Pilgrim's Pride to Reduce Weekly Chicken Processing Pilgrim's Pride Corp. will reduce weekly chicken processing by 5 percent year over year, or approximately 1.3 million head per week, by January 2007 as part of its continuing effort to better balance supply and demand amid declining chicken prices and sharply higher costs for corn. "The U.S. chicken industry is subject to volatility and there are a number of factors impacting near-term market conditions. Although industry dynamics improved in the spring and early summer of 2006, market conditions have weakened over the past few months, as evidenced by a decrease in prices for boneless breast meat and leg quarters, as well as a sharp increase over the past two months in the price of corn," says O.B. Goolsby Jr., Pilgrim's Pride president and chief executive officer. The reduction began with eggs set as of October 30, 2006, and will take effect with weekly processing beginning January 1, 2007. The company said the reduction will remain in effect until average industry margins return to more normalized levels. Bravo! Brands Enlists Media Planning Partner Bravo! Brands Inc. enlists Carat USA to handle its consumer media buying and planning account. Carat USA will be responsible for media planning and buying for the portfolio of Slammers and Bravo beverages -- flavored milk products that are produced aseptically, have no preservatives, do not need to be refrigerated until opened, and have a shelf life of six months before being opened. Planning and buying will take a multi-media approach, including spot and national television, radio, outdoor, print and new media. Creative for media is currently being handled in-house. Roy Warren, CEO of Bravo! Brands Inc., says, "We have ambitious plans to grow our brands, and Carat is well-suited to help us achieve our objectives. We were particularly impressed by the agency's innovative thinking, and buying expertise." Warnaco to Sell Ocean Pacific Brand to Iconix Iconix Brand Group Inc. enters into a definitive agreement to purchase the brand Ocean Pacific (OP) from The Warnaco Group Inc. for $54 million in the aggregate. The OP brand is a global action sports lifestyle brand that is more than 35 years old and currently has 30 license agreements, half of which are international. Primary licensed categories include footwear, kid's apparel, eyewear, fragrance, skateboards and surfboards. As part of the transaction, Warnaco will be granted a license from Iconix to continue to manufacture and sell women's and junior swimwear. "As part of our strategy to increase shareholder value, we continually assess our portfolio of brands and licenses to ensure we focus on our strongest platforms for growth," says Joe Gromek, Warnaco's president and chief executive officer. "While we have made significant progress in the restructuring of the OP business, the sale will allow us to increase our attention on our core brands and on our international opportunities, which are the key drivers of our growth strategy. Additionally, given the strength of the OP brand, we are pleased to maintain our association with the OP swimwear business." |
Metro Advances RFID in Europe
An RFID test conducted in a Metro distribution center in Unna, Germany, is helping to advance the use of RFID for case and pallet identification in Europe. Metro arranged for the test and prepared the facility in expectation of the positive results. Reva Systems, a provider of RFID network infrastructure, and Impinj, a semiconductor and RFID technology provider, supplied the RFID technology to facilitate the test. "The trial was very successful," notes Dr. Gerd Wolfram, managing director of MGI Metro Group Information Technology. "This is an important finding for supply chain applications in DC's, because it means that both stationary dock door readers as well as mobile readers on forklift trucks or in handhelds can be synchronized to use the same channel." During the test, 36 dock doors were simultaneously loaded with pallets containing 62 cases of a variety of products. "The read rate and accuracy met all the criteria for a successful operation," Wolfram notes. The tests demonstrated average tag read rates between 98 and 99 percent. Until now, time constraints and bandwidth regulations have inhibited widespread RFID usage with a large number of simultaneous readers. Metro initially got involved in this project in January 2006, and with positive trial results in hand, expects to draft a technical specification document for manufacturers by early 2007. "For us as a retailer this is especially important," Wolfram notes, "because apart from our own RFID roll-out we depend on our suppliers to use the technology so that all partners involved benefit from the RFID-enabled supply chain." J. Jill to Improve Retail Order Fulfillment
J. Jill chooses AL Systems DynaPack to improve order fulfillment and productivity. The proven DynaPack technology, already in use for more than 10 years in J. Jill's parent company, Talbots, is expected to increase order accuracy and fulfillment rates, while reducing labor costs and time to shipment. J. Jill's main focus is to eliminate errors and provide outlets with the correct merchandise in a timely manner. Bass Pro Shop Overhauls POS
Bass Pro Shops collaborates with PCMS and IBM to overhaul the sales experience at its 34 stores. Scheduled for completion in early 2007, the installation of 10 to 50 POS terminals per store will allow Bass Pro Shops to efficiently manage in-store promotions using IBM's Store Integration Framework and PCMS Vision BeanStore. The Java-based BeanStore application will facilitate checkout along with sales of large-ticket and customized items. The project also includes an upgrade to IBM's SurePOS 700 POS terminals.
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Tackling the Top Track and Trace Myths By Bill Gillmor, Global Consumer Products Industry Leader, IBM As I write this article at least one person has died and more than 60 have been hospitalized as a result of consuming E. coli contaminated spinach. The FDA, state regulators, retailers, farmers and spinach processors are all struggling to locate the source of the contamination and to identify the affected lots. Their efforts to save lives and minimize costs are being hindered by the lack of an effective Track and Trace ("T&T") system. In this article we address the four primary myths commonly associated with T&T and that currently restrict investment in this essential capability. T&T systems vary in complexity but all consist of two separate, but linked, capabilities. All supply chain members need the ability to track traded items as they move through the supply chain and to trace the ownership of all ingredients, raw materials, packaging and the finished product all the way to the consumer. The phrase 'farm to fork' is sometimes to describe a comprehensive T&T system. Myth 1: Track and Trace is regulation and mandate driven. Many of the current discussion around T&T focus on government regulations, and to a lesser extent retailer mandates. While these regulations and mandates will likely expand and increase, ultimately it is consumers that are driving T&T activity. Today's consumers are demanding detailed information about who made a product, where it came from, and what is in it. In parallel consumer preferences and segments are changing at a frenzied pace. The expanding number of consumer segments is a leading driver behind the exponential increase in consumer driven product information demands. In addition to wanting to know a product's caloric content, health conscious consumers now demand data on its trans-fat, sodium, cholesterol, fiber, calcium and whole wheat content. Organic consumers demand information on hormones, pesticides, antibiotics, GMO's and the sustainability of crops and farms. Further fueling the demand for product information is the growing list of food safety issues such as E. Coli, salmonella, mad cow, bird flu and potential allergens. Consumer demands for information are very real, are here today and their impact can be dramatic. Sales of both Coke and Pepsi in India, a $1.6 billion market for these two companies, plummeted in August of this year when consumer concerns about pesticide levels prompted widespread protests and outright bans. Cadbury was impacted when a salmonella contamination prompted the June recall of over a million candy bars at a cost of more than $37 million. In addition to the financial impact Cadbury was subjected to severe UK government criticism for being slow to inform authorities about the contamination. T&T can play a critical role mitigating the impact of such situations - helping consumer products (CP) companies communicate critical information about their products and effecting targeted responses. The core issue is that of trust. If consumers don't trust a product they won't buy it. In today's uncertain world, trust is more fragile than ever. However, by leveraging the information in a T&T system a forward thinking CP company can establish and reinforce trust, and thereby encourage consumers to buy their products. Myth 2: T&T is only relevant to a narrow assortment of products. Most T&T activity is currently focused on highly perishable products such as raw meat, fish, eggs and dairy products. However, T&T systems can also accommodate complex, multi-ingredient end products and the same concerns driving consumers to demand information about raw meat apply to other products and ingredients. Indeed, the extension of T&T from chicken thighs sold in the refrigerated case to the chicken meat in chicken noodle soup is necessary and inevitable. As a growing number of seemingly benign products are impacted by contamination and other issues the case for investment in T&T increases. The current E. Coli driven recall of spinach across the U.S. is but one recent, tragic example. Earlier this year major European food manufacturers and retailers, including Unilever, McDonalds and Tesco, announced they would not deal with soybean suppliers unless they could "prove" the legality of the soy sources. Behind this decision were allegations that a significant portion of Europe's soy product is sourced from illegal farms being carved out of the rainforest. Users of soybean oil are also now facing traceability requirements. This oil, sourced from around the world, can be blended several times prior to its sale either as an ingredient or end product. Of the two processes used to blend soybean oil, one results in the inclusion of a highly allergenic protein, the other does not. For a product as benign as soybeans the farmers and processors, as well as food manufacturers and retailers are now expected to be able to track the sources of their product and trace its ownership to ensure they are obeying the law and not endangering people's health. Circumstances such as these are arising with greater frequency and rapidity, and can impact any CP industry segment or product. Myth 3: T&T implementation is a long-term project requiring major investment. A comprehensive T&T system requires that all supply chain participants have the ability to track the movement of traded items and to trace the owners of all ingredients, raw materials, packaging and the finished products. The complexity of the required T&T system will be driven in large part by the complexity of the product and its supply chain. Today, as a result of Enterprise Resource Planning ("ERP"), data management, EDI and other IT investments, in conjunction with SOX, ISO- and HACCP-driven process improvements, many CP companies already have the core elements of a T&T system in place. Fact is, CP companies are already capturing, storing and analyzing T&T related information. The major barrier to realization of the a comprehensive T&T system, the "EPC Network" referenced in the GMA's 2004 'EPC/RFID Implementation in the CPG Industry' study, is intra-company communication of the information. It is here that middleware technologies, such as WebSphere, play a major role. By cost-effectively and efficiently linking disparate systems middleware provides a safe, secure means of facilitating the communication of critical data. To further facilitate necessary sharing of information there needs to be a standard for the items being referenced. For the CP industry EPCglobal is the principle organization developing such standards, and defining identifiers such as Global Location Numbers ("GLNs") and Global Trade Item Numbers ("GTINs"). Despite some challenges the CP industry continues to make strides in this area, 94 percent of respondents to the 2006 GMA IT Study had allocated GTINs to at least some of their consumer units, and 89 percent had allocated GTINs at the case/carton level. However these efforts are focused on finished products, and work remains to develop similar industry standards for raw materials and ingredients. So while some incremental investment will be necessary, the core T&T elements are already in place. Indeed a functioning T&T system can be created relatively quickly with some investments in middleware, standards and data management. Realization of a fully automated, open, standards-based system based on a distributed architecture is the longer term proposition.
Myth 4: RFID is critical to T&T. By definition the tracking component of T&T requires that movements of ingredients, materials, packaging and products be captured and recorded. While full automation of this process using RFID could deliver incremental benefits, in most situations existing barcode technologies deliver sufficient functionality. Where necessary, manual recording is even okay. The value of tracking information is enhanced when supply chain participants agree on what is being moved, and where. Industry adoption of unique identifiers such as GLNs and GTINs help create this shared understanding. Barcodes can store GTIN and GLN information, and product movements can be captured via automated or manual barcode scanning. RFID tags can accelerate this process; however they are best suited for certain higher value, finished goods items. When it comes to tracing item ownership existing ERP applications, such as SAP R/3, currently support many of the key activities. This includes batch tracing, lot management, quality management and compliance, as well as data synchronization. Some work may be necessary to ensure information is captured and stored for sufficient length of time but the core functionality already exists in SAP. The other critical piece of the T&T system is the ability of each supply chain participant to access the T&T information of the others. Middleware applications, such as IBM's WebSphere, facilitate exactly this type of information sharing. Together a combination of barcodes, standards, SAP and middleware can deliver the core of a T&T system. For some products RFID is currently not practical or cost effective, for T&T RFID is a nice to have but not a requirement at this point. One unique adaptation of barcode technology, developed by EggFusion, allows egg producers to 'laser-etch' bar codes directly onto individual eggs. Consumers entering this code into the MyFreshEgg.com Web site can learn exactly where and when each egg was packaged, what distribution center it was shipped through and its expiry date. Although this technology does not currently allow for tracking of egg shipments, it does provide clear traceability benefits, and is currently in deployment by A&P. Similar technology is being used to apply barcodes to individual pieces of fruit.
Summary With events such as the deadly spinach contamination in the United States, the recall of millions of Cadbury candy bars in the U.K. and the ban on Coke and Pepsi products in India becoming more frequent and costly, the need for T&T has never been more urgent. And with the relatively small initial investment required to implement a functional T&T system the business case has never been stronger. By committing to and investing in T&T a CP company can becomes a trusted provider, in the minds of both consumers and retailers. In today's uncertain, rapidly changing world what CP company wouldn't want that? Bill Gilmour is a partner in IBM Global Business Services and Global leader for Consulting Services to the Consumer Products Industry. His consulting work has focused on strategy and performance improvement and the related systems support in the Retail and Consumer Products industries including strategy development, customer relationship management, supply chain management and the development of systems strategies to support business improvement opportunities. He has worked in Europe, North America and Asia. His work with CPG companies includes implementation of global ERP systems, development of customer relationship management systems and restructuring supply chain processes to maximize revenue generation and improve cost management. He has worked for a wide range of retail operations including hypermarkets, supermarkets, electric, variety and clothing retailers. |
