Product traceability and food safety (15 oct08)
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The document discusses issues around consumer trust in food and consumer products due to contamination issues and misleading health claims. It argues that establishing full traceability systems across supply chains can help rebuild consumer trust by enabling companies to track products, isolate risks, and credibly support product claims. However, current traceability systems have gaps, and a virtual traceability ecosystem is needed to realize the full benefits of 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 ,[object Object],[object Object],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](data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///yH5BAEAAAAALAAAAAABAAEAAAIBRAA7)
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Product traceability and food safety (15 oct08)
- 1. ECR Asia-Pacific Conference Bangkok, October, 2008 “ Establishing Trust Through Traceability”
- 5. 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
- 8. 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
- 9. 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
- 10. 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
- 13. Trace Icon is OpsSmart’s Data Entry Form
Editor's Notes
- 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