KANSAS CITY — Consumer packaged goods companies spend millions of dollars to promote, develop and protect brands. With supply chains becoming more diverse and consumer purchasing methods expanding beyond brick and mortar, the years ahead may become even more challenging when it comes to protecting the equity companies have established in many high profile brands.
“What’s happening is many manufacturers of consumer products are manufacturing (potato) chips, and they are designed, packed and labeled to be sold in a store,” said Jorge Izquierdo, vice-president of market development for the Packaging Machinery Manufacturers Institute (P.M.M.I.), Reston, Va. “Manufacturers of soft drinks do the same thing.
“However, now there are third parties that may be selling these products. They’ve got web sites consumers can go to and buy a bag of chips and a six pack of Coke. If the condition of those products when they reach the consumer is bad it may reflect badly on the on-line seller, but it also may impact the consumer’s perception of the brand. The consumer doesn’t understand the packaging is not designed to be used that way.”
This past August the P.M.M.I. published a report outlining brand protection trends its members see in the coming years. A more robust supply chain, with the ability to track products from the beginning to the end, is a key component of any effort. The Brand Protection report said the use of smart labels/tags will continue to grow on products and that radio frequency identification (R.F.I.D.) will continue to grow throughout operations and the supply chain.
Mr. Izquierdo said price remains a key hindrance for greater adoption of R.F.I.D. throughout the food and beverage supply chain.
“By now I think a lot of people thought every product bought in the supermarket would have an R.F.I.D. tag,” he said. “But that point has not been reached yet. Plus, there are restrictions to the technology itself. For example, tags can be hard to scan through liquids.”
Where R.F.I.D. technology will continue to gain greater use is in internal applications throughout the supply chain.
“It makes it easier for different types of automated processes to recognize what’s on the pallet and follow it through the operation, mainly on the distribution side,” Mr. Izquierdo said. “Use will increase in the future. Today we are talking about pallets. In the future it may move to boxes and even secondary packaging.”
Mr. Izquierdo added that areas of vulnerability within the food and beverage supply chain remain at the very beginning, with the sourcing of ingredients, and at distribution, just before products reach the consumer.
“At both points there are opportunities for tampering,” he said. “With raw materials you don’t have the advantage of packaging and labeling to identify the product. A manufacturer may think they are getting a premium ingredient, but someone may replace it with something of a lesser quality. In some situations it’s easier to do and hard to check.”
Audits and supplier certification programs are currently key programs used by food and beverage manufacturers to ensure the identity of the ingredients they source. But Mr. Izquierdo said such new technologies as blockchain may represent the future of maintaining supply chain integrity and ensure brand protection.
Blockchain is a continuous database that tracks key aspects of a product as it moves through the supply chain. Records that contain the data are called “blocks,” and each block represents a digital link through multiple stages of production. In mid-December, The Wall Street Journal reported that Wal-Mart Stores, Inc., Bentonville, Ark., will begin testing blockchain during the first quarter of this year in its U.S. produce and Chinese pork supply chains.
“Blockchain is pushing information from the beginning to the end of the supply chain,” Mr. Izquierdo said. “That’s why this exercise from Wal-Mart is so interesting.
“With blockchain you have a birth certificate for every product and almost a resume. It tells everyone in the supply chain who has done what to an individual product. It’s like a pedigree for individual products, and, in the future, the amount of information you are going to be able to get is really amazing.”