Produce Business | January 2008

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Traceability: Realistic action steps

What retailers, suppliers and distributors can do — and need to do — right now to make it work.

There are four overriding reasons why it behooves retailers, foodservice operators, suppliers and distributors to implement traceability measures:

1. The devastating and potentially deadly consequences of not doing so, as epitomized by the spinach E. coli 0157:H7 crisis and exorbitant, blanket recalls;
2. The Bioterrorism Act legally mandates it;
3. Already existing global standards can be adopted using current technology and business systems right now;
4. Not totally implementing these measures will sever the traceability information chain.

If the information chain breaks down, the ability to accurately trace product both backward to its original source and forward to its end destinations can be compromised or lost completely.

According to Bryan Silbermann, president of Produce Marketing Association (PMA), Newark, DE, “Traceability is our industry’s Achilles heel. Our food system is incomplete.” Very few companies wield the necessary building blocks to sufficiently and comprehensively track product. The hold up is not about technology, it’s about changing business practices, he adds.

The spinach crisis served as a caustic awakening of the industry’s deficiencies in quickly and effectively tracing product backward and forward to know definitively where it came from and where it went at every step along the supply chain.

A large percentage of retailers and suppliers, when queried in PMA surveys, believe — incorrectly — that they have sufficient traceability systems in place to avert a food-safety crisis, according to Gary Fleming, PMA vice president of industry technology and standards. In reality, he says, some of these systems may work well for category management and other internal purposes but would be futile in providing the needed information to effectively track product through the supply chain during an emergency.

The definition of traceability itself gets confused and co-mingled with all sorts of other issues, notes Fleming. Simply put, traceability is the ability to trace back product to its source and trace forward to where it is in the supply chain.

Since the spinach crisis, the concept of traceability has mutated into three different areas, he adds.The first is foodborne illness prevention, most commonly associated with resources used in response to outbreaks. The second is how product is traced back through the supply chain in the event something slips through the cracks. The third — which people call traceability even though in actuality it’s not — is certifying handling practices are safe, insuring farms are audited on a regular basis and managing that data.

Traceability is a tool for food safety, but tracking product is not necessarily done for food safety, says Jane Proctor, director of industry technology and standardization, Canadian Produce Marketing Association (CPMA), Ottawa, ON. The myriad of traceability solutions are fundamentally the same in principle — a means to capture, store and access standard data. Barcodes and RFID technologies enable that end. Traceability locates a product that has a food-safety problem but doesn’t address how to fix that problem or the methodology for determining the scope of a product recall, she notes.

LEAVING OUT TRACEABILITY

Food-safety concerns have enveloped the produce world, driving buyer/seller coalitions to implement industry-wide solutions. The main focus up to this point has been on bolstering Good Agricultural Practices (GAPs) in the field and processing plants and in guaranteeing everyone abides by them. Industry leaders have plowed money into food-safety science and research institutes to help all companies better understand and tackle the causes of foodborne illnesses.

While these actions are important, some produce executives argue the industry has “dropped the ball” when it comes to the capability to efficiently and rapidly trace and recall product if an outbreak occurs.

“Food safety is not just about audits and testing because if there’s a problem, you have to be able to isolate it quickly; otherwise you’re putting lives at risk and your brand and products are subject to degradation,” says Martin Kupferman, business development director for North America at Buenos Aries, Argentina-based FQcode, an international traceability solutions company specializing in the fresh produce industry.

FQcode has a U.S. office in Miami, FL. FQcode developed a highly sophisticated and integrated supply-chain traceability system used extensively in Argentina, where tracking gets down to the individual item level. Clients that can quickly access data themselves can choose to provide selective access to other parties, including the government, in pursuit of pinpointing the problem.

“Companies can be very shortsighted about traceability,” says Leonardo Paniceres, FQcode CEO. “Blanket recalls are extremely damaging. The FDA [Food and Drug Administration] cast the broadest net during the spinach crisis because the problem couldn’t be resolved. Once the industry can surgically portion out the problem, it will regain control.”

REDIRECT AND SIMPLIFY

For many, the concept of seamless traceability remains complex, high-tech, costly and intangible. It seems hopelessly tied to an industry-wide solution, unattainable due to both the challenges of perishable product in a disjointed global infrastructure and the acknowledgement that all companies have to participate. At each step along the supply chain, companies need to identify, capture and store standardized product data, identifying and re-identifying that data — when mixing lots, combining products, crossing borders, blending and mutating through variable supply sources and customers, such as terminal markets, international brokers and distributors to retail and foodservice.

Traceability as generally practiced in produce for category management, efficiencies, shrink reduction, etc., can work exceptionally well internally and with companies that are vertically integrated or deal in a highly controlled and predictable supply chain. This is one reason why consumer products companies are so traceability-savvy.

Since the industry, by its nature, will never be able to totally eliminate the chance of an outbreak, it must be able to significantly reduce the consequences when one occurs. Bruce Peterson, president and CEO of Naturipe Farms, LLC, Naples, FL, and former senior vice president of perishables at Wal-Mart Stores, Inc., Bentonville, AR, has vehemently advocated redirecting efforts to insure seamless supply -chain traceability.

In 2007, Peterson left Wal-Mart and jump-started a robust traceability initiative with Michael McCartney, principal at QLM Consulting, Sausalito, CA, before assuming the presidency at Naturipe.

This past fall, PMA, CPMA and Washington, D.C.-based United Fresh Produce Association announced a joint Produce Traceability Initiative to drive broad adoption of consistent traceability practices throughout the produce supply chain. More than 30 companies, including retailers, foodservice operators and suppliers, have signed on to the steering committee. Cathy Green, COO at Food Lion, Salisbury, NC, is committee chair.

The Initiative’s sponsoring organizations have invited other stakeholder associations representing key business segments of the North American food industry to participate, including Food Marketing Institute (FMI), Arlington, VA; Canadian Council of Grocery Distributors (CCGD), Montreal, QC; Canadian Horticultural Council (CHC), Ottawa, ON; International Foodservice Distributors Association (IFDA), Falls Church, VA; and the National Restaurant Association (NRA), Washington, D.C.

“The $64-million question we are all trying to answer is how do we get to full chain implementation,” notes CPMA’s Proctor. “Global standards exist right now and I’m confident they're robust enough. If we stumble upon a glaring omission, we’ll address it but I don’t anticipate that. We’re not intent on creating new standards. National traceability guidelines are built on the global standard. I know many people, particularly on the supply side of the chain, view traceability requirements as a daunting task — one more thing they have to do.

“People are already capturing a lot of thisinformation for other processes and needs. Certainly the global trade identification number [GTIN] is a global standard and absolutely critical. We have a lot of proprietary shipping numbers that don’t mean anything to anyone else. That’s probably the biggest gap in the industry,” she adds.

If a company has standardized barcodes on cases and pallets, it’s a matter of transitioning a natural business practice, organizing and making sure data is easily pulled and figuring out a cost effective way to apply the information, re-palletize, re-scan, etc.

“Resource implications to implement traceability will vary greatly depending on what information you’re already collecting and what processes you have in place. I don’t want to make a statement that oversimplifies it,” Proctor emphasizes. “If you don’t have capacity in the warehouse to reapply barcodes, track and store information, you’ll need to do more.”

IMMEDIATE ACTION STEPS

In order to trace product seamlessly through the supply chain, the product needs to be assigned a unique identification number, in the same way each American is assigned a Social Security number.

“We all ought to talk in GTIN,” says Kupferman. “GTIN is a convention that isused extremely broadly in packaged goods for category management. Traceability is established in many other industries, such as meat, airplane manufacturing and pharmaceuticals. Unit boxes in packaging lend themselves to these codes, but the produceindustry hasn’t adapted to GTIN. It’s important to work with companies that understand the industry and can train people with that mindset, rather than attempting to transpose other technologies and cultures here. No effective traceability solution can be had until we have unique codes on separate produce items. It behooves one to go to the smallest levels realistically possible — cases or clamshells. It will be awhile until we can tell where that individual banana came from, but it is a goal.”

At minimum, says Fleming, three critical pieces of information must be included on a product: a standardized 14-digit GTIN number, which, for example, would be the same for different case configurations so everyone is speaking and understanding the same language, a lot number, either embedded in the GTIN or assigned separately and a harvest/ pack date. From that point on, every company handling the product through the supply chain needs to read the ID, capture the information and store it so it can be easily and quickly retrieved in an emergency.

A product needs to be uniquely accounted for in the chain but also re-identified as it takes on new forms — if it is co-mingled with other product; among multiple lots, fields and farms; in a bagged salad blend at a processor; as it joins other cases on a pallet; is trucked to a distributor; or fanned out to different retail warehouses, foodservice operators, etc., again and again — with companies capturing and storing that information every step along the way.

“The cold, hard reality here is that unless those three pieces of information at the case level are included, the traceability chain will be compromised,” says Fleming.

The key is to have a traceability system that monitors every single act of modification and assigns it a unique ID along the supply chain, says Kupferman, noting that FQcode traces down to the individual person who packs a case of produce. If a packer has a problem, it’s useful to be able to isolate cartons that may be susceptible because she packed them. If a truck has a refrigeration problem, produce from different lots needs to be identified. Many systems cannot capture all the data necessary to recap the product’s life cycle in the event of a food-safety issue. For example, some solutions will identify the lot number or get down to the cases, but tracing each case as it is re-palletized is very unusual, he contends.

Fragmentation is the reason the industry needs a traceability system — problems can crop up anywhere along the line amid multiple suppliers and distributors. It requires will, budget and determination, which up until now have been lacking. That isn’t to say any individual company can’t benefit by having its own traceability solution, but it’s not addressing true traceability unless the solution is implemented throughout the supply chain, claims FQcode’s Kupferman.

“If you’re a retailer,” says PMA’s Fleming, “you need to be able to read and store these three pieces of data in your system and readily access them. You won’t have that case sitting around when you take product out of it.” Unfortunately, he adds, very few retailers are doing this. “In surveys we’ve conducted, only 41 percent of retailers scan barcodes at the case level, and even then, these retailers aren’t storing the data the supplier provides.”

“GTIN is huge in terms of product traceability,” says Michael Agostini, merchandise manager, produce/floral, Wal-Mart Stores. “Last summer there was a warning on a particular cantaloupe from Mexico. We didn’t buy from that supplier, but we have secondary suppliers, and like other retailers, couldn’t be sure if we might have bought some of that product. We could have systematically found it with GTIN.”

CASE CONSCIOUS

Traceability can work through the supply chain down to the case level if everyone in the supply chain does a few fundamental steps. “It would be nice if every head of lettuce had this unique ID information, but while the technology is there, this is not a cost-effective solution, easily implemented industry-wide right now,” says Fleming.

Item barcode technology, such as GS1 DataBar (formerly called RSS or reduced space symbology barcodes), exists but has obstacles when using it for traceability. Size of the sticker is a challenge — the GTIN already has 14 numbers. “If that sticker gets bigger, it means a complete change over of label stock, and new machines to hold the bigger stickers. Also the sheer logistics of putting lot/harvest/pack date numbers on the stickers will slow production down significantly,” he claims.

Operational issues on bulk items for traceability still need to be addressed. It’s always a challenge to identify item to case. It would slow production down tremendously and the cost would be exorbitant to get that information on an apple, says Fleming.

A fundamental problem is retailers comingle apples from different suppliers in one bin. Merchandising by variety helps, but it’s still a bit of a guessing game unless retailers are willing to separate inventory by grower and shipper. The vendor community has taken the focus off the real problem by discussing the complexities of managing data, when the issue is having the basic fundamentals on the product.

In the last few years, scanners for GS1 have been developed. Still, some retailers don’t realize it will not scan on their equipment unless they convert the system, says Tim Gagnon, director, business development, C.H. Robinson Worldwide, Eden Prairie, MN. The DataBar can provide a more accurate and faster consumer checkout, giving the retailer greater confidence in the information for category management, shrink reduction, improved cashier productivity and enhanced traceback capability. The vendor can scorecard products with a company prefix and enable improved category management methods. In the transition, the current PLU can be put on the label as a fallback, he adds.

Retailers are investigating, and some areimplementing, DataBar for scanning atpoint of sale. It allows them to identify the supplier, grower or distributor, but PLUlabeled red delicious apples are the same no matter where they came from, explains Stephen Arens, senior director, GS1 US Bar- Codes and eCom Group, Lawrenceville, NJ. “Our concern is people think DataBar is the answer for traceability. When it runs through the system, it’s being used as a tool for category management and controlling shrink, to better identify which supplier is a better performer, to get quicker information and reduce key-in errors. People aren’t implementing versions of DataBar with the information for traceability right now.” Is this acceptable to the retailer? Can the retailer handle the changes to its POS system and back-end system?

Certain customers are not comfortable with GS1 DataBar, says Kelly Kirschner, senior marketing manager, Sinclair Systems International, Fresno, CA. Still, numerous suppliers and retailers are experimenting with the technology. Wal-Mart, Kroger and Loblaws are among them. Tesco is adapting its own DataBar systems, she says.

“For packers and suppliers, having to incorporate both traditional methods and GS1 is not as efficient. If the industry adapts GS1 faster, it would help everyone,” she adds.

It’s a mistake to look at this as a Wal-Mart or Loblaws initiative. For it to work it needs traction, explains Wal-Mart’s Agostini. Wal-Mart has been piloting the technology on Washington apples for over a year. “We operate in a multi-source environment,” he notes. “We may have five or six suppliers for Washington apples. As we roll out individual GTINs, we have to group together to analyze item/ category performance.”

Wal-Mart chose to start with Washington apples, a business segmented by suppliers and warehouses, with the luxury of a brand base to compare. “We don’t have the systems in place to handle multi-source supply. It’s a challenge. We are not at all dictating that suppliers have to go to DataBar, but we are cognizant to move with people that can do it. Wal-Mart just began rolling out DataBar stickers on bananas in limited distribution centers and plans to expand to more items over the next three years, prioritizing item rollouts based on the benefits and complexity of execution, Agostini explains.

DataBar technology provides a viable application for embedding information such as sell-by-dates and lot numbers, he adds. “It’s here and works and creates a bridge until other technology takes us to another place.”

However, adds Agostini, “Items, such as bulk green beans, can’t hold the sticker. For some things, we don’t have the answer. If you could package those items, DataBar would work, but for some items, that isn’t what you want for a fresh image.”

There are some impediments with applying stickers on fruit, such as the curvature, texture and surface tensions affected by cold and wet packing. These are issues you don’t have with a box of cereal, says Sinclair’s Kirschner, noting that in most cases the problems can be overcome.

We’re just scratching the surface with DataBar technology for traceability at the item level, according to David Bright, market research director, Dole Fresh Fruit Co., Westlake Village, CA. “Now, once product is taken out of the box, we lose that traceability.”

REPACKERS

PMA’s Fleming presents this possible situation: “If I’m a packer and get three different products from three different suppliers, each supplier is responsible for putting on the GTIN, lot and date and then storing that information. “If those products are commingled to create a new item, the packer has to assign a new GTIN number to that item, track it and record it with all the corresponding lots and harvest dates. Now there’s a new GTIN, new lot number and new pack date on that case. That’s what is tracked,” he continues. “Right now, not everyone is doing a good job with track and trace.

If the grower/shipper is not providing that information, no matter how good you are as a distributor/packer, the chain is broken. All it takes is one person in the supply chain not storing the information and the chain is broken.”

Capturing and storing information doesn’t require everyone to use the same software. Each company should be able to organize and access information for all its entities so if it gets a call about an outbreak, it can pull up the information in seconds. This has to be available in 24 hours.

In the spinach crisis, retrieving information took 21/2 weeks. The companies didn’t know where the product came from and had a cumbersome job sorting through stacks of information and gathering all this data. They didn’t even know where all the information was kept. In a new world, everyone will have a database with key pieces of information they can retrieve in seconds.

If you didn’t have a lot number, that whole GTIN would be implicated. “If you didn’t have a harvest/pack date, a huge amount of product would be implicated. At the packer level, you can narrow down to the pack date, if not the specific day and crew member.” Fleming concludes.

SOFTWARE GALORE

From a software standpoint, many companies can help organize data. “Most of the software packages are trying to solve entire world problems. You don’t need that as long as you can manage recalls,” says Fleming. Some want to store so much data that it is too much of a burden on the retailer or supplier, he says. “Having a place holder for that additional information is great, but software is there to organize data and provide quick and easy access — so beware of creating too complicated a system.”

Much of the software offers similar capabilities. “It can be deceiving for a company to say, ‘We have a traceability solution.’ It’s a part of a solution. Being able to quickly access and analyze data is very important, but it is only one piece of the puzzle. Other supply-chain members must also participate. If they don’t use that software, that company can’t claim a traceability solution,” he adds.

“If you also want to identify the problem, extra information can be put in, ranging from what type of water was used to treat the product to the fertilizer used. It’s one thing to trace back to the source and pull product off the shelf. The first thing is to get tainted product out of the system,” he continues. “Once you are comfortable no consumer will be harmed, the next step is determining what went wrong, looking at all the issues with water treatment, field proximity to cattle, etc.”

Getting information on the case doesn’t require anything new that growers/shippers don’t already have. They put a number on the case today. It just means exchanging that number for a GTIN; no new technology is needed. The hardware required down the supply chain is also available, he contends. It’s just a matter of changing behavior to store that information. Those retailers and distributors that don’t have barcode readers would have to get them.

Manual entry produces errors and takes a lot of time and expensive labor. Right now, barcodes and RFID are the most efficient ways to trace product. “The supply chain doesn’t have to view this as complicated. You don’t necessarily need uniqueness down to the item level. If you can afford to ID down to one square foot in the field, that’s great, but let’s deal with the minimum of what we need to trace back,” advises Fleming.

“People have a false perception that traceability in the produce industry is a monumental undertaking. The reality is we can track product back using exact science from the case to the actual lot providing everyone uses these three pieces of information and is compliant with the one step up, one step down requirements set forth in the Bioterrorism Act,” he emphasizes.

“It’s not that complicated. The traceability vendor community is making it more complicated. They create all these high-tech options and a myriad of bells and whistles. Some are peripheral and that’s fine,” Fleming concludes. “You could incorporate those if you want, and it’s great if you can afford to. They might have additional information to isolate into the mix, but at what cost and what benefit?”

Publicated in January, 2008, Produce Business Magazine