square footage of their plants.
In 2017, pharma companies utilizing track and trace solutions can locate shipments of their products at any moment, with the utmost accuracy. They know that the products shipped are of the highest quality, as automated inspection removes defective packaging from the line. Most importantly, the technology offers risk reduction and peace of mind in knowing that the medications people consume are safe. In 2018, these benefits will become more attractive for brand protection and marketing for adjacent industries.
What does this mean for consumer goods companies?
Consumer packaged goods companies and retailers will gain additional opportunities to connect openly with consumers. For example, a consumer can enter the serial number of a package on a company’s website to access additional information about how to take their medication, or a retailer could work with major food companies to create a unique loyalty program. Consumers could scan a 2D barcode to identify clean label products quickly and get a full list of ingredients and sources; each scan could also rack up points towards rewards and discounts within the store.
Between the consumer desire for transparency and government regulations to avoid counterfeit and faulty products, track and trace technology is pushing innovation within labeling and packaging — allowing brands to prove authenticity and build higher levels of trust with consumers than ever before.
Transparency is just one of the latest trends we uncovered in our 2018 e-book. To learn about the other trends, download here.