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Product traceability and food safety (15 oct08)
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Product traceability and food safety (15 oct08)

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  • POWER STATS: Yankelovich Study on Marketing Receptivity 56% of consumers “avoid buying products that overwhelm them with marketing and advertising” PricewaterhouseCoopers study and survey: 94 percent of consumers and 81 percent of industry stakeholders said that drug companies are too aggressive in promoting unapproved uses of their product. 62 percent of stakeholders agreed that drug companies often manipulate or suppress negative clinical trial results to maximize sales. Four out of five pharmaceutical executives disagreed. More than seven in 10 stakeholders (73 percent) agreed that drug companies spend too much money and effort attempting to prevent generic drugs from competing with their branded products.
  • POWER STATS: Yankelovich Study on Marketing Receptivity 56% of consumers “avoid buying products that overwhelm them with marketing and advertising” PricewaterhouseCoopers study and survey: 94 percent of consumers and 81 percent of industry stakeholders said that drug companies are too aggressive in promoting unapproved uses of their product. 62 percent of stakeholders agreed that drug companies often manipulate or suppress negative clinical trial results to maximize sales. Four out of five pharmaceutical executives disagreed. More than seven in 10 stakeholders (73 percent) agreed that drug companies spend too much money and effort attempting to prevent generic drugs from competing with their branded products.
  • We’ve painted a pretty bleak picture here thus far. So what are our CP clients to do. We believe that traceability systems can play a critical role by repositioning CP companies as a trusted source of information about all the things the Omni Consumer cares about Traceability systems (also known as Track & Trace) provide each member of the supply chain with three things: The first is the ability to trace the ownership of products backwards through the supply chain, The second is the ability to track product movements forward through the supply chain The third is the ability to track and trace products and risks within their own four walls Traceability is not easy, just looking at the over simplified supply chain on this page we can see how the number of supply chain participants, handoffs and ingredients grows rapidly
  • Traceability systems are typically associated with food safety – allowing companies to locate contaminated products across the supply chain and hopefully isolate the source of any contamination. But we believe this focus on food safety misses a much bigger opportunity, and that is the opportunity to leverage traceability systems to capture and communicate information that supports a company’s marketing claims Whether the claim is that the product is organic, sustainable, or contains a cholesterol lowering ingredient – CP companies can prove to the “Omni Consumer” that their claims are trustworthy using traceability. Unfortunately most traceability systems today fail to effectivley protect products from contaminations or enable them to make new claims about their functionality or responsibility.
  • We believe that in order to build trust with the consumer, and in turn protect and empower their brands, CP companies need to embrace what we call Full Value Traceability Full Value Traceability is a new way of looking at traceability that will require CP companies to take action on four imperatives They must develop a deep understanding of the information needs of their customers and consumers and figure out how to use traceability to meet those needs Achieving Full Value Traceability is complex, potentially costly undertaking that will require executive level leadership and a clear, shared vision of where the company, and its stakeholders, are heading. Full Value Traceability is not a destination however, it is a journey To deliver on the vision CP companies must reinvest themselves in integrating the physical and informational aspects of the supply chain Lastly they must proactively engage with stakeholders. Traceability is not something that any one company can achieve. There must be a shared understanding of the benefits and costs, and a shared agreement of the vision. Although each of these sound daunting there are compelling examples from the many recalls over the past 12 months that absolutely reinforce the criticality of each of these imperatives
  • POWER STAT: According to June 2006 Aberdeen Group Supply Chain Benchmark Report “79% of large companies say that the lack of supply chain process visibility is their top concern”. 90% of all enterprises report global supply chain infrastructure is inadequate to provide information to support budget and cash flow planning and management. “Three quarters of firms lack enterprise-wide automation for global supply chain processes.”
  • Examples: Unilever engaging with Rainforest Alliance to certify tea is sustainable

Product traceability and food safety (15 oct08) Product traceability and food safety (15 oct08) Presentation Transcript

  • ECR Asia-Pacific Conference Bangkok, October, 2008 “ Establishing Trust Through Traceability”
  • Contaminations and recalls are changing consumer perceptions and purchasing behaviors, and eroding consumer trust Source: IBM research, IBM survey of U.S. and UK consumers; Fortune, July 16, 2008
    • 42% of consumers buy different brands today versus 2 years ago … because they are looking for safer products
    • 47% are more concerned today about food safety than they were 2 years ago
    2006 Baby Food Botulism Peanut Butter Salmonella Spinach E. Coli Chocolate Salmonella Lettuce E. Coli Onions E. Coli Chicken Bird Flu Cantaloupe Salmonella Chicken Listeria Mushrooms E. Coli Chocolate Salmonella Chocolate Nuts Pet Food Melamine? Rice GMO Toothpaste Diethylene Glycol 2007 Canned Chili Botulism Dog treats Melamine Snack food Salmonella Gr. Beef E. Coli Gr. Beef E. Coli Cantaloupe Salmonella Tomatoes ► Jalapeños Salmonella Beef E. Coli Toys Lead Pork LIsteria Formula Melamine 2008
  • Consumer confusion around the efficacy of new product health and wellness claims have also eroded consumer trust
    • 82% ‘agreed’ that “claims made by food and drink products often exaggerated or unproven”
    • 52% felt that ‘health boosting claims by food and drinks players were untrustworthy’
    Calorie burning energy drink Omega-3 fortified peanut butter Heart healthy chocolate Protein, fiber and Omega-3 fortified pasta Cereal with probiotics and fiber for digestion Source: “Coke Says Things Go Better with Green Tea:”, Financial Review, 10/23/06; www.cocoavia.com ; www.smartbalance.com ; www.kashi.com Source: “How To Exploit New Wellness Trends in Food”, Datamonitor, 09/06; “Consumer Skepticism of Healthy Food Claims – Another Report”, Nutraingredientsusa.com, 12/6/05; “Confusing Claims Harm Consumer Trust”, Food & Drink – Europe, 07/16/04; “2005 Consumer Attitudes Toward Functional Foods/ Foods For Health”, International Food Information Council, 07/06 Yogurt with probiotics for digestive health Spread with Omega-3 oils for heart health Antioxidant fortified cereal Melatonin rich milk to aid sleep Consumers confused by conflicting science “ The health and wellness market needs to focus on avoiding consumer confusion as a result of an abundance of scientific information…”
    • 73% are skeptical at some level that branded food products deliver the health and wellness benefits advertised
    2006 survey of consumer skepticism 2007 survey of health and wellness
  • … however a proliferation of corporate responsibility claims is only adding to the confusion and fostering distrust Carbon Footprint Crisps Carbon Neutral Beer WWF alleges tens of thousands of hectares of rainforest in Indonesian National Parks cleared to grow coffee Source: Brandweek, July 15, 2008; Financial Times, September 9 2006; Financial Times, January 17, 2007; www.CNNMoney.com "Ethical" coffee is being produced in Peru, the world's top exporter of Fairtrade coffee, by labourers paid less than the legal minimum wage.
    • 40% of consumers are negative or ambivalent about media attention regarding our impact on environment
    • Only 13% of consumers believe companies adopt environmentally friendly practices because they care about the environment
    Advocacy group claims retailer is misleading its customers by labeling non-organic foods as ‘organic’ Socially Responsible H 2 0
  • Traceability systems can serve as that source of trusted information allowing CP companies to connect with concerned consumers, and realize other benefits Track Trace Source: Economic Research Service, United States Department of Agriculture Antibiotics Logistics Logistics Logistics Logistics Logistics Logistics Fertilizers Packaging Ingredients Logistics Logistics Ingredients Logistics Grocery Retailer Corn Farmer Cattle Rancher Distribution Center Beef Processor CP Manufacturer Track and trace products and risks within own four walls to isolate and prevent issues Compliance Ensure compliance with both individual retailer mandates and government regulations Brand Empowerment Become trusted source of information to the ‘Omni Consumer’. Empower brands to make new claims. Risk Mitigation Protection of brand through identification of risks and isolation of contaminated product Supply Chain Efficiency Accelerate product flows and reduce inventory levels through increased visibility to inventory and movements Trusted information The ability for each member of a supply chain to track the movement of ingredients, packaging, and products forward through the supply chain The ability for each member of a supply chain to trace the ownership and characteristics of ingredients, packaging and products backwards
  • Typically associated with food safety, most traceability systems today fall short of either protecting brands from recalls, or empowering them to make new claims
    • Traceability systems capture, store, access, aggregate and communicate product, supplier, customer, handling and processing information to:
      • Credibly support new marketing claims, and
      • Prevent, identify and isolate product contamination issues
    Current Gaps / Shortfalls
    • Data:
    • Limited breadth and depth of information captured
    • Critical information not available across organization
    • Information not readily available to 3 rd parties
    • Data elements not standardized to facilitate sharing and comparison
    • Relevant data stored in disparate systems
    • Data collected not aligned internally (i.e., MES data does not align with ERP)
    • Organization / Culture:
    • Compliance driven mindset - only invest where necessary
    • Limited ability to track / trace outside own four walls
    • Downstream tracking capability usually stronger than upstream
    • Process:
    • Processes not standardized
    • Process steps not effectively monitored
    • Manual processes dominate data collection
  • To realize the Full Value Traceability opportunity CP companies need to move forward on four imperatives, starting by aligning their Traceability capabilities with the requirements of the brand Proactively engage with Traceability stakeholders 4
    • Recognize that Traceability is complex, strategic undertaking
    • Adopt an evolutionary path for of process, capability and tool development
    • Establish clear executive level and functional responsibility and sponsorship
    • Prioritize desired/required functionality leveraging assessment of current IT and Supply Chain capabilities, and product/brand risks and opportunities
    Define Traceability vision, and create an roadmap Integrate the physical and informational supply chain Leverage Traceability to Protect and Empower the Brand
    • Embrace whole supply chain perspective
    • Identify stakeholders, define their Traceability related stake and develop engagement plans that drive alignment with company vision
    • Create a shared Traceability vision and development roadmap with vendors and suppliers
    • Leverage distributed, standards based architecture for data management
    • CP companies need to effectively and efficiently move product, and capture, manage and communicate data about product(s) and their movements
    • Establish one version of the truth for customer, product and supplier data
    • Automate collection, analysis, and communication of data
    1 3 2
    • Develop deep understanding of target ‘Omni Consumers’
    • Establish fact-based understanding of product/brand attribute risk elements
    • Prioritize traceability requirements within existing product portfolio
    • Define traceability requirements within new product development pipeline
    • Ensure traceability investments deliver capabilities that support the brand
  • Full Value Traceability systems capture, a) product movements, b) attribute changes, and c) processing activities across and within the supply chain Antibiotics Logistics Logistics Fertilizers Packaging Ingredients Logistics Ingredients Logistics Data Data Data Data Data Data Each company maintains its own product information and record of transactions, making that information available on a permission basis to stakeholders Virtual Traceability System Track and trace products and risks within the four walls to isolate and prevent issues Logistics Logistics Logistics Logistics Logistics Grocery Retailer Corn Farmer Cattle Rancher Distribution Center Beef Processor CP Manufacturer Transaction & Historical Data Firewall Firewall Firewall Firewall Firewall Firewall Firewall Data security maintained via encryption, restricted password access, etc… Rapid communication of essential data facilitated through open-standard software and adoption of industry ID standards
  • Creation of a virtual Traceability ‘ecosystem’ will accelerate realization of the Full Value Traceability opportunity Ecosystem Enablers Virtual Traceability ‘Ecosystem’ Consumers Shoppers Influencers Each stakeholder of the Virtual Traceability ‘Ecosystem’ plays a role empowering and protecting the brand Stakeholders with critical role protecting or empowering the brand Common Data Standards Distributed IT Infrastructure Protect & Empower Brand Direct Supply Chain Grocery Retailer Distribution Center Logistics Service Providers (LSP) Packaging Suppliers Creditors Advertising Agency Food Brokers Media Local Communities Co-Packers CP Manufacturer Beef Processor Cattle Rancher Corn Farmer Government Regulatory Agencies Trade Associations Auditors Insurers IT Service Providers Equity Analysts Non-Profits and NGOs Executive Sponsorship & Support
  • IBM is working with partners such as FXA to create a complete traceability solution FXA IBM Scope of Work Request Traceability Data Send Traceability Data Websphere RFID Information Center Websphere Premises Server Send Data from RFID Capture device RFID Data Capture Device Send Production Data and Master Data ERP / MRP Send production Data and Quality Data Manual input and/or IBM Food safety manager Customer Request Traceability Data Send Traceability Data EPCIS
  • Product Overview Multi Domain Configurable User Interface Permitted Data Access Electronic Data Exchange Secure data Storage Web enabled
    • Trace with
    • Flexible search parameters
    • Bi-directional
    • Drill Down
    • Permitted Access
  • Build User Interface
  • Trace Icon is OpsSmart’s Data Entry Form
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  • FXA References
    • Betagro
    • Biotec – Black Tiger Shrimp Broodstock
    • Cameron farm – Hatchery and Nursery
    • Surajthani Shrimp Farm Cooperative
    • Tacheen Shrimp Farm Cooperative
    • Thathong Shrimp Farm Cooperative
    • Pakfood – 3rd largest manufacture
    • Grampian Foods
    • River Kwai
    • Taniyama
    • CPF
    • Chantaburi Frozen Food – Part of Rubicon group
    • Department of Fisheries
    • Department of Livestock Development
    • Department of Agriculture
    • National Bureau of Agricultural Commodity and Food Standards
  • Change management
    • Management of processes in compliance with best practices
    • Commitment to Quality and safety processes
    • Transparency
    • Willing to adopt new technology
    • Management Commitment
    • Tightly integration with suppliers and authorities
    • Utilization of the information to productivity and efficiency
  • EPCIS: Enabling exchange of traceability information through global standards
    • System defined by GS1 for exchanging information on serialized items
    • Developed for RDIF technology, can be used to exchange associated information
    • Does not require RFID tagging. Can store the serial number in a SGTIN on a bar code
    • Serialization can be at the item, case, pallet or container level
    • IBM’s RFID Information Center supports all the EPCIS standard protocols
    • Supported by leading companies such as Carrefour, Henkel, Kraft International, Metro Group, Nestlé, Procter & Gamble, Rewe Group
  • Where to go for help
    • Visit the IBM stand in the exhibition area
    • Download the GS1 guides from
      • http://www.gs1.org/productssolutions/traceability/
    • Download the “European EPC Guide for Retailers and Manufacturers”
      • http://www.gs1.eu/index.php?page=&tudasbazis=60&lister=47
    • E-mail
      • [email_address]
      • [email_address]