© Copyright IBM Corporation 2008
IBM Global Business Services
ECR Asia-Pacific Conference
Bangkok, October, 2008
“Establishing Trust Through Traceability”
Establishing Trust Through Traceability | June 15th, 2007 2 © Copyright IBM Corporation 2008
IBM Global Business Services
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
►42% of consumers buy different brands today versus 2 years ago … because they are looking for safer products
►47% are more concerned today about food safety than they were 2 years ago
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
Establishing Trust Through Traceability | June 15th, 2007 3 © Copyright IBM Corporation 2008
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82% ‘agreed’ that “claims made by food and drink products often exaggerated or unproven”
52% felt that ‘health boosting claims by food and drinks players were untrustworthy’
Consumer confusion around the efficacy of new product health and wellness claims have also eroded consumer trust
Calorie burning energy drink
Omega-3 fortified peanut butter
Heart healthy chocolate
Protein, fiber and Omega-3 fortified pasta
Cereal with probiotics and fiber for digestion
Source: “Coke Says Things Go Better with Green Tea:”, Financial Review, 10/23/06; www.cocoavia.com; www.smartbalance.com; www.kashi.comSource: “How To Exploit New Wellness Trends in Food”, Datamonitor, 09/06; “Consumer Skepticism of Healthy Food Claims – Another Report”, Nutraingredientsusa.com, 12/6/05; “Confusing Claims Harm Consumer Trust”, Food & Drink – Europe, 07/16/04; “2005 Consumer Attitudes Toward Functional Foods/ Foods For Health”, International Food Information Council, 07/06
Yogurt with probiotics for digestive health
Spread with Omega-3 oils for heart health
Antioxidant fortified cereal
Melatonin rich milk to aid sleep
Consumers confused by conflicting science
“The health and wellness market needs to focus on avoiding consumer confusion as a result of an abundance of scientific information…”
► 73% are skeptical at some level that branded food products deliver the health and wellness benefits advertised
2006 survey of consumer skepticism
2007 survey of health and wellness
Establishing Trust Through Traceability | June 15th, 2007 4 © Copyright IBM Corporation 2008
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… however a proliferation of corporate responsibility claims is only adding to the confusion and fostering distrust
Carbon Footprint Crisps
Carbon Neutral Beer
WWF alleges tens of thousands of hectares of rainforest in Indonesian National Parks cleared to grow coffee
Source: Brandweek, July 15, 2008; Financial Times, September 9 2006; Financial Times, January 17, 2007; www.CNNMoney.com
"Ethical" coffee is being produced in Peru, the world's top exporter of Fairtrade coffee, by labourers paid less than the legal minimum wage.
► 40% of consumers are negative or ambivalent about media attention regarding our impact on environment
► Only 13% of consumers believe companies adopt environmentally friendly practices because they care about the environment
Advocacy group claims retailer is misleading its customers by labeling non-organic foods as ‘organic’
Socially Responsible
H20
Establishing Trust Through Traceability | June 15th, 2007 5 © Copyright IBM Corporation 2008
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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
TrackTrace
Traceability systems can serve as that source of trusted information allowing CP companies to connect with concerned consumers, and realize other benefits
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 RancherDistribution
CenterBeef Processor
CP Manufacturer
Track and trace products and risks within own four walls to isolate and prevent issues
ComplianceEnsure compliance with both individual retailer mandates and government regulations
Brand EmpowermentBecome trusted source of information to the ‘Omni Consumer’. Empower brands to make new claims.
Risk MitigationProtection of brand through identification of risks and isolation of contaminated product
Supply Chain EfficiencyAccelerate product flows and reduce inventory levels through increased visibility to inventory and movements
Trusted information
Establishing Trust Through Traceability | June 15th, 2007 6 © Copyright IBM Corporation 2008
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Typically associated with food safety, most traceability systems today fall short of either protecting brands from recalls, or empowering them to make new claims
Current Gaps / Shortfalls
Data: Limited breadth and depth of information captured Critical information not available across organization Information not readily available to 3rd parties Data elements not standardized to facilitate sharing
and comparison Relevant data stored in disparate systems Data collected not aligned internally (i.e., MES data
does not align with ERP)Organization / Culture: Compliance driven mindset - only invest where
necessary Limited ability to track / trace outside own four walls Downstream tracking capability usually stronger
than upstreamProcess: Processes not standardized Process steps not effectively monitored Manual processes dominate data collection
Traceability systems capture, store, access, aggregate and communicate product, supplier, customer, handling and processing information to:- Credibly support new marketing claims, and- Prevent, identify and isolate product
contamination issues
Establishing Trust Through Traceability | June 15th, 2007 7 © Copyright IBM Corporation 2008
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Proactively engage with Traceability
stakeholders 4
Recognize that Traceability is complex, strategic undertaking Adopt an evolutionary path for of process, capability and tool development Establish clear executive level and functional responsibility and sponsorship Prioritize desired/required functionality leveraging assessment of current IT
and Supply Chain capabilities, and product/brand risks and opportunities
To realize the Full Value Traceability opportunity CP companies need to move forward on four imperatives, starting by aligning their Traceability capabilities with the requirements of the brand
Define Traceability vision, and create an
roadmap
Integrate the physical and informational
supply chain
Leverage Traceability to Protect and
Empower the Brand
Embrace whole supply chain perspective Identify stakeholders, define their Traceability related stake and develop
engagement plans that drive alignment with company vision Create a shared Traceability vision and development roadmap with vendors
and suppliers
Leverage distributed, standards based architecture for data management CP companies need to effectively and efficiently move product, and capture,
manage and communicate data about product(s) and their movements Establish one version of the truth for customer, product and supplier data Automate collection, analysis, and communication of data
1
3
2
Develop deep understanding of target ‘Omni Consumers’ Establish fact-based understanding of product/brand attribute risk elements Prioritize traceability requirements within existing product portfolio Define traceability requirements within new product development pipeline Ensure traceability investments deliver capabilities that support the brand
Establishing Trust Through Traceability | June 15th, 2007 8 © Copyright IBM Corporation 2008
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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 DataData
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 LogisticsLogistics
Grocery Retailer
Corn Farmer Cattle RancherDistribution
CenterBeef Processor
CP Manufacturer
Transaction & Historical Data
FirewallFirewallFirewallFirewall
FirewallFirewall
Fir
ewal
l
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
Establishing Trust Through Traceability | June 15th, 2007 9 © Copyright IBM Corporation 2008
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Ecosystem Enablers
Virtual Traceability ‘Ecosystem’
Creation of a virtual Traceability ‘ecosystem’ will accelerate realization of the Full Value Traceability opportunity
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 BrokersMedia
Local Communities
Co-Packers
CP ManufacturerBeef
ProcessorCattle
RancherCorn
Farmer
Government
Regulatory Agencies
Trade Associations
AuditorsInsurers
IT Service Providers
Equity Analysts
Non-Profits and NGOs
Executive Sponsorship & Support
Establishing Trust Through Traceability | June 15th, 2007 10 © Copyright IBM Corporation 2008
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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 RFIDInformation Center
Websphere PremisesServer
Send Data from RFID Capture device
RFIDData CaptureDevice
Send Production Dataand Master Data
ERP / MRP
Send production Dataand Quality Data
Manual input and/or IBMFood safety manager
CustomerRequest Traceability Data
Send Traceability Data
EPCIS
Establishing Trust Through Traceability | June 15th, 2007 11 © Copyright IBM Corporation 2008
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Multi Domain
ConfigurableUser Interface
Permitted Data Access
Electronic Data Exchange
Secure dataStorage
Web enabled
Trace with • Flexible search parameters• Bi-directional• Drill Down• Permitted Access
Product Overview
Establishing Trust Through Traceability | June 15th, 2007 12 © Copyright IBM Corporation 2008
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Build User Interface
Establishing Trust Through Traceability | June 15th, 2007 13 © Copyright IBM Corporation 2008
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Trace Icon is OpsSmart’sData Entry Form
Establishing Trust Through Traceability | June 15th, 2007 14 © Copyright IBM Corporation 2008
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Establishing Trust Through Traceability | June 15th, 2007 15 © Copyright IBM Corporation 2008
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Establishing Trust Through Traceability | June 15th, 2007 16 © Copyright IBM Corporation 2008
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Establishing Trust Through Traceability | June 15th, 2007 17 © Copyright IBM Corporation 2008
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Establishing Trust Through Traceability | June 15th, 2007 18 © Copyright IBM Corporation 2008
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Establishing Trust Through Traceability | June 15th, 2007 19 © Copyright IBM Corporation 2008
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FXA References
Betagro Biotec – Black Tiger Shrimp Broodstock Cameron farm – Hatchery and Nursery Surajthani Shrimp Farm Cooperative Tacheen Shrimp Farm Cooperative Thathong Shrimp Farm Cooperative Pakfood – 3rd largest manufacture Grampian Foods River Kwai Taniyama CPF Chantaburi Frozen Food – Part of Rubicon group Department of Fisheries Department of Livestock Development Department of Agriculture National Bureau of Agricultural Commodity and Food Standards
Establishing Trust Through Traceability | June 15th, 2007 20 © Copyright IBM Corporation 2008
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Change management
Management of processes in compliance with best practices Commitment to Quality and safety processes Transparency Willing to adopt new technology Management Commitment Tightly integration with suppliers and authorities Utilization of the information to productivity and efficiency
Establishing Trust Through Traceability | June 15th, 2007 21 © Copyright IBM Corporation 2008
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EPCIS: Enabling exchange of traceability information through global standards
System defined by GS1 for exchanging information on serialized items
Developed for RDIF technology, can be used to exchange associated information
Does not require RFID tagging. Can store the serial number in a SGTIN on a bar code
Serialization can be at the item, case, pallet or container level
IBM’s RFID Information Center supports all the EPCIS standard protocols
Supported by leading companies such as Carrefour, Henkel, Kraft International, Metro Group, Nestlé, Procter & Gamble, Rewe Group
Establishing Trust Through Traceability | June 15th, 2007 22 © Copyright IBM Corporation 2008
IBM Global Business Services
Where to go for help
Visit the IBM stand in the exhibition area Download the GS1 guides from
- http://www.gs1.org/productssolutions/traceability/
Download the “European EPC Guide for Retailers and Manufacturers”- http://www.gs1.eu/index.php?page=&tudasbazis=60&lister=47
E-mail- [email protected] [email protected]
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