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Traceability at the interface between economics and the law
Innovating Food, Innovating the Law An interdisciplinary approach to the agro-food sector
Università Cattolica SC Piacenza, 13-14-15 October, 2011
Key word, Key concept
• Traceability between law and market
• Traceability, essential lever for the competitive advantage in the supply chain
• ICT, “conditio sine qua non” for implementation and utilization traceability
• The problem : upstream and downstream along the Supply Chain
• State of the art: difficulties for a perfect management of rapid alerts and delays in ICT
• Economic outlook: the critical economic scene makes it hard to find further investments for the best ICT management: the withdrawal for rapid alert is still very expensive
Reflexions plan • The two dimensions of traceability:
– the health “dimension” (quality control and “food safety”)
– the economic “dimension”, as a competitive market lever ( “the differentiation by value” according to M.PORTER e M.CHRISTOPHER)
• The health dimension is fundamental in international regulations (Reg 178/2002)
• The economic dimension is linked to the RETAIL FOOD STANDARD dictated by the downstream operators of the supply chain (BRC, IFS, GLOBALGAP)
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Implementation of traceability systems is linked to ICT spread. Without ICT, tracing is not possible.
This concept has never been written in REGULATIONS, but it’s the actual LEVER of the competitive advantage.
Traceability between LAW and MARKET
• Traceability is an obligation for the European legislator (it’s an essential food safety instrument)
• Traceability is a fundamental requirement in retail food standards (BRC, IFS, GLOBALGAP)
• Traceability is a fundamental requirement in the voluntary regulations of ISO systems (ISO 22000)
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CIES - Food Business Forum – it’s an independent network formed by 175 retailers and 175 suppliers in 150 countries worldwide
GFSI - Global Food Safety Initiative , project within CIES (created in Geneva, 2002)
Traceability for IFS, BRC and ISO IFS point 4.18 requirement K.O. n° 3 ITA “l’organizzazione deve definire un sistema di rintracciabilità che permetta
l’identificazione dei lotti di prodotto e la loro relazione con le partite delle materie prime, dei materiali di confezionamento primario e dell’unità di vendita destinata al consumatore finale, con le registrazioni relative alla fabbricazione e alla distribuzione”
BRC-FOOD point 2.13 fundamental ITA “l’azienda deve avere un sistema che abbia la capacità di rintracciare e seguire
tutte le materie prime (incluso il materiale di imballaggio primario) dall’ingresso in tutte le fasi del processo e della distribuzione del prodotto finito al consumatore”
ISO 22000 FSMs Food Safety Management Systems - 7.9 Traceability System ITA “L’organizzazione deve stabilire a applicare un sistema di rintracciabilità che
consenta l’identificazione dei lotti di prodotto e le loro relazioni con i lotti delle materie prime, con le registrazioni di processo e di consegna. Il sistema di rintracciabilità deve essere in grado di identificare i materiali in ingresso dal fornitore diretto e il percorso iniziale della distribuzione del prodotto finito.
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The state of the art: Is everything ok?
• In 2005 the regulation 178/2002 became mandatory…
• …and the food traceability has become a “conditio sine qua non” of the international relations (BRC, IFS, GlobalGap), regardless of the reg. 178 !
• The implementation of traceability systems seems (apparently) concluded …
• …but it’s not so simple to speak about the concrete reliability of these systems !!
• In general, in view of an Alert problem, many daily lots of products are withdrawn as a safety measure…
• …but in reality an efficient traceability system would noticeably reduce withdrawals (with a concrete saving of costs as a result)
Physical and information flows: the double challenge of traceability
• Since the implications of food risk management are increasing, a “new positioning” of the whole supply chain is required in relation to the information management
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Developing a traceability system along the supply chain consists in systematically connecting an information flow with a physical one
Widely shared opinions
• Traceability is an extraordinary competitive advantage instrument …
• a competitive advantage that is totally based on the information control and management
• with an important interaction with logistics…
• … and that requires an strong cooperation among all the operators (general exchange of data)
The additional (and expected…) advantages of traceability
• Improvement of client/supplier relationships
• Openness
• Supply Chain rationalization and consequent cut in costs
Why should we track & trace? To reduce the costs of product recall and
withdrawal in the management of rapid alerts
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• 1990: Benzene contamination
• Withdrawal of the whole production all over the world
• Operation cost: 150 thousand Euro
• The firm is taken over by Nestlè
• 1999: sulphur poisoning and presence of a fungicide
• Withdrawal of 50 million tins
• Operation cost: 1 million Euro
• Loss in the share price: around 50-70 million US$
• 2000: LYSTERIA MONOCITOGENES in pig by-products
• The companies Coudray and Système U were sued
Rapid alert: the difference between withdrawal and recall
WITHDRAWAL
• Every measure able to prevent the product retailing, display and offer to the consumer
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RECALL
• Every measure able to succeed in the removing of a dangerous product with which the supplier or the distributor has already supplied or provided the costumer
How to deal with a RAPID ALERT ?
• Consumer complaint (lot)
• Client complaint (bar code, pallet,…)
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• Identification of the suspect LOTS along the supply chain (stores, logistic platforms, etc.)
• WITHDRAWAL and RECALL
• Investigation among the suppliers
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Downstream traceability
Upstream traceability
Bottom-up traceability Top-Down traceability
Internal traceability
Internal traceability
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Raw
materials and
Packaging
Food industry
Logistic
platform
Logistic
platform
Store
Store
Consumer ISO 8402
“The ability to trace the history, application or location of an item or activity by means of documented recorded identification”
Downstream Upstream
Tracking & Tracing
source:
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LOGISTIC TRACEABILITY
Quantitative way
PRODUCT TRACEABILITY
Qualitative way
Ability to trace the location of products in
every point of the supply chain TO DEAL
WITH THEIR WITHDRAWAL
Ability to trace the origin and the features of products in every point of the supply chain TO
FIND THE CAUSES OF A QUALITY PROBLEM
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Store a) Platform
supplier
Store b)
Store b) = Lot n°2
Recall
Lot n°2 Recall
Lot n°2
Withdrawal
Lot n°2
Store a) = Lot n°1
Store b) = Lot n°2
Store a) = Lot n°1
DOWNSTREAM TRACEABILITY
source:
• The regulation 178/2002 states that every firm must be able to identify all its SUPPLIERS
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• The regulation 178/2002 states that every client-firm (that has received products from its SUPPLIERS) must be identifiable
DOWNSTREAM TRACEABILITY
UPSTREAM TRACEABILITY
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• DEVELOPING A TRACEABILITY SYSTEM IN THE SUPPLY CHAIN CONSISTS IN :
SYSTEMATICALLY CONNECTING AN INFORMATION FLOW TO A PHYSICAL ONE
TRACEABILITY AND I.C.T.
BUT THE FOOD SYSTEM RECORDS SEVERAL DIFFICULTIES !!
And information doesn’t pass from a ring of the chain to another…
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THE NEW PRINCIPLES OF TRACEABILITY
Identification
Connection
Data record
Communication
(receiving-conveying)
SO, WHAT’S A TRACEABILITY SYSTEM?
• An advanced system for the control of the in and out-flow of items
• Every firm must be able to:
• Identify and label items (common language)
• Optimize the receiving and delivery of items avoiding mistakes (speed and accuracy)
• Facilitate the information sharing to support the withdrawal and recall process
The preparing of the lot is the most critical point because it determines the precision of every traceability system.
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L. 123ABC link
PALLET / LOT
and PALLET
link
between LOT
and PALLET
• The pivot of a traceability system is the identification of the object to be traced: the LOT
• Every traced object has to be UNIVOCALLY IDENTIFIED. That’s the only way to reach all the data about the history, application and location of the LOT
• By Tracing the PALLET, it is possible to find the LOT to be recalled
Tracing the LOT: that’s the concrete aim of traceability!
Link PALLET-DESTINATION Link PALLET-DESTINATION
PRODUCTION AREA DISTRIBUTION AREA
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Risks of inefficient TRACEABILITY
• Is the ICT LINK between the product-LOT and the pallet in delivery guaranteed ?
• Is the transmission of EAN 128 Code guaranteed all along the supply chain ?
• Are the Lot-Codes always indicated on the DELIVERY NOTE (DDT) ?
Using too wide TIME WINDOWS (based on daily LOTS) for WITHDRAWALS is a sign of WEAKNESS:
the firm is not able to link the product-LOT with the PALLET-lot (generally a
multi-lot pallet) in the final part of delivery
CRITICAL POINTS
Vertical relationships
ICT management ICT integration Logistics
An imperative : revising the vertical relationships about traceability and logistics
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Quick adaptability
Quality / Safety
time costs