Why did track and trace processes become crucial in many industries?

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Published on
August 14, 2023
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With the constant technological development, consumers can buy goods using multiple touchpoints, from onsite shops to social media platforms. With this development, their expectation became immediacy and availability of information. Consumers want to have guaranteed quality of the product they're buying. Also, they should be able to get proof that the product is indeed manufactured in a certain factory and is fraud-free.

On the other hand, companies need to be able to control their distribution process and easily recall products if determined that they have any flaws.

For this to be possible, companies need the visibility of stock across all channels and locations for both staff and customers. This is specifically valuable in industries that face high levels of product forging, such as tobacco, pharmaceutical, or liquor.

We spoke with Nenad Pašćan, Tech Lead and Sales Manager at Enlight Engineering about the present and future of track and track systems. He shared his decade-long experience in the industry.

What is track and trace?

N: "In the distribution and logistics of many types of products, track and trace is a system containing different sets of software, hardware and databases. It allows you to determine the current and past locations of items, their manufacturing place, expiry date and other information about a unique item. Tracking a product means that the manufacturer can have information on the whereabouts of all items at any time. With tracing, the end-user or seller can find out where a specific product was produced and how it was distributed to its current location by scanning the barcode.

Track and trace is a process of following each product's path from the factory to the end customer. It is a system that ensures that each product that leaves the factory, gets followed through the transporting process all the way and is delivered to the sellers.

In the track and trace process, every product gets a specific serial number in the factory. By scanning this code, manufacturers can determine exactly in which box and wherein the warehouse a specific product is placed. They can also track where each product from a certain series is sold and sent to."

What are some real-life examples of track and trace usage?

N: "One of the examples that can illustrate how the need for track and trace emerged comes from Italy, specifically from the pharmaceutical industry.

The Italian government required the pharmacists to collect the information from one part of the medicine boxes and send them to the appropriate government body. This body would check the information that was sent by the pharmacists and refund the part of the money to the pharmacists.

Since it was very complicated to check the probity of the information collected from the boxes, some people saw the opportunity in forging them to get a refund from the government. The problem was that the system wasn’t regulated and optimized properly.

After realizing the problem that emerged in the process, the government of Italy set the regulation for the pharmaceutical industry to use track and trace processes. With this process, manufacturers could prove the medicines being sold were indeed manufactured in their factories. Additionally, the government could check the exact number of boxes sold and distribute refunds appropriately, and therefore save the state funds."

Why is track and trace process so important today?

N: "Almost all industries that produce expensive products or products that can affect the health or wellbeing of the user are dependent on track and trace processes. Besides the pharmaceutical industry, some of these industries are food, tobacco, alcoholic beverages, automotive, etc."

Nenad Pascan, Enlight Engineering Tech Lead and Sales Manager

What are the key benefits of track and trace process?

Guarantees that the products are safe to use

N: "Without track and trace, it would be hard to determine if the product is original, and therefore safe to use. This is specifically valuable in the pharmaceutical and food industry where the forged products can seriously affect the end customers' health.

As many would argue, we live in the era of fake products. This issue has significantly increased with the rise of e-commerce. Online selling platforms such as Amazon are having a hard time proving the origin of certain products and preventing third-party sellers from selling them. If you are interested in finding out how Amazon uses machine learning to tackle this problem, here is an interesting article by Wirecutter for you to read."

From this benefit emerges the next one:

Saves money and time

N: "In all production factories, there is always one product from each series left in the factory stock, used for testing the quality of the product if there are any questions about it or if someone reports any flaw in it. If the mistake in the production of that series is determined, track and trace make it easier and cheaper to withdraw the product series.

Since the track and trace process ensures that the manufacturer knows to which stores its products are dispatched, it is easy to withdraw only the products from a specific series that is in question. In this way, all other products from different lines of production remain in stores, and there are no unnecessary expenses when it comes to product withdrawal."

It doesn't only save money and time, but something equally valuable - reputation:

Reduces reputational risk of the company

N: "By ensuring that the product is indeed original, the track and trace process saves the company from any fraud attempt which always carries the reputational risk.

Additionally, and more importantly, it allows companies to recall a specific series of products if it is concluded that those products have flaws. This option can save lives.

How is it related to the company's reputation?

Well, for instance, if a certain automotive company has to recall 10.000 vehicles because of a possibility of malfunction, it is not likely that it will make the headlines. But if it has to recall a million vehicles because they can't determine from which exactly series or on which production day the malfunction happened, a lot of people will likely hear about it in the news pretty soon. This kind of bad publicity makes a company seem unreliable, which will make customers think twice before they purchase from it.

Tesla could be used as a good example. In December 2021, the company had to recall 475.000 vehicles due to a potential manufacturing fault. Tanks to the effective track and trace process that the company had in place, cars were recalled before any injuries or deaths occurred. You can find more details about this story here."

Allows you to track expiry dates

N: "With track and trace, it is easy to trace the expiration dates of the products. Therefore, the manufacturer or sellers in the stores can always locate the products whose expiration date is approaching. In that way, it is ensured that the product will not remain in the store and reach the end customer since it could be dangerous to use."

What is the future of track and trace?

N: "While the track and trace process is not mandatory for all industries at the time, it is almost certain that most countries will soon adapt their regulation to current technological development. Even if the track and trace process isn’t mandatory by law, we recommend looking into setting up this process since it brings many other non-negligible benefits. You should consider tracking and trace to improve your business and reduce risk. This is an investment that saves money for the company by ensuring the quality and safety of produced goods while also saving the company's reputation."

For more information about how track and trace works, technologies used and real-life problems that emerge in production processes, read our Laetus Case Study.

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