Traceability Means Transparency
July 9, 2008 - On Tuesday, June 24, the CGT Supply Chain Share Group convened for its first in -person meeting of the year at the IBM Industry Solutions Lab (ISL) in Hawthorne, NY. While the first half of the day was dedicated to the topic of sustainability, during the second half of the meeting, member attendees heard from IBM industry experts and discussed their own company initiatives around traceability.
An Expert Opinion
Susan J. Wilkinson, executive consultant, Traceability Solutions Team for IBM Global Business Services started off the afternoon explaining that traceability supports all keys to Corporate Social Responsibility as identified in a recent IBM survey. Although traceability is usually associated with cost, leading companies are instead using it as a growth opportunity. Next, moving from visibility to transparency enables consumer trust and makes critical information available to all stakeholders. This, in turn, also leads to better partnerships -- "from containment to engagement."
The drivers for traceability are the same as those for sustainability discussed earlier in the day (see previous article): regulation, cost/economics, reputation and consumer/stakeholders -- with this final driver deemed being particularly critical to the business. The growing complexity of supply chain has created challenges and the prominence of product recalls has generated distrust by consumers. In fact, according to Wilkinson, 49 percent consumers don't trust companies to do what is in the best interest of consumers. She noted, "Transparency is necessary to meet the needs of today's Omni Consumer: informed and empowered."
Thus, principle benefits of full value traceability include:
> Brand empowerment and increased consumer trust through the provision of open information that reinforces brand quality and safety
> Risk mitigation
> Supply chain efficiency -- particularly around cost
> Compliance
This is not to say that transparency is easily achieved. To illustrate the intricacy of tracking the "input to output" of a product Wilkinson cited food kits, many of which have multiple ingredients. In one example she mentioned a product that contained seven components each sourced from different suppliers and different countries. To further complicate things some of the components had multiple ingredients also sourced from different suppliers and different countries. Now imagine having a recall stem from something that was contaminated in that kit. The difficulty in finding the true source could be overwhelming as seems to be the case with the latest incident of salmonella outbreaks discussed at the conclusion of this article.
One share group member commented that in her company's case, a certain key partner expects them to be able to do a recall in two hours. Wilkinson added that traceability is not even as straightforward as knowing where products come from, but when and where did it enter the supply chain? What were the conditions? How was the product touched and by whom?
Developing Track and Trace Capabilities
So, how does a CG company begin to navigate the maze of traceability? While many companies' ERP systems have traceability functionality, it was not necessarily turned on at the time of implementation.
Wilkinson says key steps in developing track and trace capabilities at the individual stakeholder level are:
> Define objectives of program -- how granular do you need to be and what are timing needs
> Start with a small project with narrow scope and clear benefit -- any project will teach you something about your internal processes and trading partners; build a business case and quantify benefits for risk reduction as well as for brand building
> Assess the current state and define gaps in your ability to track and trace these products
> Define data requirements; what data you need, who has it and how can you collect it
> Engage all stakeholders (especially your suppliers) and create a shared vision
> Design technical architecture as part of overall information architecture -- one version of the truth for customer, product and supplier data, and automate the collection of data. Collect and store data and define business scenarios for how/when you will share it
For further details, read "Establishing Trust through Traceability."
An Expert Opinion
Susan J. Wilkinson, executive consultant, Traceability Solutions Team for IBM Global Business Services started off the afternoon explaining that traceability supports all keys to Corporate Social Responsibility as identified in a recent IBM survey. Although traceability is usually associated with cost, leading companies are instead using it as a growth opportunity. Next, moving from visibility to transparency enables consumer trust and makes critical information available to all stakeholders. This, in turn, also leads to better partnerships -- "from containment to engagement."
The drivers for traceability are the same as those for sustainability discussed earlier in the day (see previous article): regulation, cost/economics, reputation and consumer/stakeholders -- with this final driver deemed being particularly critical to the business. The growing complexity of supply chain has created challenges and the prominence of product recalls has generated distrust by consumers. In fact, according to Wilkinson, 49 percent consumers don't trust companies to do what is in the best interest of consumers. She noted, "Transparency is necessary to meet the needs of today's Omni Consumer: informed and empowered."
Thus, principle benefits of full value traceability include:
> Brand empowerment and increased consumer trust through the provision of open information that reinforces brand quality and safety
> Risk mitigation
> Supply chain efficiency -- particularly around cost
> Compliance
This is not to say that transparency is easily achieved. To illustrate the intricacy of tracking the "input to output" of a product Wilkinson cited food kits, many of which have multiple ingredients. In one example she mentioned a product that contained seven components each sourced from different suppliers and different countries. To further complicate things some of the components had multiple ingredients also sourced from different suppliers and different countries. Now imagine having a recall stem from something that was contaminated in that kit. The difficulty in finding the true source could be overwhelming as seems to be the case with the latest incident of salmonella outbreaks discussed at the conclusion of this article.
One share group member commented that in her company's case, a certain key partner expects them to be able to do a recall in two hours. Wilkinson added that traceability is not even as straightforward as knowing where products come from, but when and where did it enter the supply chain? What were the conditions? How was the product touched and by whom?
Developing Track and Trace Capabilities
So, how does a CG company begin to navigate the maze of traceability? While many companies' ERP systems have traceability functionality, it was not necessarily turned on at the time of implementation.
Wilkinson says key steps in developing track and trace capabilities at the individual stakeholder level are:
> Define objectives of program -- how granular do you need to be and what are timing needs
> Start with a small project with narrow scope and clear benefit -- any project will teach you something about your internal processes and trading partners; build a business case and quantify benefits for risk reduction as well as for brand building
> Assess the current state and define gaps in your ability to track and trace these products
> Define data requirements; what data you need, who has it and how can you collect it
> Engage all stakeholders (especially your suppliers) and create a shared vision
> Design technical architecture as part of overall information architecture -- one version of the truth for customer, product and supplier data, and automate the collection of data. Collect and store data and define business scenarios for how/when you will share it
For further details, read "Establishing Trust through Traceability."
Traceability Challenges Persist
In considering the most recent case of contamination, the Washington Post reported this morning that the FDA is now looking for other sources of a salmonella outbreak that was originally attributed to tomatoes. Staff writers Annys Shin and Simone Baribeau wrote, "Investigators who spent nearly a month searching for the cause of a salmonella outbreak in tomatoes are now holding and testing shipments of imported jalapenos at the Mexican border in hopes of finding the outbreak strain."
The writers also indicate, however, that FDA and CDC officials say it is "premature" to declare jalapenos as the cause, and the full list of suspects still include tomatoes along with cilantro and serrano peppers as common salsa ingredients under investigation. Meanwhile, according to the paper, "The tomato industry says it has already lost $100 million."