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COMBATING COUNTERFEITS THROUGH THE USE OF TECHNOLOGY

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The counterfeit menace has been one with the world ever since the evolution of industrialization. It based itself as the easiest and most convenient way of making money then, and still is now. Counterfeiters simply have the easiest job; all they have to do is copy your packaging, get as close as they can to the ingredients used, supply their product to the market at a cheaper rate and there you have it (supply creates its own demand). An average consumer wouldn’t know the di erence between the real and the fake product.

Companies facing these issues have been rolling out anti- counterfeit campaigns but to no gain. My personal view is that we’ve been doing this all wrong. Technology is really the only way to solve this pertinent issue. The possibilities that come along with technology are immense and all it takes is critical thinking. When I speak about technology, I speak geared speci cally to mobile technology. The mobile phone coverage in Africa as a whole is experiencing a major boom with regards to coverage. According to an article in The International business times, October 2015, the mobile phone industry contributed more than $100 billion to the region’s economy and that shows us the upward growth and trend is currently exceeding other industries. Coverage, especially in urban areas has reach a whopping 68.66%. The statistics go further to indicate that 93% of all Africans have access to mobile phones.

In Kenya alone, the mobile and internet penetration stand among the highest in Africa at 83% and 58% respectively according to Jumia Kenya (online mobile phone retailer) making the country the 21st most connected population in the world.

The LPG industry as well is no stranger to the problem of counterfeiting. In fact, key players in this industry have been su ering in silence. Majority of companies are very reluctant in admitting this since it may have grave consequences in terms of revenue generation through sales. They would therefore prefer for it to remain a closed door discussion and not come out and admit it openly. To top it all o , the bodies in charge of dealing with counterfeit problems in majority of African countries have been in ltrated with graft and the usual political bureaucracy that makes it impossible to deal with counterfeits. As far as consumers may be aware, these products may actually just be owned by their political class. The problem in Kenya is just as bad, to the extent that 7 out of 10 gas cylinders sold are illegally re lled, implying that 70% of our coverage is illegal. This means that all the legitimate companies operating in Kenya are ghting over only 30% or less of the market share. That is a very small market indeed, considering majority of the users of LPG are the middle class with very few in the rural areas adopting this method and option for charcoal and wood instead.

The LPG industry must borrow a leaf from other industries that are leading the war against counterfeits, sighting an example Sample portal showing searches performed by consumers. (real-time data) of a company such as mPedigree. In markets such as Ghana, Nigeria, Kenya, India, and others, they support consumer goods companies that deal with pharmaceuticals to build a smart and robust supply chain for delivering critical products to consumers. What such a company has done is to specialize in that particular space (pharmaceuticals) and sensitize the public on its usage to ensure proper utilization through mobile technology .

Recent data with regards to the real issue we face here is quite vivid. Investors are slowly shunning the idea of joining the LPG sector. The problems are just too many and the solution isn’t too obvious. The normal annual cycle of a gas cylinder should be 6 times and above but the current rates stand at less than 1 cycle a year with the remaining cycles left to illegal re- llers which can be up to more than 7 times due to the fact that they don’t ll the cylinders to the required weight therefore its life in the household is shortened. Therefore giving us the implication that for every gas cylinder a brand lls in a year, a counterfeiter has lled 7 (1:7). With such data, it makes things evident that no one in their right mind should even think of investing in this industry. This should not be the case, especially when the industry is one that is building up the society and solving many health and environmental issues all at once.

Another common trend that has been seen is the number of counterfeit sellers for LPG. There has been a signi cant rise in unauthorised dealers mostly in heavily populated areas. In this sense we are talking of areas of both formal and informal settlements (suburbs). Most households would rather purchase a gas cylinder nearer their location rather than travel far distances simply to exchange a gas cylinder. The Energy Regulatory Board should be at the fore-front in eliminating this kind of trade since it ends up frustrating the rightful owners of the cylinders.

As African countries, we must recognise that our entry points are not well guarded and we must acknowledge that counterfeits will be with us for as long as the problem is not xed. We as part of the private sector therefore have no choice but to grab the bull by the horns. A standard regulatory body formed by companies that deal with LPG can utilise data retrieved from the consumers themselves through the use of algorithms. This is a simple term to study consumer behaviour. In as much as we may advocate for the use of eld o cers to monitor counterfeits through the supply chain, we must begin to recognize who between the two (consumers and eld o cers) will be the biggest earners.

By reducing the amount of counterfeit losses by at least 4.6% monthly, LPG companies in the next 4 years will have dealt with the issue of counterfeits eating into their pro ts. By the end of the 4 years we project a 76.7% reduction. All these strategies are based on consumer knowledge ensuring that each and every client buying LPG products, will have to validate the details of the gas cylinder before purchasing.

Mobile technology therefore should be the top solution to this problem. Through adopting this kind of technology, a brand should be looking to cover a larger spectrum of supply due to the already high mobile phone (smartphone) coverage already existing. The solution we seek to provide in the LPG industry in regards to the problems major LPG rms face;

1. Illegal re lling of gas cylinders by counterfeiters

2. Management of gas cylinders throughout the supply chain (inventory management).

With those two perspectives in sight and bonding that with technology, we seek to assign every gas cylinder that rolls of a brands production line with a spectacular and distinct Quick Response (QR code) that is encoded together with a serial number. This means that every QR code (also known as a matrix bar code) will be di erent from the latter. QR codes simply provide both consumers and brand owners with a way to access information quicker than manually transmitting the same information. Beyond the mere convenience to the consumer, the importance of this capability is that it increases the conversion rate by coaxing interested prospects further down the conversion funnel with little delay or effort. Conversion rate in this sense will imply to the degree of consumer satisfaction that a brand guarantees its clients.

Every brand receives a Business portal where they are able to access aggregate events such as exact locations where searches are being performed and for what particular product within the range of a brand. This poses a very crucial means of accumulating data about consumer trends and the possibility of where counterfeiters may be within the scope of operations.

QR codes have vast uses since they can be applied in any part of the world. It is a mode of technology that is quickly gathering wind with the rapid improvements in technological operations. For this to be a success, LPG rms must sensitize the public, particularly their customers on the use of the QR Codes. The codes are stuck onto the cylinder using a sticker detailing the Brand credentials plus a warning not to buy the gas cylinder from unauthorized retailers. The codes are given a lifetime of 5 searches which after surpassing the limit, the QR code will be deactivated for safety  purposes and will therefore be rendered invalid.

Brands can then geographically tag the location of a scan performed through the mobile application. This will imply that a brand can trace its cylinders through the supply chain. The complexity of the information contained on the QR codes is solely the decision of the brand. Essentially , the QR code should display the owing details when scanned;

  1. Product is genuine.
  2. Product has no recall.
  3. Product description and a product image.
  4. Any further details that a brand may want to display.
  5. Aggregation details of the time it left the production line, useful life duration, warnings, and cautions.

What this does, is to inform the consumer of the details of the gas cylinder and assures them that the cylinder is genuine. That way, any gas cylinder that does not have a QR Code should be rendered as questionable and therefore must not be purchased by a consumer.

On the retail side, every authorised dealer must be connected to the Business portal through an API. This will then allow them to cater for the inventory by marking gas cylinders as sold, returned and dispatched back to factory . This then allows a brand to manage its inventory and monitor trends of cylinder usage according to locations. Once returned, the QR code on the gas cylinder is de-activated to ensure that even if it nds its way back to the market, it cannot be validated. It will therefore give a consumer an authentication failed noti cation to ensure no purchase is transacted. Again, once taken back to be re lled, the QR code
is re-activated. The sequence of activation or deactivating may sound like a hectic issue but is cost e ective in the long run The LPG industry and lubes in general must re-think the strategies we use in order as to enjoy fully the privilege of operating a business.

Legit Authentication Systems is currently working with local LPG manufacturers to streamline the illegal re lling of gas cylinders that are causing millions of losses to local rms, mostly those involved in petroleum products. We picked this industry due to the fact that no e orts have been made both by the Government through the Anti-counterfeit authority as well as private sector representatives. We therefore decided to concentrate on this industry. We see ourselves as key parties in the long run and have been on the forefront with the issue. Previous e orts to partner with relevant bodies such as the Anti-counterfeit authority (ACA), Kenya bureau of statistics (KEBS) and the Kenya Association of Manufacturers (KAM) have proved futile due to the politics involved with counterfeit markets.

(LPG Business Review)


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WAMBUGU KARUMA GACARA

 

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