Putting a stop to counterfeit products

Electronic pedigree systems ensure authenticity throughout the supply chain

Although a bottle of bogus Viagra might prove to be a big disappointment, a counterfeit bottle of a heart medication such as Lipitor could be deadly. On the National Association of Boards of Pharmacy’s list of drugs most susceptible to adulteration and/or counterfeiting, Viagra is No. 23 and Lipitor is No. 10. In 2003 more than 200,000 bottles of phony Lipitor were found on the shelves of major drugstore chains.

As is so often the case, it will soon be IT, in the form of pedigree systems, that will help solve the problem.

A pedigree system tracks all the information about a product as it moves through the supply chain from the manufacturer all the way to the point of sale. This could be done manually, but I wouldn’t want to be the one in charge of that.

Rather, the electronic version of a pedigree system uses RFID. I spoke with Peter Regen, vice president of global visible commerce at Unisys, about his company’s ePedigree pilot project and how supply chain technology, especially RFID, can be used to alleviate counterfeiting.

Here’s how the pedigree system works, according to Regen: A tag commissioned with a unique EPC (Electronic Product Code) is recorded at the point of manufacture. Its unique ID is sent to a hosted solution using, in this example, SupplyScape pedigree software. The SupplyScape system captures the original data and notifies the next stop to expect these cases with these IDs.

As the pallet, case, or item moves along the supply chain, it eventually lands at the wholesaler, where it’s unloaded at the dock. Once again the RFID tag is read, as it will be when it’s shipped out again. Finally, if there’s a reader at the retailer, the tag is read one final time for authenticity. With this much monitoring, a case is much less likely to “fall off the back of the truck” (as we used to say in Brooklyn) or be replaced by a counterfeit.

The pharmaceutical industry will be the first to use an electronic pedigree system. The Food and Drug Administration has already sent out its guidelines. Pharmaceuticals, however, is not the only industry that can benefit.

Consumers and manufacturers are also being ripped off in the luxury goods industry by knockoffs of products such as Gucci bags and consumer electronics. Even more seriously, counterfeit aircraft parts were blamed for the crash of an airplane in 1989. And naturally any products that involve intellectual property -- such as software, CDs, and DVDs -- are also targets.

One of the big unanswered questions is who will host these systems. Regen suggests that an industry association or a nonprofit might take up the task -- or it might even be Uncle Sam, as in the case of pharmaceuticals.

Of course, these same tags will also be used for more ordinary supply-chain track and trace. This means IT will need to plug pedigree systems into other components of the overall infrastructure, including warehouse management systems, demand planning, forecasting, order management, and inventory management, to name a few.

The downside? Although everyone talks a good story about lowering IT costs, the truth is that increasing demands on business and IT won’t allow that to happen.

These new technologies cannot be ignored. Their benefits are real, but they will require additional expenditures.