IBM Global Business Services
“Establishing Trust
Through Traceability”
ECR Asia-Pacific Conference
Bangkok, October, 2008
© Copyright IBM Corporation 2008
IBM Global Business Services
Contaminations and recalls are changing consumer
perceptions and purchasing behaviors, and eroding
consumer trust
► 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
Rice
GMO
Lettuce Chocolate
E. Coli Salmonella
Chocolate Spinach Chocolate Onions
Salmonella E. Coli
Nuts
E. Coli
Mushrooms
E. Coli
Chicken Snack food Dog treats
Listeria Salmonella Melamine
Chicken CantaloupeGr. Beef
Bird Flu Salmonella
Coli
Tomatoes►Jalapeños
Salmonella
E. Toothpaste
Cantaloupe Toys Formula
Diethylene Glycol Salmonella Lead Melamine
Peanut Butter Baby Food Pet Food Canned Chili Gr. Beef
Coli
Salmonella Botulism Melamine? Botulism
2006
2007
E. Beef
Pork
E. Coli LIsteria
2008
Source: IBM research, IBM survey of U.S. and UK consumers; Fortune, July 16, 2008
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Establishing Trust Through Traceability | June 15th, 2007
© Copyright IBM Corporation 2008
IBM Global Business Services
Consumer confusion around the efficacy of new product
health and wellness claims have also eroded consumer trust
► 73% are skeptical at some level that branded
food products deliver the health and wellness
benefits advertised
Calorie burning
energy drink
Cereal with probiotics
and fiber for digestion
Antioxidant fortified
cereal
2006 survey of consumer skepticism
 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’
Yogurt with probiotics
for digestive health
Spread with Omega-3
oils for heart health
Omega-3 fortified
peanut butter
2007 survey of health and wellness
Heart healthy
chocolate
Protein, fiber and
Omega-3 fortified pasta
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…”
Source: “Coke Says Things Go Better with Green Tea:”, Financial Review, 10/23/06; www.cocoavia.com; www.smartbalance.com; www.kashi.com
Source: “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
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… however a proliferation of corporate responsibility claims
is only adding to the confusion and fostering distrust
"Ethical" coffee is being produced in Peru, the world's top
exporter of Fairtrade coffee, by labourers paid less than the
legal minimum wage.
Carbon Footprint
Carbon
Crisps
Neutral Beer
Socially
Responsible
H20
WWF alleges tens of thousands of hectares of rainforest in
Indonesian National Parks cleared to grow coffee
► 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’
Source: Brandweek, July 15, 2008; Financial Times, September 9 2006; Financial Times, January 17, 2007; www.CNNMoney.com
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Traceability systems can serve as that source of trusted information
allowing CP companies to connect with concerned consumers, and realize
other benefits
Brand Empowerment
Supply Chain Efficiency
Risk Mitigation
Compliance
Become trusted source of
information to the ‘Omni
Consumer’. Empower
brands to make new claims.
Accelerate product flows and
reduce inventory levels
through increased visibility to
inventory and movements
Protection of brand through
identification of risks and
isolation of contaminated
product
Ensure compliance with
both individual retailer
mandates and government
regulations
Trusted information
Fertilizers
Antibiotics
Ingredients
Logistics
Logistics
Logistics
Corn
Farmer
Logistics
Cattle
Rancher
Packaging
Logistics
Beef
Processor
Logistics
Ingredients
CP Manufacturer
Logistics
Trace
The ability for each member of a
supply chain to trace the ownership
and characteristics of ingredients,
packaging and products backwards
Logistics
Track and trace products and
risks within own four walls to
isolate and prevent issues
Distribution
Center
Grocery
Retailer
Logistics
Track
The ability for each member of a
supply chain to track the movement of
ingredients, packaging, and products
forward through the supply chain
Source: Economic Research Service, United States Department of Agriculture
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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
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
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Establishing Trust Through Traceability | June 15th, 2007
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 upstream
Process:
 Processes not standardized
 Process steps not effectively monitored
 Manual processes dominate data collection
© Copyright IBM Corporation 2008
IBM Global Business Services
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
1
Leverage Traceability
to Protect and
Empower the Brand
2
Define Traceability
vision, and create an
roadmap
3
4
7
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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
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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
Integrate the physical
and informational
supply chain
 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
Proactively engage
with Traceability
stakeholders
 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
Establishing Trust Through Traceability | June 15th, 2007
© Copyright IBM Corporation 2008
IBM Global Business Services
Full Value Traceability systems capture, a) product movements, b)
attribute changes, and c) processing activities across and within the
supply chain
Each company maintains its own product information and record of transactions,
making that information available on a permission basis to stakeholders
Fertilizers
Antibiotics
Ingredients
Logistics
Logistics
Logistics
Corn
Farmer
Cattle
Rancher
Logistics
Data
Data
Transaction &
Historical Data
Firewall
Track and trace products and
risks within the four walls to
isolate and prevent issues
CP Manufacturer
Logistics
Data
Data
Firewall
Firewall
Virtual Traceability
System
Establishing Trust Through Traceability | June 15th, 2007
Distribution
Center
Logistics
Firewall
Rapid communication of essential data
facilitated through open-standard software
and adoption of industry ID standards
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Ingredients
Logistics
Beef
Processor
Firewall
Logistics
Packaging
Grocery
Retailer
Logistics
Data
Data
Firewall
Firewall
Data security maintained via encryption,
restricted password access, etc…
© Copyright IBM Corporation 2008
IBM Global Business Services
Creation of a virtual Traceability ‘ecosystem’ will accelerate
realization of the Full Value Traceability opportunity
Each stakeholder of the Virtual Traceability ‘Ecosystem’ plays a role
empowering and protecting the brand
Virtual Traceability ‘Ecosystem’
Direct Supply Chain
Corn
Farmer
Cattle
Rancher
Beef
Processor
CP
Manufacturer
Distribution
Center
Auditors
Grocery
Retailer
Insurers
Creditors
Non-Profits and
NGOs
Regulatory
Agencies
IT Service
Providers
Logistics Service
Providers (LSP)
Advertising
Agency
Packaging
Suppliers
Media
Co-Packers
Food Brokers
Government
Trade
Associations
Equity Analysts
Local
Communities
Consumers
Protect &
Empower
Brand
Shoppers
Influencers
Common Data Standards
Distributed IT Infrastructure
Ecosystem
Enablers
Executive Sponsorship & Support
Stakeholders with critical role protecting or empowering the brand
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Establishing Trust Through Traceability | June 15th, 2007
© Copyright IBM Corporation 2008
IBM Global Business Services
IBM is working with partners such as FXA to create a
complete
traceability solution
FXA IBM Scope of Work
Request Traceability Data
Customer
Send Traceability Data
EPCIS
Websphere RFID
Information Center
Send production Data
and Quality Data
Request
Traceability
Data
Send
Traceability
Data
Send Production Data
and Master Data
ERP / MRP
Manual input and/or IBM
Food safety manager
Websphere Premises
Server
Send Data from RFID Capture
device
RFID
Data Capture
Device
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IBM Global Business Services
Product Overview
Electronic Data
Exchange
Secure data
Storage
Web enabled
Configurable
User Interface
Multi Domain
Permitted Data Access
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Establishing Trust Through Traceability | June 15th, 2007
Trace with
• Flexible search parameters
• Bi-directional
• Drill Down
• Permitted Access
© Copyright IBM Corporation 2008
IBM Global Business Services
Build User Interface
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Trace Icon is OpsSmart’s
Data Entry Form
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IBM Global Business Services
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IBM Global Business Services
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IBM Global Business Services
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IBM Global Business Services
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Establishing Trust Through Traceability | June 15th, 2007
© Copyright IBM Corporation 2008
IBM Global Business Services
FXA References
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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
© Copyright IBM Corporation 2008
IBM Global Business Services
Change management
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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
© Copyright IBM Corporation 2008
IBM Global Business Services
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
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Establishing Trust Through Traceability | June 15th, 2007
© 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
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http://www.gs1.org/productssolutions/traceability/
 Download the “European EPC Guide for Retailers and Manufacturers”
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http://www.gs1.eu/index.php?page=&tudasbazis=60&lister=47
 E-mail
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chris.cave.jones@sg.ibm.com
chattau@fxagroup.com
Establishing Trust Through Traceability | June 15th, 2007
© Copyright IBM Corporation 2008