Canadian Packaging

Serialization beyond Compliance: The Gateway to Competitive Differentiation

By Lee Metters   



Product-level serialization has historically been associated with compliance mandates within highly regulated industries such as pharmaceuticals, medical devices, and tobacco. Its central premise was to prevent counterfeit goods from entering these markets.

However, as organizations within these sectors have realized, having full traceability within the supply chain offers benefits beyond compliance alone, providing opportunities for greater visibility, data exchange, and information sharing that can present a significant competitive advantage to brands.

Moreover, as more advanced labeling and serialization systems become more widely available at lower price points, and integration into existing lines and systems becomes easier, organizations across all sectors and of all sizes can now reap the benefits, as Lee Metters, Group Business Development Director of Domino Printing Sciences, explores.

Beyond compliance

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Through the process of product serialization, brands can allocate a unique identity to each saleable product item. This identity is typically contained within a machine-readable 2D code, such as a Data Matrix or QR code.

Until recently, the high cost and perceived complexity of implementing serialized solutions have stood as a barrier to widespread implementation. Examples of organizations adopting serialization have been largely limited to those with a regulatory compliance obligation – such as pharmaceuticals, medical devices, tobacco – and high-value, luxury goods manufacturers seeking to protect their brand and reduce the risk of counterfeits.

Despite the early cost of implementation, these manufacturers rapidly found that serialization unlocked significant business benefits beyond brand protection and compliance. As the foundation for data sharing and enabling digital capabilities in physical products, serialization has opened opportunities for improved supply chain management, personalized consumer engagement, and improved brand positioning.

Today, the cost of serialization through 2D codes is no longer a barrier to implementation. The technology is available and accessible across a wealth of markets, including low-cost sectors such as fresh fruit and vegetables and even postage stamps. In addition, as the benefits of serialization beyond compliance become more evident, specialist companies such as Second Thought and Neurotags have emerged to provide ready-made support for serialization to reduce the cost further, making the application of the technology even more appealing.

In short, the world is awaking to the opportunities associated with serialization using 2D codes. The time is ripe for data sharing, and those without the technological capabilities may soon find themselves left behind.

Benefits of serialization

The rich vein of data that companies gain access to as a result of serialization can be used to enhance consumer protection, prevent counterfeiting, improve supply chain management, reduce waste, facilitate recycling, and optimize consumer engagement for better brand awareness and positioning. By enabling the tracking of products down to the individual item, serialization also simplifies returns processing and the management of recalls. In the event of a product recall, alerts can be set, so consumers scanning codes on recalled products are made aware of the changed status and advised on where to return products or how to claim a refund.

Effectively, serialization allows each partner in the supply chain to work together to track a product at every step, from the point of manufacture to when it arrives in a consumer’s hands – and back again. The unique serial number can be used on all shipping documents to provide touchpoints and status updates at both ends of the supply chain.

When it comes to counterfeit protection specifically, serialization gives brands in all industries the tools they need to counter the threat of supply chain fraud and diversion – that is, when product stock is sold in a different distribution channel from where it was intended. By tracking to the unit level using unique codes, consumers can quickly validate the authenticity of their purchased product, and brands can identify instances of product divergence and trace diverted products back to their last known location within legitimate supply chains. The same technology can lend a hand to fight against product adulteration – where high-value products are contaminated with lower-value ingredients – by allowing product processors to verify the authenticity and provenance of the source materials or ingredients.

Beyond the obvious traceability benefits, the data sharing between the partners within a supply chain could also enable future efficiencies in terms of stock and inventory management, facilitated by knowing exactly where within a supply chain a product is and the exact age of this product.

Broader engagement

Serialized codes also unlock substantial opportunities for improvements in marketing and consumer engagement. As consumers become more accustomed to scanning 2D codes, marketing teams will be better equipped with timely information regarding sales of their products, allowing them to adjust marketing tactics as needed.

For example, customer feedback about positive product characteristics can be used in future advertising campaigns, while changes in product design, advertising, or loyalty campaigns can be tested, measured, and altered much faster with a serialized track and trace system.

Similarly, inviting customers to register their product purchases on a brand’s website can provide the opportunity for targeted personalization programs, where the consumer gets information or rewards that are relevant to them. The company gets the opportunity to create brand loyalty and increase sales opportunities through cross- and up-selling of other products within its brand portfolio.

Within fresh food, in particular, there is also the opportunity to grow a brand’s sustainability credentials by providing consumers with batch-specific advice on product provenance or serving suggestions to ensure that the product is enjoyed at its best. The same 2D code can also house recycling advice, potentially utilizing geo-location to provide information on nearby recycling centers – all of which reinforces brand reputation.

Gateway to the future

Of course, as relevant and important for operational efficiency and competitive differentiation as these opportunities are today, they also arguably only scratching the surface of what might be achieved using 2D code-enabled serialization in the future.

Supply chains have become far more efficient in recent years, but they are also more complex and volatile, with products shipped through channels faster than ever and the global demand for supply chain traceability increasing. Unique 2D codes are a digital gateway that links any physical product to its supply chain signature, helping brands collect and share supply chain data, which can be used to identify global trends and support planning to minimize waste.

And, perhaps in its most exciting visionary capacity, product-level serialization may lead to a future where individual products come with their product pedigree: with imagery of the product’s lifecycle from its source components or raw ingredients through every step of the supply chain to the consumer, and indeed to its decomposition.

In addition to reinforcing a brand’s credentials, from a recall or waste management perspective, this will help to identify the exact place where issues may have arisen or, indeed, where customer complaints may be unfounded. It also offers the unique capability for brands to actively contribute to environmental and sustainability targets by identifying wasteful processes and driving out causes of waste during manufacture – as well as taking steps to reduce packaging waste at the consumer end of the supply chain.

Conclusion

Globally, manufacturers realize the opportunities of 2D code-enabled serialization. Cost is no longer a barrier: more advanced labeling and serialization systems are available at lower price points, and many manufacturers will find that their current coding and marking technologies are already fit for purpose. With only minor upgrades, an expert coding and marking provider can support you to identify the most reliable option for your business.

Yet, for many organizations, the benefits of this technology in the supply chain remain unrealized. The time to act is now. Companies must embrace the next exciting step in supply chain management to keep pace with the competition and create groundbreaking opportunities for differentiation.

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