“establishing trust through traceability”

© 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


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



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



… 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



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



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



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



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



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



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



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



Build User Interface



Trace Icon is OpsSmart’sData Entry Form



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



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



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



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]

“establishing trust through traceability”

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