• Consumer Goods
  • Compliance
  • Supply Chain

Alcohol, Tobacco and Firearms – The Challenges of a Restricted Product Supply Chain

Written by Robert Brice
September 30, 2015

Alcohol and tobacco manufacturers have to keep a close eye on their supply chains.

Alcohol and tobacco manufacturers have to keep a close eye on their supply chains.

Some consumers are not allowed to buy certain products due to legal restrictions. There are goods that can’t be sold in specific regions, to children, to ex-convicts or after governments pass relevant regulations. Items like firearms, tobacco and alcohol create unique supply chain obstacles.

Responding to Government Regulations

When used responsibly, products like alcohol and firearms are legal and promote U.S Industry. If the goods fall into the wrong hands, however, they can be dangerous. Companies that manufacture firearms are watched very closely by government regulators, and they must keep up with the changing laws.

MassLive detailed how federal discussion of gun restriction regulations caused a recent surge in the firearms market. In 2013, The New York legislature signed in a new law that continued the state’s assault weapons ban, limited ammo capacity in magazines and restricted sales to the mentally ill. Worrying local lawmakers would follow suit, citizens of other states responded by rushing out to buy products they feared would soon become illegal. Weapons manufacturers and retailers in certain regions were unable to keep up with demand. On the other hand, should products become illegal, manufacturers could find themselves with stockpiles of hard-to-sell inventory.

Weapons manufacturers, and all companies that sell products hotly debated by government regulators, need to practice an inventory control system that provides supplies and procedures for huge fluctuations in supply chain practices.

Suffering From Illegal Activities

When companies do the responsible thing and restrict the distribution of their dangerous or age-restricted products, unscrupulous consumers search for the items through illegal channels. Criminals supplying the black market and counterfeit merchandise are dangerous and can deal a terrible blow to consumers and businesses.

Illegal suppliers sell tobacco and alcohol products to minors. Tobacco Reporter said counterfeit cigarettes may contain ingredients that don’t meet government standards. When the media discovers dangerous items in a supply chain, it worsens public relations for all companies in the industry.

Tobacco retailers and federal officials must work together to track legitimate merchandise and keep illegal goods out of the market. Companies have to share their data with government officials to assure above-board business practices and advertise their quality to consumers. Product labeling must include government certifications.

Moving Through Multiple Channels

Industries take intricate steps to ensure they deliver products to the appropriate consumers. Some alcohol manufacturers cannot sell their goods directly to customers. Fermentation, a wine blog, detailed how alcohol businesses sell their merchandise using a three-tier system. Manufacturers have to sell to distributors, and then the distributor supplies the products to retailers.

Some businesses find ways around the three-tier system, craft breweries have on-premise tasting bars and wineries can send visitors home with bottles. Wholesales companies are also held to different standards. This process only gets more complicated as they move from state to state. Each state has its own laws about alcohol sales and companies have to track taxes, fees and restrictions that apply to products as they distribute them across the nation.

Every business that participates in the restricted product supply chain must account for its actions. If there is a problem, authorities will investigate the company that sold the item, the supplier and the manufacturer to learn where the error occurred. These items are also targets for theft, so supply chain visibility is essential for securing inventory movements.

Shouldering Responsibility

Companies that manufacture, distribute and sell restricted products need an automated data collection system supplying all invested parties with real-time information. If a single detail slips through the cracks, the business could be in legal trouble or held responsible for dangerous activities.

Fast, efficient warehouse management systems can respond to rapidly changing markets and government regulations. If managers ensure each employee has a data collection device that can update product activities, it prevents movements from going unreported. Organizations can share complete records with partners or government officials.

An RFgen case study offered the example of a firearm manufacturer that increased productivity and shipping accuracy by integrating an automated data collection solution into its existing infrastructure. Mobile data collection tools were used to track inventory receipts, shipments and serial numbers. The technology helped the company stay compliant with government regulations in each of the territories in which it operated. The supply chain was tighter and quicker to respond to customer needs.