LOGIC

November 27, 2023

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Companies across all sectors are under immense pressure to change the way they are managing their supply chain.

From one side, the recent events that have disrupted the supply chain all over the world from a global pandemic to the warfare between Russia and Ukraine.

On the other hand, consumers are looking at products through a new lens where their purchasing decisions are no longer limited to product specifications but extended to sustain-ability-related factors. Moreover, governments are trying to promote sustainable and transparent supply chains, hence enforcing laws concerning environmental and social aspects.

Yet, neither brands nor consumers typically know what happens during a product's journey, and value is often diminished along the way. Thus, companies are left with no choice but to gain visibility over their entire value chain for more resilient and circular supply chains.

What Is the Most Important Outcome Your Company Wants From Traceability?

In fact, across most industries and sectors, we are already beginning to see companies with traceable supply chains start to outrun competitors with limited visibility. Also, traceability technologies are evolving rapidly allowing digitizing and mapping all suppliers and real-time flow of products moving through the supply chain, from first-mile through to the end consumer. There is a broad set of objectives that can be expected from traceability applications including maximizing value and efficiencies, reducing risk, securing supply, meeting stakeholders’ demands, etc. Yet, regulatory compliance is considered to be the most important outcome, according to Bain’s 2021 global state of traceability survey.

Where Do Egyptian Companies Stand on Supply Chain Traceability? Which Industries Will Be Affected the Most?

Egyptian companies seem to be lagging behind in this regard, and little efforts are being directed towards integrating themselves into the global value chains. This is the situation despite foreign countries having stringent requirements around the importation of the different prod-ucts. At the same time, Egypt is trying to enhance the localization of their supply chains and incentivize its export champions to drive economic recovery. For example, Egypt targets to increase agricultural exports volume by 15% in 2023 compared to 2022 through the introduction of the Agricultural Export development program. Moreover, the pharmaceutical industry is one of the industries that would contribute towards narrowing the trade gap, with goals to double export of medical products (including pharmaceuticals) by 2023 from the 2020 levels.

How Are the Leading Countries In these Industries Making Moves in this Regard?

1. Agri-Food Industry:

Increasingly, consumers want to know more about food products they are buying – what is in them, where they come from, the conditions under which they were made, how they got to them, and even how they will be disposed of. At the same time, food scandals have been making headlines for centuries from the rise of madcow disease in 80s till the 2015 “zombie meat scandal” where authorities seized 100,000 tons of expired meat. Such complications are requiring a major transformation in food systems to be able to address consumer demands and protect consumers from potential food fraud.

Brazil is the largest exporter of beef in the world with roughly 1.6 million metric tons exported in 2021, currently supplying quarter of the global beef market. However, the industry is one of the main contributors to the deforestation taking place in the Amazon, where 60% of all Brazilian cows are currently grazing on deforested lands.

Responding to this, The European Union began to demand traceability for its fresh beef market to ensure sustainability, resulting in the introduction of Brazil’s national identification system and the certification of Bovine and Bubaline Origin (SISBOV) program that develops unique animal IDs and digital certifications of farms to be stored and traced electronically. Additionally, to ensure transparency for Brazil’s trade partners, all animal information such as cattle’s origin and destination, cattle brand and inspection service records are consolidated on a unified database that can be accessed through the Ministry of Agriculture, Livestock and Food Supply (MAPA) Agricultural Management Platform. Also, the Brazilian Confederation of Agriculture and Livestock (CNA) has developed the Agri Trace CNA Brazil System to facilitate the management and organization of information relevant to cattle traceability, while serving as a quarantee for foreign buyers.

Besides, a foot-and-mouth disease outbreak severely affected Uruguay in 2001, resulting in costs of $243.6 million. With 3.8 cattle per capita, beef is Uruguay’s second-largest export product, meaning that such outbreaks pose a significant economic risk to the country. In response, Uruguay implemented an individual livestock traceability system that requires electronic ear tags for all cattle populations to reduce risk exposure and promote food safety. Also, the government provided and distributed the ear tags free of charge to all food producers to ensure its wide adoption.

2. Pharmaceutical Industry:

According to the World Health Organization, one of the major threats to the pharmaceutical industry’s credibility is the circulation of counterfeit products, with counterfeit drugs making up 10-30% of the global pharmaceutical supply.

To address this epidemic and help protect patients from harmful counterfeit drugs, the U.S. FDA enacted the Drug Supply Chain Security Act (DSCSA) in 2013 that required pharmaceutical companies to serialize and track drug packages throughout the complex supply chain through labelling each drug package with a unique serial number and implementing a process to verify product serial numbers by late 2017.

India has been emerging as a leader in the pharmaceutical sector. According to the Indian Brand Equity Foundation (IBEF), the Indian Pharmaceutical market is the third largest in the world by volume, hence rampant counterfeiting has implications beyond its borders.

India has been progressing towards building a transparent supply chain through outlining guidelines for a traceability system – Drug Authentication and Verification Application (DAVA).

Exporting companies are mandated to incorporate serialization for all pharmaceutical products through a two-dimensional barcode encoding information such as unique product identification code, expiration date, etc. This data is then uploaded into DAVA’s web portal before the products are released for authorities to scan the barcodes and cross-check the information.

For Egypt, it is taking important strides towards establishing a well-regulated environment through focusing on serialization and traceability, which was the driver behind the Egyptian Pharmaceutical Track & Trace System (EPTTS). The EPTTS can spur additional value beyond reducing counterfeits by enhancing operational efficiency and reducing waste.

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