This is a transcript of The Axway Podcast of the same name.
CHAUGHTAI: “Grey market” refers to legal goods which are sold outside the normal distribution channels. And they’re done without having any relationship with the producer of that good directly. This frequently follows the form of what is called parallel trading or parallel importing. Entrepreneurs basically buy the products. They’re available cheaply. And then take the product and offer it for retail in their designated areas to actually gain significant profit from those products. It’s mostly doable because those products are not directly available in those markets.
ANNOUNCER: From Phoenix, Arizona, this is The Axway Podcast. Here’s your host, Mike Pallagi.
PALLAGI: While a channel partner has a clear responsibility to adhere to the terms and conditions of partner programs, the burden of enforcing those T&Cs ultimately falls on the organization itself. So how, I wondered, can a track and trace solution help an organization protect its profits and brand equity by detecting potential “grey market” product diversion? Here’s Atif Chaughtai, Axway’s director of solution marketing for the Healthcare industry.
CHAUGHTAI: Because of the nature of the grey market, it is difficult or impossible, in some cases, to track the precise number of grey market sales. It’s hard to put a finger on “Okay, how many millions of dollars of grey market sales is happening for a particular product?” Importing — there are certain legal restricted items, such as prescription drugs. Drugs or firearms would be categorized as black market, as with smuggling the goods into the target countries to avoid import duties. Some prescription medication, most modernly popular and branded, can have very high prices in comparison to the cost of transporting those drugs there.
PALLAGI: I asked Atif to give us an example.
CHAUGHTAI: If you look at the drugs that are being distributed in Canada, it’s much more expensive than the drugs that are in the U.S. This varies from country to country. It’s mostly because a government has negotiated specific prices in their market or in their country. This opens up the potential for savings by the consumer to purchase these drugs from Canada or between the U.S./Canadian borders for significantly lower prices than the same drugs would cost in the U.S. pharmacies.
PALLAGI: What this situation calls for, Atif says, is a solution that allows you to integrate your supply chain from the manufacturers to the distributors. A solution that provides end-to-end visibility. You’ve probably heard about this idea before — end-to-end visibility. But what does it mean? What does it mean to actually integrate your supply chain? Here’s Atif again.
CHAUGHTAI: To actually leverage your massive product data, which might be in an ERP system, your line systems that are being used in the data manufacturing facility or in distribution facilities, along with your inventory systems. Or any other system that has captured the data about your production and about your distribution. We can actually bring it all together and give you a 360-degree view of what’s happening in your supply chain in real time or near-real time. Why real time or near-real time is important is because you want to be able to detect these things right there and then and stop it. There’s no point in chasing the diversion after even three months or six months after it has happened.
PALLAGI: It’s about monitoring all of these different data sources in real time and applying business rules to them, so that any problems can be detected, like product diversions, for example.
CHAUGHTAI: Let’s talk about what happens in the field investigation. Either you have an audit company that you have hired to actually check for these kinds of conditions throughout your supply chain, or a retailer who has gotten a product from a pharmacy that might have gotten products, and they are suspicious of the origins of the product or the distributors that were involved. They actually all need to have a way to authenticate the product that they have received. Now, with the emerging regulations around the globe, the U.S. has the (Drug) Supply Chain Security Act, and in Brazil, it’s ANVISA, that is promoting serialization and visibility into… visibility and identification into the whole manufacturing-through-distribution process. Then actually leverage some of these regulations that are in place to provide capabilities to these third parties either through a portal, where they can simply login and type in a product identification, that might be a combination of serial numbers or other encoded information on the bottle to authenticate with your master data and your events data that you have captured throughout the supply chain to verify that this product is real and it is coming from the manufacturer directly or the authorized distributor directly.
PALLAGI: Another aspect would be to actually leverage an automated authentication by using a solution that can expose data to certain APIs. You probably know that APIs are becoming extremely common throughout tech industries. Well, these APIs can allow you to pull off various moves, like authenticating product and sharing information that you’d want your consumers or the dispensers to have. I asked Atif one more thing: How can a manager use a track and trace solution to quickly detect anomalies? What capabilities should she expect from a track and trace solution?
CHAUGHTAI: …the capability to define business rules, and define scenarios through those business rules. Those scenarios are basically your standard operating procedures or your normal business work. In real time, when we are collecting information from the supply chain, and those events are coming in, we can run those business rules and do correlation on the information coming in to identify any data that constitutes an anomaly outside of the norm or the normal behavior that we have defined in the standard operating procedures. Once we detect an anomaly, we can notify a manager that there is something outside the norm — doesn’t meet the normal behavior, doesn’t meet the thresholds you have set — to identify and quickly act on those anomalies.
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