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18 - Innovating Food, Innovating the Law - Timpano e Lanini


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Piacenza, October 14, 2011
"Innovating Food, Innovating the Law"

FRANCESCO TIMPANO and LUCA LANINI (Università Cattolica del Sacro
Cuore, Italy)
Traceability at the interface between economics and the law


Published in: Education, Technology, Business
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18 - Innovating Food, Innovating the Law - Timpano e Lanini

  1. 1. Innovating Food, Innovating the Law An interdisciplinary approach to the agro-food sector Università Cattolica SC Piacenza, 13-14-15 October, 2011 Traceability at the interfacebetween economics and the law 1
  2. 2. Key word, Key concept• Traceability between law and market• Traceability, essential lever for the competitive advantage in the supply chain• ICT, “conditio sine qua non” for implementation and utilization traceability• The problem : upstream and downstream along the Supply Chain• State of the art: difficulties for a perfect management of rapid alerts and delays in ICT• Economic outlook: the critical economic scene makes it hard to find further investments for the best ICT management: the withdrawal for rapid alert is still very expensive 2
  3. 3. Reflexions plan• The two dimensions of traceability: – the health “dimension” (quality control and “food safety”) – the economic “dimension”, as a competitive market lever ( “the differentiation by value” according to M.PORTER e M.CHRISTOPHER)• The health dimension is fundamental in international regulations (Reg 178/2002)• The economic dimension is linked to the RETAIL FOOD STANDARD dictated by the downstream operators of the supply chain (BRC, IFS, GLOBALGAP) Implementation of traceability systems is linked to ICT spread. Without ICT, tracing is not possible. This concept has never been written in REGULATIONS, but it’s the actual LEVER of the competitive advantage. 3
  4. 4. Traceability between LAW and MARKET• Traceability is an obligation for the European legislator (it’s an essential food safety instrument)• Traceability is a fundamental requirement in retail food standards (BRC, IFS, GLOBALGAP)• Traceability is a fundamental requirement in the voluntary regulations of ISO systems (ISO 22000)CIES - Food Business Forum – it’s an independent network formed by 175 retailers and 175 suppliers in 150 countries worldwideGFSI - Global Food Safety Initiative , project within CIES (created in Geneva, 2002) 4
  5. 5. Traceability for IFS, BRC and ISOIFS point 4.18 requirement K.O. n° 3ITA “l’organizzazione deve definire un sistema di rintracciabilità che permetta l’identificazione dei lotti di prodotto e la loro relazione con le partite delle materie prime, dei materiali di confezionamento primario e dell’unità di vendita destinata al consumatore finale, con le registrazioni relative alla fabbricazione e alla distribuzione”BRC-FOOD point 2.13 fundamentalITA “l’azienda deve avere un sistema che abbia la capacità di rintracciare e seguire tutte le materie prime (incluso il materiale di imballaggio primario) dall’ingresso in tutte le fasi del processo e della distribuzione del prodotto finito al consumatore”ISO 22000 FSMs Food Safety Management Systems - 7.9 Traceability SystemITA “L’organizzazione deve stabilire a applicare un sistema di rintracciabilità che consenta l’identificazione dei lotti di prodotto e le loro relazioni con i lotti delle materie prime, con le registrazioni di processo e di consegna. Il sistema di rintracciabilità deve essere in grado di identificare i materiali in ingresso dal fornitore diretto e il percorso iniziale della distribuzione del prodotto finito. 5
  6. 6. The state of the art: Is everything ok?• In 2005 the regulation 178/2002 became mandatory…• …and the food traceability has become a “conditio sine qua non” of the international relations (BRC, IFS, GlobalGap), regardless of the reg. 178 !• The implementation of traceability systems seems (apparently) concluded …• …but it’s not so simple to speak about the concrete reliability of these systems !!• In general, in view of an Alert problem, many daily lots of products are withdrawn as a safety measure…• …but in reality an efficient traceability system would noticeably reduce withdrawals (with a concrete saving of costs as a result) 6
  7. 7. Physical and information flows:the double challenge of traceability Developing a traceability system along the supply chain consists in systematically connecting an information flow with a physical one• Since the implications of food risk management are increasing, a “new positioning” of the whole supply chain is required in relation to the information management 7
  8. 8. Widely shared opinions• Traceability is an extraordinary competitive advantage instrument …• a competitive advantage that is totally based on the information control and management• with an important interaction with logistics…• … and that requires an strong cooperation among all the operators (general exchange of data) 8
  9. 9. The additional (and expected…)advantages of traceability • Improvement of client/supplier relationships • Openness • Supply Chain rationalization and consequent cut in costs 9
  10. 10. Why should we track & trace? To reduce the costs of product recall andwithdrawal in the management of rapid alerts • 1990: Benzene contamination • Withdrawal of the whole production all over the world • Operation cost: 150 thousand Euro • The firm is taken over by Nestlè • 1999: sulphur poisoning and presence of a fungicide • Withdrawal of 50 million tins • Operation cost: 1 million Euro • Loss in the share price: around 50-70 million US$ • 2000: LYSTERIA MONOCITOGENES in pig by-products • The companies Coudray and Système U were sued 10
  11. 11. Rapid alert: the difference betweenwithdrawal and recallWITHDRAWAL• Every measure able to prevent the product retailing, display and offer to the consumerRECALL• Every measure able to succeed in the removing of a dangerous product with which the supplier or the distributor has already supplied or provided the costumer 11
  12. 12. How to deal with a RAPID ALERT ?• Consumer complaint (lot)• Client complaint (bar code, pallet,…)• Identification of the suspect LOTS along the supply chain (stores, logistic platforms, etc.)• WITHDRAWAL and RECALL• Investigation among the suppliers 12
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  14. 14. Internal traceabilityBottom-up traceability Top-Down traceability Internal traceability Upstream traceability Downstream traceability 14
  15. 15. Tracking & Tracing Upstream Downstream Raw Food industry Logistic Storematerials and Logistic platform Packaging platform Store ISO 8402 Consumer “Theability to trace the history, application or location of an item or activity by means of documented source: recorded identification” 15
  16. 16. PRODUCT TRACEABILITY Qualitative way Ability to trace the origin and the features ofproducts in every point of the supply chain TO FIND THE CAUSES OF A QUALITY PROBLEM Ability to trace the location of products in every point of the supply chain TO DEAL WITH THEIR WITHDRAWAL LOGISTIC TRACEABILITY Quantitative way 16
  17. 17. DOWNSTREAM TRACEABILITY Platform Store a) = Lot n°1 Store a) source:RecallLot n°2 Recall Lot n°2 Store b) = Lot n°2 Store a) = Lot n°1 Store b) = Lot n°2 Withdrawal Store b) supplier Lot n°2 17
  18. 18. UPSTREAM TRACEABILITY• The regulation 178/2002 states that every firm must be able to identify all its SUPPLIERSDOWNSTREAM TRACEABILITY• The regulation 178/2002 states that every client-firm (that has received products from its SUPPLIERS) must be identifiable 18
  20. 20. THE NEW PRINCIPLES OF TRACEABILITYIdentification ConnectionData record Communication (receiving-conveying) 20
  21. 21. SO, WHAT’S A TRACEABILITY SYSTEM?• An advanced system for the control of the in and out- flow of items• Every firm must be able to: • Identify and label items (common language) • Optimize the receiving and delivery of items avoiding mistakes (speed and accuracy) • Facilitate the information sharing to support the withdrawal and recall process The preparing of the lot is the most critical point because it determines the precision of every traceability system. 21
  22. 22. Tracing the LOT: that’s the concrete aim of traceability!• The pivot of a traceability system is the identification of the object to be traced: the LOT• Every traced object has to be UNIVOCALLY IDENTIFIED. That’s the only way to reach all the data about the history, application and location of the LOT• By Tracing the PALLET, it is possible to find the LOT to be recalled PRODUCTION AREA DISTRIBUTION AREA link link L. 123ABC between LOT PALLET / LOT and PALLET and PALLET Link PALLET-DESTINATION Link PALLET-DESTINATION 22
  23. 23. Risks of inefficient TRACEABILITY Using too wide TIME WINDOWS (based CRITICAL POINTS on daily LOTS) for WITHDRAWALS is a sign of WEAKNESS:  Vertical the firm is not able to link the product- relationships LOT with the PALLET-lot (generally a  ICT management multi-lot pallet) in the final part of  ICT integration delivery  Logistics• Is the ICT LINK between the product-LOT and the pallet in delivery guaranteed ?• Is the transmission of EAN 128 Code guaranteed all along the supply chain ?• Are the Lot-Codes always indicated on the DELIVERY NOTE (DDT) ? 23
  24. 24. An imperative : revising the vertical relationships about traceability and logistics Quality / Safetytime Quick adaptability costs 24