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Up to 660 billion cigarettes consumed each year are either smuggled, counterfeited or tax evaded—causing governments to lose up to $40 billion in taxes annually. The threat of illicit tobacco trading is a growing concern, causing increased international legislation, and standards—which SAP helps British American Tobacco to meet.
The World Health Organization (WHO) leads a treaty, setting out standards that all governments must comply with. One of these is the introduction of a “track and trace” solution to assist in supply chain security. The scope of this will measure supply chain security, such as customer identification, as well as tracking and tracing, licensing and record keeping, security and preventative measures, and Internet sales. BAT looked to SAP to meet this legislation and were one of the first companies to implement SAP‘s track and trace solution.
British American Tobacco (BAT)
London, England, UK
Movilitas Consulting AG
Consumer Products, Wholesale Distribution
SAP Object Event Repository (SAP OER)
British American Tobacco Plc (BAT) is the second largest tobacco group in the world, and sells 250 brands in more than 180 countries. Their 50 cigarette factories are spread across 41 Countries and they use 40k ton of tobacco leaf every year. 80% of this comes from farmers in emerging markets. They work with an indirect model selling their various brands through retailers.
BAT wanted to both minimize the impact of illicit trade on their company brand as well as ensure they were set up to comply with impending international tobacco control laws. The challenge they faced was finding a solution that could manage the large volumes of data they manage daily to enable the tracking and tracing of their products as they left their manufacturing plants.
British American Tobacco relied on SAP for their supply chain needs. When they needed a solution that could handle large volumes of data on a daily basis as well as meet the very specific industry regulations laid out by the world health organization, they looked to SAP.
The functionality of SAP’s OER solutions solved the challenge of having to build a track and trace hierarchy unique to their industry. When they implemented the solution as it stood, there was minimal customization to deploy a global track and trace solution.
The British American Tobacco Track and Trace solution works by unique computer-generated codes (bar codes) printed onto labels that are applied to cigarette cartons, which normally contain 200 cigarettes. These bar codes are scanned as the cartons are packed into master cases normally containing 10,000 cigarettes, which are also marked with unique codes and scanned – this then links the cartons inside to the master cases.
The process continues with master cases being rescanned as they are packed onto pallets. Final scanning of the pallet, also marked with a unique code, links the master cases to the pallet into which they are packed. As the supply chain journey of cartons, master cases, and pallets labeled with unique track and trace codes begins, scanning of these product containers at certain points within the supply chain allows for their movement to be uniquely identified and therefore tracked.
The solution tracks 90 million records each month. BAT leaders believe they are well prepared for compliance with the laws, and for safeguarding their brand. The company will continue to anticipate and prepare to meet WHO legislation, and combat the illicit tobacco trade.