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Supply Chain Integrity - An Opportunity
- 1. SUPPLY CHAIN INTEGRITY: ANOPPORTUNITY NOT JUST A COST © Source Certain International Pty Ltd – 2017 Cameron Scadding (Executive Chairman – Source Certain International) Supply Chain Integrity Seminar - FoodPro2017
- 2. WE (CONSUMERS) HAVEVERY HIGH EXPECTATIONS 2Confidential © SCI 2017
- 3. WHAT MATTERS? • Thinklike a consumer • What holds it all together? 3Confidential © SCI 2017
- 4. 4 TRANSPARENCY HYPER- CONNECTED BIGGER IS NOT ALWAYSBETTER Confidential © SCI 2017 WE HAVE CHANGED
- 5. HEADLINE MESSAGE 5Confidential ©SCI 2017 Lets turn the light on, fix the problems that we can now see and give consumers a reason to trust us. It will create value!
- 6. TAKE HOME MESSAGES 1.Consumers in export markets already trust Australian food. 2. Often, these consumers (e.g Chinese consumers) do not trust the supply chains that deliver the food to them. 3. Securing supply chains from source to consumer is essential to fixing this problem. 4. The value of the “Australian” promise is why the adulteration, substitution and counterfeiting problem exists. The promise is cheap, the reward is high, the consequences are small (to nothing). 5. There is no silver bullet – this issue is a complex one and requires a supply chain wide solution. 6. Open supply chains are a reality – a supply chain solution may be difficult to implement but we must do what we can to manage the some of the business risks associated with this problem. 7. Transparency is coming to food supply chains – you must be authentic with your promise and to build trust you must be prepared to verify this promise. Confidential © SCI 2017 6
- 7. FOOD: A GLOBALBUSINESS 7 • The way food is grown, sourced, aggregated, distributed, represented and sold is more complex than ever. • This complexity combined with the regulatory limitations provides opportunity. • Consumers have high expectations of these supply chains. Not only the food that they deliver but also the information. • What happens when the promise is not met or even worse something happens to a consumer (Food Safety Incident for example). Confidential © SCI 2017
- 8. FOOD SUPPLY CHAINS 8 •Food supply chains are a vital connection between producers and consumers. • The demand or trust of a product can be destroyed by a single incident. • Security and integrity in each segment of the supply chain that connects consumers to the source of their is critical. • In food - TRUST is all you really have. • How important is transparency? Confidential © SCI 2017
- 9. ALL OF THESEVALUE PROMISES ARE CREATED BY THE SOURCE AND DELIVERED BY THE SUPPLY CHAIN 9 Free Range High Quality Safe Working Conditions & No Slave Labor Provenance e.g. Swan Valley, WA Organic Natural GM Free Ethically Sourced Grass Fed Pasture Raised Farm Fresh Confidential © SCI 2017
- 10. THE SITUATION INAUSTRALIA 10 • Consumers in Australia generally trust Australian foods and the supply chains that deliver the food to them • Biosecurity strategies • Food Safety Infrastructure • Complacent? • Implication of everyone being good guys? Confidential © SCI 2017
- 11. EXPORT MARKETS: EXAMPLE-FOOD IN CHINA 11 • Food safety incident after food safety incident - high profile and some resulted in fatalities. • Amongst consumers in China, there is a general mistrust in the food delivered through their supply channels. – Melamine in infant milk powder – Meat bleaching – Fish species substitution Time 19 September 2016. http://time.com/4498998/china- meat-food-safety-bleach-police-guandong-shenzhen/ Confidential © SCI 2017
- 12. MELAMINE IN INFANTMILK POWDER 2008 Melamine Issue in China 2016 Nationwide Australian Formula Shortage • 300 000 people affected • Six infant deaths, 54 000 babies hospitalized • 11 countries banned Chinese formula imports • Those prosecuted and convicted were jailed or given the death penalty • Shortage of infant formula nationwide in Australia. • Purchase limits imposed by the major retailers. • The concern is still real for consumers in China and Chinese-born mothers living in Australia 12Confidential © SCI 2017
- 13. Big Business +Big Opportunities = Criminal Infiltration Most substituted products: – Vanilla Extract – Maple Syrup – Wines – Juices – Coffee / Tea – Saffron – Honey – Milk – Olive oil These sorts of lists are built from reported case 13 http://www.cbsnews.com/news/60-minutes-agromafia-food-fraud/ FOOD FRAUD: GLOBAL PERSPECTIVE Confidential © SCI 2017
- 14. • FDA definesthis as economically motivated adulteration. • Australia tends to focus on IP (brand protection) and food counterfeiting. • Food Fraud is broader than this and refers to any fraud that happens within the food supply chain. • The focus (highest profile) is deceptive conduct, substitution and adulteration but also includes tax avoidance, money laundering and other organised criminal activities. In the context of AUSTRALIA à CHINA • EMA (Economically Motivated Adulteration) • EMS (Economically Motivated Substitution) 14 Source Supply Chain Consumer Confidential © SCI 2017 FOOD FRAUD: ONE OF THE SUPPLY CHAIN THREATS IN EXPORT MARKETS
- 15. RECAP- THE CONSUMER& THE PROBLEM 15 SOURCE (CHARACTERISTICS) MILK POWDER AUSTRALIA ORGANIC BRAND MILK POWDER CHINA • Milk Powder • ChinaD • Milk Powder • Australia • Organic • Brand W • Milk Powder • Australia • Organic • Brand D • Milk Powder • Australia • Organic • Brand W SUPPLY CHAIN CONSUMER $ $$ $$$$$ $$$ $$$$ $$$$$ D DISTRIBUTION W WHOLESALE Confidential © SCI 2017
- 16. Confidential © SCI2017 16 WHAT ARE THE CURRENT SOLUTIONS? China’s ‘diagou’ shoppers leading Australian retail drive The Sydney Morning Herald, 27 Jan 2016. http://www.smh.com.au/business/retail/chinas-daigou-army- plan-fresh-assault-on-our-stores--and-this-time-theyre-coming-for-our-cherries-20160126-gme8ec.html • Estimated 40,000 of these shoppers accessing AU retail outlets to supply their clients in China. • P2P approach where the client communicates with the buyer – often the buyer will show their client themselves removing the items from the shelf in AU. Daigou Personal Shopper Packaging-based traceability security systems Paper-based quality control and quality assurance traceability systems Unique-to-product barcode or other labelling Trackable QR code scanning to connect consumers with product information Security packaging seals ARE THESE SOLUTIONS ENOUGH?
- 17. SOURCE CERTAIN A NEW,BETTER WAY: VERIFIED SUPPLY CHAIN INTEGRITY Confidential © SCI 2017 8 VERIFIED SUPPLY CHAIN INTEGRITY FOR ALL SUPPLY CHAINS 1
- 18. WHO & WHATIS SOURCE CERTAIN INTERNATIONAL? Confidential © SCI 2017 18 • Source Certain International (SCI) is a global service business with global access to use the unique TSW TraceTM provenance (origin) process. This process comprises; a) Highly experienced and globally recognised forensic investigators and analytical scientists. b) Use of state of the art laboratory and analytical instrumentation to test products. c) A well established and recognised process for profiling (fingerprinting) products to determine or verify origin. • SCI substantiates the source of products and delivers “Verified Supply Chain Integrity”. • SCI by providing accuracy, clarity and transparency of origin claims builds confidence in supply chains. This confidence enhances brand and assists in management of brand reputation risks. • SCI can help develop confidence for all supply chain stakeholders and critically helps build trust with the consumer. • SCI offers a real, science based, security solution for supply chains to combat fraud and substitution.
- 19. Risk Management – Assistswith Managing Recall & Crisis, Supply Chain Threats (Economically Motivated Adulteration & Substitution, Fraud), System Verification Supply Chain Security – Surveillance: Independent third party presence within the supply chain Builds Trust with Consumers – Connects and communicates with consumers Compliance – Satisfy regulatory or other statutory requirements with respect to origin verification and declarations SCI VALUE PROPOSITIONS BRAND ENHANCEMENT, PROTECTION & COMPLIANCE 19 VERIFIEDSUPPLYCHAININTEGRITY Confidential © SCI 2017
- 20. HOW WE DOIT - REAL VERIFICATION 20Confidential © SCI 2017 A ROBUST SCIENTIFIC METHOD FOR THE DETERMINATION OF PROVENANCE
- 21. SCI ORIGIN TECHNOLOGY Whatis TSW Trace TM TSW TraceTM has been developed by TSW Scientists over the past 40 years. TSW TraceTM is a method that robustly determines the provenance of an item. TSW TraceTM uses a variety of scientific approaches to determine the fingerprint of a sample and link it to its origin. TSW TraceTM is routinely employed as a Forensic tool and is delivered by Expert Forensic Chemists and Investigators. Confidential © SCI 2017 21 SCI HAS EXCLUSIVE, GLOBAL LICENSE FOR APPLICATION OF TSW TRACETM TO ALL PRODUCTS TM
- 22. Confidential © SCI2017 22 SCI SERVICE VALUE TSW TRACE™: FORENSIC VERIFICATION • NO silver bullet solution to supply chain security and integrity. • Data based traceability is a minimum requirement. • Security labels, data tracking and secure packaging are part of a solution. – Risk of counterfeit labelling OR substitution and adulteration of products inside ‘authentic’ packaging. • Forensic verification of the product itself is an absolute way of linking a product to its source and build integrity and confidence. TM Source Certain’s REAL verification assurance that the actual product that has travelled through the defined supply chain can be physically linked, through scientific analysis, to its production source or origin is independent of any labels on packaging and the human intent to defraud. FORENSIC VERIFICATION
- 23. Confidential © SCI2017 23 Paper-based quality control and quality assurance traceability systems Unique-to-product barcode or other labelling Trackable QR code scanning to connect consumers with product information Security packaging seals SCI SERVICE VALUE SCI SERVICE vs PACKAGING-BASED SYSTEMS Packaging-based traceability security systems examples: Packaging-based traceability systems in no way lay claim to the integrity or authenticity of the actual product, only the packaging. • The packaging itself and any traceability information (labels, barcodes, QR codes) can be copied in implementation of counterfeiting strategies. • There is inherent potential for label duplication or substitution, including: – Direct duplication of ‘unique’ QR or barcodes, – Creation of false codes on duplicated packaging linking consumers to different and unrelated source verification information, or – Substitution or adulteration of a product through re-packaging false or fake product inside ‘authentic’ and ‘unique’ packaging. • Not all products are sold in packaging.
- 24. WHAT DOES SCIBRING TO SUPPLY CHAINS? 24 Farmers / Producers & Their Story Consumers & Their Need for Information Transparency & Integrity Confidence & Trust Confidential © SCI 2017
- 25. SOURCE CERTAIN SERVICES 25 SourceCertain Services fall within one of three categories: - Compliance with a Source Verification Standard - Statement of Compliance for production sources Verifiable supply chain integrity: - Source Check - Source Secure - Source Certified - Support service - Investigation Unit Confidential © SCI 2017
- 26. SOURCE CERTAIN SERVICES 2.SUPPLY CHAIN SECURITY Confidential © SCI 2017 26 • Risk Management • QA / QC Source Check Brand differential & value creation Source Secure Dynamic consumer communications Source Certified EXTERNAL COMMUNICATION - Value adding, mass communication options available. - Communicate that supply chain is secure. CONSUMER COMMUNICATION - Add-on to Source Secure Service. - Consumer facing, on product, Source Certified trademark. - Dynamic communication option for consumer regarding service and source of food specific to product and supply chain. INTERNAL COMMUNICATION - No external (consumer engaging) communication.
- 27. 27 Australian Food Products – Exportto China for sale via e-Commerce Example Products: Beef, Dairy, Wine SERVICE EXAMPLE AUSTRALIAN FOOD: E-COMMERCE IN CHINA Confidential © SCI 2017
- 28. 28 Objectives: 1) Secure theexport supply chain from Australian production sources to e-Commerce platform consumers in China for Australian food products. 2) Facilitate verification of Australian food product or batch identification (has the food product come from a covered supply chain source?) 3) Build trust with consumers by connecting them to the source of Australian food products. Supply Chain: Australian Farm/Supplier/ Producer Processing/ Packaging Distribution (Aus➤China) Consumer SERVICE EXAMPLE AUSTRALIAN FOOD: E-COMMERCE IN CHINA Distribution (E-Commerce) Confidential © SCI 2017
- 29. BUILDING THE SOURCESECURE SERVICE 29 1. Supply Chain Mapping & Risk Assessment • Definition of supply chain segments • Supply chain segment risk and threat analysis 2. Stakeholder Induction & Education Sessions • For supply chain participants • Outline of objectives of service and service activities • All stakeholders on notice 3. Supply Chain Communication • Inside supply chain communication strategy implemented • All stakeholders on notice of security strategy implemented 4. Reference & Verification Sampling • Independent sampling conducted by SCI • SCI staff present and visible in supply chain 5. Verification Testing & Reporting • Forensic testing of sample to verify source • Failed verification initiates investigation and further action 6. Consumer Communication • Source Certified TM option for service customers • Communicate directly with consumers • Provide consumers with information on supply chain security SECURING A SUPPLY CHAIN: SOURCE SECURE SERVICE COMPONENTS Confidential © SCI 2017
- 30. CONTACT INFORMATION 30Confidential ©SCI 2017 CORPORATE OFFICE (PERTH) 2/27 Clark Court Bibra Lake WA 6163 Free Call: 1300 872 233 Customer Service Locations SINGAPORE 7 Temasek Boulevard Suntec Tower One, 44th Floor SINGAPORE 038987 Call: +65 6430 6626 MORE INFORMATION www.sourcecertain.com CONTACT Email Enquiries: info@sourcecertain.com Cameron Scadding cameron.scadding@sourcecertain.com www.facebook.com/SourceCertainInt www.linkedin.com/showcase/15179871/