Wednesday, February 23, 2005

RFID and the Politics of Cigarette Smuggling

The EU is cracking down on Phillip Morris International (PMI) for allowing their products to be smuggled around the world. While I find the death merchants at PMI to be totally noxious individuals, I have some sympathy for their plight. We're not talking about nuclear waste here, how much time and effort are these manufacturers supposed to use to track their goods?

Regardless, the Europeans are demanding the cigarette maker take action.

The 25-nation EU is, in effect, ordering the cigarette maker to implement a supply chain system that will keep track of every Marlboro, Bond Street and Parliament carton—as well as Philip Morris' other brands—from the time the cigarettes are packaged to the time they're sold by anybody, anywhere, in the world.

It's a demand that the EU could easily impose on manufacturers of liquor, apparel, pharmaceuticals, hazardous materials or other products that want to do business in its surging $12 trillion-a-year common market. And other governments—particularly those facing financial deficits, like the U.S.—could be easily motivated to follow along with their own actions.

Leaks in the distribution of cigarettes conservatively cost national, state and local governments more than $30 billion a year in tax revenue, according to the World Health Organization. Smokes are not the only trade of unauthorized distributors. Illicit supply chains move more than $500 billion a year in smuggled and counterfeit goods, from pocketbooks to steel, says the U.S. Government Accountability Office.

"This is just the beginning for manufacturers in many industries," says Kara Romanow, an analyst with AMR Research. "Either by force of regulation or from a large customer such as Wal-Mart, companies are being forced to get their supply chains under better control." (emphasis added) |Link|

Of course, RFID is discussed as a possible option, but it's probably too expensive to implement in this instance at least on the cigarette pack level. The economics change a bit for the cigarette carton or pallet of cigarette cartons, but the ability to track the items is also greatly reduced.

These sort of regulatory efforts create even more impetus for implementing the Internet of Things. For the record, I don't think the the world will be a fun place to live after the Internet of Things is fully operational. I believe the Internet of Things will make totalitarian control of society vastly easier.

But I also think we are inexorably sliding down that slope.

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