Innovation of product liability prevention model for food processing industry in thailand


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Innovation of product liability prevention model for food processing industry in thailand

  1. 1. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 4, Issue 2, March- April (2013)285INNOVATION OF PRODUCT LIABILITY PREVENTION MODELFOR FOOD PROCESSING INDUSTRY IN THAILANDPasuta Phunyathip1, Damrong Thawesangsakulthai2, and Sakda Thanitkul31Technopreneurship and Innovation Management, Chulalongkorn University, 1405-14092Technopreneurship and Innovation Management, Chulalongkorn University, 1405-14093Faculty of Law, Chulalongkorn University, Soi Chula 42,ABSTRACTProduct liability law brings entrepreneurs to have a burden and a greater risk. Theyhave a responsible for prove the safety of product; prevent the defect, and a remedy whendamage occurs. Especially the entrepreneurs in food processing industry, the damage willaffect the health of the consumer. It aims to find a prevention model for entrepreneurs in foodprocessing industry to prevent the liability from the Unsafe Goods Act B.E.2551. This studyuses a qualitative method by literature review and in-depth interview with one largepurposively selected sample plant then synthesize the legal factor compared with theentrepreneurs safety system. The innovative prevention model from this study will helpentrepreneurs to prepare themselves for the rise of the product liability lawsuits in Thailandand to increase confidence in the product to consumers.Keywords: Innovation, Product liability prevention model, Risk Management, Unsafe GoodsAct B.E.2551, Food processing industryI. INTRODUCTIONEnvironmental change is a cause of production limitation in each country and themovement of the food resource becomes more global including food contamination hasbecome a key concern [1]. Open of the free trade area for commercial according to theinternational commercial condition makes many countries changing their measurements inorder to obstruct goods from foreign countries by using the sovereignty of the state in goingout regulations and using standard voluntarily as tools [2] [3]. Product liability law is one ofthe popular tools in the world and marks as a world trend [4] [5] [6] [7] [8] [9] [10]. Theproduct liability law is not only use for protect in-house consumer but also to be an efficiencytools using for international trade barrier [11] [12] and block low quality product fromINTERNATIONAL JOURNAL OF MANAGEMENT (IJM)ISSN 0976-6502 (Print)ISSN 0976-6510 (Online)Volume 4, Issue 2, March- April (2013), pp. 285-291© IAEME: Impact Factor (2013): 6.9071 (Calculated by GISI)www.jifactor.comIJM© I A E M E
  2. 2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 4, Issue 2, March- April (2013)286foreign countries because of the inequality trade [13]. The Product liability law is increasedduties especially for the importer to take responsibilities with their product [11] [14]. WhereThailand is in the position of exporter country so Thailand has affected by this law and is alsodisadvantage commercial in international market [11] [12].The product liability law is the tort law presents under the special law that uses theprinciple of strict liability [15]. The faults according to this law occur by determining theliability by the law [12]. However, no statistical data can identified that product liability lawsable to reduce complaint cases yet. It would clear that the manufacturing increasescarefulness and attention rate more and more [16].In Thailand, the committee had a draft of the product liability law and arranged ameeting to receive comments on the year 1999 [17] and enacted in a government gazette in aname of “Unsafe Goods Act B.E. 2551” on February 20, 2008 [18]. This law has beenaccepted an important concept in the form of the United States law such as the strict liability,res ipsa loquitur (Thing speak for itself), Punitive Damage, Defense of the operators in thesupply chain and distribution [19]. It has an effect to entrepreneur especially in foodprocessing industry because its damage will affect to consumer health. Moreover, Thailandsfood industry is important in term of an industry that brings money into the country morethan 700,000 million baht in the year 2009-2010 and plays as the largest food exportercountry in Asia, the 5th in the world food trade surplus and the 12th of the food exporter inthe world [20]. The key question is how entrepreneur prevent themselves from the “UnsafeGoods Act B.E. 2551” and maybe the Product Liability Prevention Model is an answer.II. OBJECTIVE OF THE STUDYThe objective of this study is to create a model innovation of product liability, thus toprevent potential product liability against the processed food industry in Thailand.III. RESEARCH METHODOLOGYThe purpose of this research is to create a practical novelty with regard to whichsearch process and content is not known. Therefore, qualitative research is used byconducting an in-depth interview with one large company in the food processing industry,with high-standard of manufacturing the products for sales in the domestic market and forexport. The research includes studying relevant documented information.IV. PRODUCT LIABILITY PREVENTION MODELThe research results show that it is possible to create an innovation of the model ofmanagement to prevent product liability against the processed food industry in Thailand, andto be a guideline for entrepreneurs in the processed food industry and other industries, toobjectively apply to a preventive measure with regard to product liability based upon aprovision and the purpose of the “Unsafe Goods Act B.E.2551”. Entrepreneurs can apply theprocess and store necessary evidence to affirm a defect of the products as shown in Figure 1and it can be explains the model structure in the following 4 parts:1. Manufacturing perception to produce food safety2. Manufacturing‘s Product Liability Prevention Focus3. Organization Structure & Accountability
  3. 3. International Journal of Management (IJ6510(Online), Volume 4, Issue 2, March4. OutputFigures 1 Product liability prevention model for food processing industry in Thailand(Adapted from the ISO 31000: 2009 frameworkof Design for Safety and Liability1. Manufacturing perception to produce food safetyThere are 2 sources of the manufacturing perception to produce food safety:a. Force inputb. Voluntary inputa. Force inputForce input means regulations or standards that entrepreneur must do befproducts to the market. Otherwise it shall bedistribute such as the “Unsafe Goods Act B.E.25b. Voluntary inputVoluntary input means activities that have nochoose to practice or not. It can bei. Standardii. Marketing Requirementiii. Insurance RequirementInternational Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 09766510(Online), Volume 4, Issue 2, March- April (2013)287liability prevention model for food processing industry in ThailandISO 31000: 2009 framework [21] and The Conceptual frameworkof Design for Safety and Liability [22])1. Manufacturing perception to produce food safetythe manufacturing perception to produce food safety:Force input means regulations or standards that entrepreneur must do befproducts to the market. Otherwise it shall be deemed to be guilty and have notthe “Unsafe Goods Act B.E.2551”, “Food Act B.E.2522” etc.activities that have no state enforcement then entrepreneurIt can be considered in 3 types:Marketing RequirementInsurance Requirement1. Manufacturing perceptionto produce food safety2. Manufacturing‘s ProductLiability Prevention Focus3. Organization Structure &Accountability4.6502(Print), ISSN 0976 –liability prevention model for food processing industry in ThailandThe Conceptual frameworkthe manufacturing perception to produce food safety:Force input means regulations or standards that entrepreneur must do before sendand have not authorized toentrepreneur canManufacturing perceptionto produce food safetyManufacturing‘s ProductLiability Prevention FocusOrganization Structure &Accountability4. Output
  4. 4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 4, Issue 2, March- April (2013)288i. Standard depends on the nature of the industry and usually a requirement of theconsumer to ensure that the products are manufactured in compliance to consumption. Thereare many standard in food processing industry such as: GAP; Good Agriculture Practices,GMP; Good Manufacturing Practices, and HACCP; Hazard Analysis Critical Control Point.ii. Marketing Requirement is something that customer or partners needs such asthe implementation according to the British Retail Consortium Standard; BRC Standard orother special demands.iii. Insurance Requirement as importance as a tool to spread the risk of productliability. And the insurance company has the right to deny the requested by the entrepreneuror accept in a high premium.2. Manufacturing‘s Product Liability Prevention FocusWhen the entrepreneurs comprehend manufacturing safe foods, they are to consideran issue focusing on the prevention of product liability. There are three unsafe types whichwill have preventive activities in every manufacturing and distribution process.To prevent an unsafe product, it can be considered that there are the following 3unsafe types:a. Manufacturing Defectb. Design Defect, andc. Warning Defecta. Manufacturing DefectsThe manufacturing defect can explain in 3 meaning as:i. When the product departs from its intended design, even if all possible care wasexercised [19] orii. The defect that may occur in the procedure [12] oriii. The company produces the product differing from those designs and the damageoccurs as a result of the product [23].b. Design DefectThe design defect means the unsafe point that concealed in the engineering of product[24] or scientific ideas that can be and reasonable to avoid by designing a different formulafor the safety or reduce the risk that unsafe but has not done [24].c. Warning DefectLacking of sufficient information for user to avoid the dangers of the product, thesufficient information means the information for user that can reduce the risk or danger whichmay arise as a result of using the product. However, there are 2 basic objectives to warn or togive the information to customer as follow [24]:i. To reduce the risk of injury and accidents.ii. Inform in order to get admit.3. Organization Structure & AccountabilityThe entrepreneurs’ scope of knowledge in respect of safety and the protection ofunsafe products will define organizational safety activities which are present in eachresponsible level of the organization. An executive will determine a policy and its objective,
  5. 5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 4, Issue 2, March- April (2013)289and then transmit the policy to be a practice in each process for manufacturing safe products,which is separated into the two following periods:a. Activities before the distribution; andb. Activities after the distribution.a. Activities before the distribution are activities where the manufacturing of foodproducts can be separated into three processes, i.e. input, process and output, which have thefollowing sub-activities in each activity:i. Input is a process at the beginning of the manufacture with regard to design andreceiving raw materials.ii. Process is the transformation of raw materials into products. This step is veryimportant for manufacturing safe products. Therefore, there are a lot of standards in place, aswell as the performance of risk analysis and the control of a critical point, i.e. manufactureactivity and the monitoring of activity after manufacturing.iii. Output is an activity performed after the raw materials are processed; to monitorsafety before being used by consumers. This activity involves storing products and reviewingproduct deliveries to consumers again.In each step of manufacturing, there will be a safety operation to ascertain that theproducts produced follow the relevant regulations, laws and customers’ requirements byapplying standards, rules and controls for manufacturing and applying a risk managementprocedure in seven steps, such as: Establish the context, Identify risks, Analyze risks,Evaluate risks, Treat risks, Monitor and review, and Communication and Consult. The sevensteps listed above relate to analyzing and controlling any risk occurring in this industry sothat the utilization of good risk control will reduce the chances of product defects.b. Activities after the distribution are listening to customers’ comments, customercomplaints, product recalls, and the provision of additional information after sales, andcustomer service support. Such activities significantly show a consumer responsibility, andthere might be a special department for this proposed after sales customer service.4. OutputOutput of this model can separate in 2 outputs as:a. Safety goodsb. Evidence for Product Liability Lawa. Safety goods are a result of an analysis, quality control, and activities inmanufacturing process that concerned in safety.b. Evidence for Product Liability Law is a result of all safety activity inmanufacturing process to prevent a defective product such as a design product record, amanufacturing quality control record, and a safety check of products before delivery etc. Thedocument should store completely and keep in a long period sufficient to product liabilitylitigation. The sufficient period should be at least 10 years after a sale date which cover thelimitation in the normal case of damage.
  6. 6. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 4, Issue 2, March- April (2013)290V. CONCLUSIONThis study tries to find an answer for an entrepreneur problem with Thai Productliability law. The result of the study is the Product Liability Prevention Model. It classified asa process innovation and uses a qualitative research method. It is developed by combine thebody of knowledge in law and engineering and use in food processing situation. This modeluse as a direction for entrepreneur to keep the product liability evidence which to confirmthat the product is safe and can prove under the product liability litigation.VI. ACKNOWLEDGEMENTSThis research was supported by research grants from "the 90-year ChulalongkornUniversity" Ratchadapiseksompotch Fund, Chulalongkorn University. And I would like tograteful Associate Professor Damrong Thawesangsakulthai, who is not only my advisor butalso my inspiration for this study. Professor Dr.Sakda Thanitcul, Professor Susom Suphanit,Associate Professor Dr.Supawan Tantayanon, Associate Professor Dr.Suwimon Keeratipibul,Assistant Professor Dr.Pongpun Anuntavoranich, and Associate Professor Dr.KanchitMalaiwongs, who refine presence and incubate the body of knowledge to get me accomplishthis work. My dad and mom, who give me a life and always encourage me. My sister;Kanyanut, and Pantira who are always beside me. Manussanun, my niece, who often cheersme up. My husband’s family, who care for me. Special thanks for my husband, SansiriYomna, who takes care of my life and try to do everything for me. All my friends for themoral support.REFERENCES[1] R.G. Fink, and H.B. Rhinehimer, Liability in The Food Processing Industry, FrozenFood Digest, Dec, 1999.[2] W. Pattarasuk, International Trade and Food Safety: Editorial International Trade andFood Safety, Chulalongkorn University Press2006, 1-10.[3] S. Henson, The Role of Public and Private Standards in Regulating International FoodMarkets, presented at the IATRC Summer symposium, Germany, 2006.[4] C. Clarridge, Product Liability Bill Becomes a Hot Topic in Harrisburg, PhiladelphiaBusiness Journal, 8, 1999.[5] R.E. Litan, The Safety and Innovation Effects of U.S. Liability Law: The Evidence,The American Economic Review, 81, 1991, 59.[6] T.J. Duesterberg, Federal Government Response to the EC 1992 Challenge inStandards, Testing and Certification, Business America, 113, 1992, 6-9.[7] S. Cotterli, P. Martinello, and C.M. Verardi, Implementation of EEC consumerprotection directives in Italy, Journal of Consumer Policy, 17, 1994, 63.[8] D. Keenan, Safer than ever, Accountancy, 116, 1995, 37.[9] C. Eleonora, Marketing strategy, product safety, and ethical factors in consumerchoice, Journal of Business Ethics, 21, 1999, 37.[10] K. Ross, Product Liability Goes Global, Risk Management, 53, 2006, 10-15.[11] S. Supanit, Product Liability, 2nd(Bangkok, Thailand: Winyuchon, 2006) 15-20.[12] P. Wanichkittikul, Explanation of the “Unsafe Goods Act B.E.2551”, 1st(Bangkok,Thailand: Rungsilpkarnpim, 2009).
  7. 7. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –6510(Online), Volume 4, Issue 2, March- April (2013)291[13] C. Sapworanich, and T. Narintarangkul na Ayuthaya, Some of considerations and theimpact of the “Unsafe Goods Act B.E. ….”, Dulapaha 3(54), 2007, 175-206.[14] A. Cavaliere, Product Liability in the European Union: Compensation and DeterrenceIssues, European Journal of Law and Economics, 18, 2004, 299–318.[15] S. Sotthiphun, The explanation of the tort law. 1st(Bangkok, Thailand: Winyuchon)2010.[16] Loureiro, L.M. 2008. Liability and food safety provision: Empirical evidence from theUS. International Review of Law and Economics 28: 204–211[17] M. Wongseri, W. Boonbumrung, P. Na nakorn, S. Nawatrakulpisut, and E. Jintanalert,Final report: Product liability, National Research Council, 2000.[18] Government Gazette, The “Unsafe Goods Act B.E.2551”, Government Gazette125(36), 2008, 17-22.[19] S. ThanitkulThanitcul, The product liability acts. 2nd. (Bangkok, Thailand:Winyuchon) 2010.[20] National Food Institute. Food Export Information Classified by Standard Group in2008-2009 [online]. Available from:, 2010, June 13.[21] International Standard Organization: ISO, ISO 31000 Risk management — Principlesand guidelines. Switzerland, 2009.[22] S. Dowlatshahi, The role of product safety and liability in concurrent engineering.Computers & Industrial Engineering 41, 2001, 187-209.[23] E.V. Schwartz, Making Product Liability work for You: A Path Out of the ProductLiability Jungle in Hunziker, R.J. and Jones, O.T., Product Liability and Innovation:Managing Risk in an Uncertain Environment (Washington, D.C.: National Academy Press)30-36, 1994.[24] M. Jumpa, Explanation of the “Unsafe Goods Act B.E.2551”. 1st(Bangkok, Thailand:Chulalongkorn University Press) 2011.[25] Dr. Saurabh and Abid Sultan, “Issues And Concerns Of Food ProcessingManufacturing Units In J&K” International Journal of Management (IJM), Volume 3, Issue3, 2010, pp. 160 - 168, ISSN Print: 0976-6502, ISSN Online: 0976-6510