TRACK AND TRACE WITH AUTHENTICATION AND GEOLOCATION: THE LONG-TERM SOLUTION TO REDUCING COUNTERFEITING AND HIJACKINGS…AND KNOWING YOUR CUSTOMER
As a basic approach to business, increasing profits and minimizing costs are always of concern to manufacturers and business alike. Reducing costs becomes increasingly difficult when costs are incurred due to crime. Nowadays manufacturers have to manage and put strategies in place to deal with organized crime activities. Some forms of organized crime activities include counterfeiting, cybercrime, white-collar crime and corruption as well as other violent crimes including hijacking and theft of products. Of specific relevance to this paper, is the impact and long-term solution to reducing counterfeiting and truck hijackings.
The Impact of Counterfeiting
As a brand manager and/or manufacturer have you found yourself confused as to which item is fake and which is genuine when making a comparison between your product and a counterfeit product? If this is the case, can you imagine how confused your clients and potential clients may be? Product counterfeiting is a fraudulent imitation of something that is of value. Nowadays, due to advancements in technology, printing and the development of products, counterfeit manufacturers are able to replicate products to an extent that it is difficult to distinguish between the fake item and the authentic product. Perhaps if consumers were able to distinguish the fake from the genuine product, they would be more likely to choose the genuine product. Despite this, passing lesser goods as high quality merchandise so convincingly only compounds the negative impact that counterfeit goods have had on the global economy.
According to the International Chamber of Commerce, counterfeiting is worth an estimated US$600 billion per year. Not only is the counterfeit industry worth billions, but the distribution of the fake products is also widespread. It was found by the World Customs Organization that in 2008, counterfeit products were destined for 140 countries across the world. This means that governments, consumers and registered manufacturers globally bear the brunt of this illegal commerce.
Government looses precious taxes due to this crime. This is due to counterfeit manufacturers generally operating criminally by evading tax and circumventing customs and government agencies when bringing goods into other countries3. The consequences to consumers buying and using fake and counterfeit goods are even more serious than those experienced by government. Consumers may be exposed to health risks, especially when purchasing counterfeit drugs or cosmetics. These criminal organisations generally have no sense of responsibility for the items that they supply, so quality and the safety of their clients are not a concern.
Perhaps, the least obvious of the three, legitimate manufacturers suffer indirect consequences as a result of this forgery. Legitimate manufacturers suffer a loss in profits due to the counterfeit products taking market share. Consumers sometimes don’t question the reason for the seemingly genuine product being sold at a fraction of the price. If consumers do question it, the low cost and the similarity in the look and feel of the replica may make it hard to refuse. In addition, manufacturers are loosing money due to their brand and reputation being damaged. As discussed before, consumers often cannot distinguish the fake from the genuine product. By consequence; consumers will associate the bad experience of using the fake product with the brand it imitates. Something needs to be done as the consequences are far reaching.
Brief Contextualization of Truck Hijackings in South Africa
Manufacturers in South Africa have another costly crime to contend with. There has been a recent hike in truck hijackings. Trucks are taken by criminals, sometimes violently from truck drivers, on route to delivering product to shops or warehouses. Over 1200 trucks were hijacked in 2014 across South Africa, which is 10% more than the previous year. According to the Road Freight Association, losses range from R1 million to R7 million rand per incident with a total cost of R1 billion per year to business and insurers. According to another source, the cost of one truck hijacked amounted to approximately R12 million.
Gavin Kelly, technical and operations manager from the Road Freight Association explained that one of the reasons that trucks are hijacked is to target the contents of the truck trailer for their resale value5. Some of the industries hit hard for the theft of their products include cigarettes, fuel, food, and electronic goods5. Organised crime syndicates are often responsible for truck hijackings and target trucks based on orders6. Once the truckloads are obtained, the products are distributed for resale.
Technologies Used to Address Counterfeiting and Hijackings
In a bid to tackle this counterfeiting, some of the main actions taken by the United Nations include encouraging collaboration and coordination between countries, creating public awareness around the scale and dangers of counterfeiting, providing assistance to developing countries and lastly using technology to help law enforcement gather intelligence to fight this crime4. Technologies available are of specific relevance to this paper. Anti-counterfeit technologies adopted by the World Health Organisation can be broadly classified into the following categories:
- Use of overt and covert features
- Serialisation, track and trace
- Forensic techniques
Private security companies and their management systems are often used by organisations to prevent hijackings5. Trucks can be monitored and located using GPS positioning. In some instances the management systems are even able to measure tonnage, where and when the truck offloaded cargo. In-cab video and audio systems are also being developed to help in the fight against truck hijacking5.
Some of the established methods used to fight these forms of organized crime, are effective in many ways. There is a solution available that combines some of the established methods and extends their effectiveness into a secure long-term solution to fighting truck hijackings and counterfeiting.
The Pelta™ technology combines the use of covert features and provides the platform to track and trace product in the distribution chain. The combination of covert features with track and trace using geolocation functionality makes this solution a viable option for manufacturers to consider when developing strategies to deal with hijackings and counterfeiting. The covert feature of this solution provides consumers and law enforcement with the tools to differentiate between fake and genuine products. The track and trace with geolocation functionality helps to establish where product is in the distribution chain, providing valuable information should product be stolen or a truck hijacked.
How it works
Pelta™ is a patented digital solution based on the standard 2D barcode, but the incremental benefit is creation of a covert secondary layer of data, which is encrypted via a custom key. The overt layer in the Pelta™ code is read identically to many standard 2D barcodes, so a Pelta™ code can replace a Data Matrix, QR, Aztec, MaxiCode and many other 2D barcodes. The overt layer typically contains logistical or marketing information, and is not encrypted. The covert layer can only be decrypted by the Pagemark’s mobile or PC software using a custom key, thus can be used as a basis of an authentication or track and trace solution.
These Pelta™ codes are marked on each product and these items are then packed, combined or assimilated into larger packs, boxes, crates or pallets. When items are packaged for distribution, the packs, boxes, crates or pallets are also marked with a unique code. This convention helps to establish a relationship between the item and packaging and is understood in industry to be a parent (packs, boxes, crates or pallets) child (item) relationship. This parent/child relationship in a track and trace platform allows for flagging of a box or an entire shipment, should an item go missing or get stolen.
When products are on-route for delivery, established scan points can be set up along the way. If a delivery truck is intercepted, the failure to scan the product at the next scan point at the pre-planned time, the track and trace platform will flag the truck on the system for investigation. In addition, if the truck is intercepted and the cargo is diverted to another scan point, the truck is flagged on the system for inquiry. Although these systems may not be able to prevent hijackings, the information obtained from scanning products can be used in conjunction with information obtained from tracker devices to piece a story together of what happened, should a truck be hijacked.
Perhaps, of more value, this solution will eventually make stolen good undesirable to stock by shady retailers. This is due to the fact that the Pelta™ codes can be scanned by any smartphone that has a scanning application loaded onto the device. Law enforcement and even consumers would be able to identify whether the item they are purchasing is stolen or counterfeit. Manufacturers could run campaigns whereby their clients are rewarded for scanning stolen or counterfeit products. Once the counterfeit or stolen product is scanned, information could be sent to law enforcement and the manufacturer for further investigation. Multiple sources of information would be made available to law enforcement and eventually after investigation; organized crime units would be tracked and arrested for committing these crimes.
Knowing your customer
Although the solution discussed up until this point was intended to slow or stop organized crime, there is another benefit for manufacturers to integrate this solution into their supply chain. Manufacturers could run other marketing campaigns and loyalty schemes using the Pelta™ codes. Consumers could be encouraged to scan their products, fill in personal information and by doing so, win complementary products or trips away for example. These campaigns could be geared at getting to know the demographics of clients purchasing products. Manufacturers could develop new products, upsell or cross sell to their clients as a result of the information obtained, just from scanning these codes.
Perhaps the power of the outlined solution lies in the fact that consumers will have the power of knowing whether the product they are about to purchase is fake or genuine. This knowledge does not necessarily mean that they will decide against purchasing the product, but at least consumers will be better positioned to make an informed choice. This is especially important when it comes to buying counterfeit medicines. Nevertheless, the purchasing of counterfeit goods is likely to reduce as a result of this knowledge.
Lastly, this solution enables any Joe Soap to help in the fight against selling and buying stolen goods. These stolen goods are likely to become less desirable as consumers will be empowered to know whether what they are buying was procured ethically or not. Street vendors or shady retailers would be at the behest of their customers. This is likely to result in the decrease in demand for stolen products and thereby decrease the incidents of truck hijackings for cargo.
Traceability Solutions is the authority on marking, identification and traceability solutions for various industries. The company is based in Northriding, Johannesburg and has branches in the Eastern Cape, and Western Cape. For more information on this solution and other solutions available for part marking, identification, track and trace contact Traceability Solutions on +27 11 704 4744 or visit our website on www.tracesol.co.za.
on November, 2014 from the world wide web: https://www.unodc.org/documents/data-andanalysis/tocta/8.Counterfeit_products.pdf
 International Chamber of Commerce, 2015. In 2004, ICC launched the Business Action to Stop Counterfeiting and Piracy (BASCAP) to combat product counterfeiting and copyright piracy worldwide. Retrieved on April 7, 2015 from the world wide web: http://www.iccwbo.org/advocacy-codes-and-rules/bascap/about/ United Nations Office on Drugs and Crime, 2010. The Globalization of Crime: A Transnational Organized Crime Threat Assessment. United Nations Publication: Austria.
 United Nations Office on Drugs and Crime, 2015. Transnational Organized Crime: The Globalized Illegal Economy. Retrieved April 7, 2015 from the world wide web: http://www.unodc.org/toc/en/crimes/organized-crime.html Zhuwakinyu, M. (2014). Daylight Robbery: Truck Hijackings up 10% in 2014, Road Freight Industry to lose R1.2bn. Retrieved on April 7, 2015 from the world wide web: http://www.engineeringnews.co.za/article/truck-hijackings-up-10-in-2014-road-freight-industry-to-lose-r12bn-2014-12-12-1
 Mngoma, N, (2014). Spike in Truck Hijackings Cost SA R1bn. Retrieved on April 7, 2015 from the world wide web: http://www.iol.co.za/news/crime-courts/spike-in-truck-hijackings-cost-sa-r1bn-1.1770417#.VSOPRzoe6fR
 SAPA, 2014. Senior Officials not Investigated – Hawks. Retrieved on April 7, 2015 from the world wide web: http://citizen.co.za/187376/senior-officials-investigated-hawks/
 Power, G. (n.d.). Anti-counterfeit Technologies for the Protection of Medicines. Retrieved on April 7, 2015 from the world wide web: http://www.who.int/impact/events/IMPACT-ACTechnologiesv3LIS.pdf