Some governments implement laws regulating traceability in certain product categories. Manufacturers must comply by implementing track and trace systems to meet these requirements if they want maintain access to target markets. Such systems help prevent the production, import, and circulation of illegal goods within the country, which safeguards domestic markets and buyers from counterfeit products.
For instance, many countries are enacting legislation regarding drug traceability, such as EU regulations for falsified medicines. Published in 2011 and applicable since 2012, the Directive states that medicine packaging must include mandatory safety features like a unique identifier and anti-tampering device, along with an EU-wide logo to identify legal online pharmacies.
llegal trade harms everyone involved in the market — it reduces the income of legitimate producers, deprives the state of revenue, and endangers the lives and health of consumers who purchase low-quality goods. According to The Economist, illicit trade results in economic losses equivalent to 3% of global GDP, totalling $2.2 trillion. Therefore, both governments and manufacturers are actively combating it, with traceability proving to be a highly effective method.
Addressing smuggling between countries requires interstate cooperation and efforts. So, in addition to regulations at the national level, as pointed out in the previous section, international regulations are also being introduced. For example, the WHO’s FCTC protocol, signed by 168 countries and legally binding in 182 ratifying countries, aims to control the illicit tobacco trade on an intergovernmental level. It mandates tobacco product controls and the implementation of track and trace systems.
Track and Trace systems accurately track the movement of goods from production to sale and reduce tax evasion. As a result, governments collect more excise taxes efficiently and transparently, benefiting from increased revenue.
For instance, in Kyrgyzstan, after introducing track and trace for strong alcohol, excise tax collection surged by 88% in the first year after implementation. Within just two years after implementation, the number of companies operating legally in Uzbekistan rose by 10-30%.
Track and Trace solutions help businesses connect with customers and allow for personalised marketing, tailored recommendations, and easy feedback. This leads to happier customers who are more loyal to the company/cause. For governments, it means increased consumer awareness and trust in product authenticity.
Using AI in track and trace systems offers several key benefits that enhance efficiency, accuracy, and decision-making across various industries, including supply chain management, logistics, healthcare, and security. Read this post to learn more.
Traceability technologies, driven by data analysis and data fusion systems, have the potential to empower institutions and change various sectors for the better. Everybody wins with an effective national traceability system — consumers, businesses, and governments. However, it is important to recognise that different regions have their own approaches to track and trace, each with its unique advantages and implications.
Tax stamps are commonly used in many countries to control revenue and fight tax evasion. Emerging technologies are reshaping our routines, and digital tax stamps are a prime example. They are modernising excise tax collection, streamlining processes, and boosting efficiency in tax services.
