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Pundit’s Mailbag — Joint Response To Produce Traceability Cost Concerns

This is in regards to your January 29, 2009 story, Is Produce Traceability Initiative Worth the Investment? in which you ran a letter addressed to Dr. David Gombas from Greg Fritz.

We are glad that Greg raised his questions, and while Dr. Gombas contacted Greg directly, CPMA, PMA and United Fresh wanted to share our joint response with the rest of the industry.

As we expand from the initial 40-some companies that support the Produce Traceability Initiative (PTI) to a broader industry effort, it is fully expected that there will be questions, doubts and concerns such as those that Greg expressed. As the primary promoters of the produce traceability initiative, CPMA, PMA and United Fresh must work to address industry concerns through open dialogue and consistent messaging. It is important that all three organizations speak as one voice when discussing the PTI.

We won’t pretend that implementing the PTI will be simple or that the PTI Steering Committee has all the answers. The PTI Action Plan set the policies, but achieving the PTI milestones will take time and effort. The easier things are at the beginning of the plan, the toughest at the end. In between, the industry is going to have to work together to find good answers. There are dozens of solution-providers — traceability companies — already looking at the PTI action plan, determining whether their system complies and can make produce companies’ compliance easier. The Steering Committee has assigned five subgroups to identify implementation problems and develop “best practices” and a “tool kit” of workable solutions. Early adopters of the Action Plan will find the issues first and will be the first to recommend solutions that work in their systems.

The “sticker shock” of obtaining a GS1 company prefix is one we are working on, and we recognize that no matter the cost, it will always be more of a burden to some than to others. The PTI Steering Committee recognized that a globally-unique company number was a critical first-step for every company putting a brand and lot code onto a produce case. While any company can generate its own number, there must be a central authority to ensure that number remains unique; this is similar to how social security or tax ID numbers are unique. GS1, a not-for-profit international organization, was recognized as the best authority available. In the long run, creating such an authority ourselves would cost more.

Even a government-run authority would have huge start-up costs and would not necessarily obtain international acceptance. GS1 is already used by over 2 million companies in over 145 countries, is globally recognized, and gives us a running start.

Regarding the concern about additional hardware, software and upgrade costs, as Greg points out, some companies already have good lot-coding and record-keeping systems in place. The PTI requirements were kept simple and flexible with the intent to be compatible with multiple existing systems. If you review the PTI Action Plan, it states that every case must be labeled with a 14-digit Global Trade Item Number (GTIN), which identifies who the brand owner is and what is inside the case. This number would be used in lieu of your proprietary number used for the same identification purpose. The Action Plan states that every case also must be labeled with a lot number that you assign, which some companies are already doing in their current systems. And each case must be labeled with the GTIN and lot number in human readable and GS1-128 barcode format. Depending upon how much of a change is required to existing hardware and software to make this happen, companies may be able to adapt to the PTI format faster and easier than others.

But why even do this as an industry? As Greg notes, good performers already have internal traceability systems in place that are compliant with the law. The problem is that not everyone’s system is effective, and too often these systems don’t work well together. If your inventory control/traceability system uses your company name and an 8-digit numerical lot code, and your customer’s system uses a numerical company code and 12-digit alphabetic lot codes, their system can’t talk to your system. So, they end up translating your codes into their codes and that’s where the “prone to error” occurs or, worse, it can become too burdensome to even do and traceability can be lost.

In addition, if you require more information than what your customer is able to store, they will not be able to provide you the information needed for you to effectively trace the product. Selecting one language and one set of standards removes the need for translation of these two critical pieces of information — identity of the product and its lot code. It will also ensure that the information necessary for traceback is at minimum used by ALL trading partners, regardless of their proprietary systems.

The costs associated with implementing the Produce Traceability Initiative will vary by company depending on the number of products, case configurations and existing hardware and software currently in use. The acceptance of the PTI will have a positive impact for our industry when the critical mass of handlers reaches each milestone. When a recall does hit the perishable market, the ability to have an industry-wide traceability system will limit the impact to the specific commodity group and market as a whole.

The PTI took great pains to utilize what is already being used by most companies in the industry: case numbers and lot numbers, barcodes and internal traceability systems. All of these are needed to capture this vital information and store it electronically for quick and easy access in the event of a recall. The biggest change for most companies is accessing all of this information via computer.

In the end, what is most important is that every business that decides to implement the PTI believes that it makes good business sense. For some that investment will make sense sooner rather than later. For others more time and continual learning will be needed. In the meantime, keep the questions coming, so that the active members of the PTI can continue to address industry concerns.

— Jane Proctor
Canadian Produce Marketing Association

— Gary Fleming
Produce Marketing Association

— Dr. David Gombas
United Fresh Produce Association

It is a happy coincidence that we run this letter from the three national associations that have shepherded this initiative on the same day we run an interview with Bruce Peterson. For it was Bruce’s insight, expressed in an earlier interview with the Pundit, that whatever efforts might be made to make produce safer, there would still be intermittent outbreaks and, as such, the food safety challenges the industry faced needed to be addressed with an eye toward limiting the scope and damage of any recalls or government action. It was out of this insight that the industry focus on traceability arose.

We have praised the outcome of the Produce Traceability Initiative, even while acknowledging it was not a panacea.

We are skeptical that companies on the buy-side will, in the end, constrain their supply chain to those in conformance with the PTI requirements and, even if they do, large parts of the industry operate in a netherworld far from these association initiatives and the mandates of big corporate buyers.

That the industry is still seeking an answer for how to hook some local purveyor into a traceability system is without doubt. It also is true that the initiative didn’t address a core fact in produce marketing — consumers don’t typically buy cases, so much like the last mile problem with fiber optics, where high speed Internet can traverse the world and then has to slow to the speed of copper because that is the only entry to the house. So the PTI, even if fully implemented, loses its integrity once that case of bulk produce is intermingled with other produce in a retail store, restaurant or consumer refrigerator.

Still we thought the outcome a good one because it at least established a goal post. Many of the choices, as this letter indicates, are essentially arbitrary. Should you write out your company name or have a number that represents the company, it almost doesn’t matter. By having an industry standard, we can add value. The simple fact of declaring either one of those options the standard facilitates industry communication and thus increases the return on the investment in implementing the standard.

Although there are many costs to migrating to this standard, the standard is a no-brainer if you are starting a new company or building a greenfield facility. So, gradually, we hope the industry will migrate to these standards.

Shortly after we ran the letter from Greg Fritz, we heard from Greg once more:

Thanks for addressing my letter. United Fresh has been very responsive to it, and Dr. Gombas has asked me to participate in the PTI process.

What I didn’t say in my letter that perhaps I should have is that I would wholeheartedly support the PTI effort, given the assumption of a level playing field. If, as in your example, “Ken” has to pay for the fees, systems, and record-keeping that Produce Packaging will have to pay for, then that’s fair, and good for the industry. However, if the small, “local,” or “seasonal” boys get a pass (or an “exemption” from the government), then it’s no longer fair, and not a significant benefit to the public.

I’ll try to make this message known as I get into this more.

— Gregory J. Fritz
Produce Packaging, Inc.
Cleveland, Ohio

Our “Ken” example went as follows:

Here is a letter we ran in a piece entitled, Though Traceability Initiative Is a Big Win, Weak Links Still Exist:

Putting in a system to trace product gets more difficult the further down we go in the distribution chain. Stand on the floor on a busy Terminal Market and try and imagine where the product goes after it is sold by the Wholesaler. A customer known as “Ken, the guy with Red truck,” pays cash for a pallet of tomatoes. He takes the tomatoes to his garage where the boxes sit on the floor next to cleaning supplies, motor oil, and who know what else.

He and his kids (2 of whom just used the toilet without washing their hands) dump the tomatoes on a dirty tarp to sort them for color. The green ones sit in the garage for a few days to color up during which time one or two rodents snack on tomatoes. When they finally ripen, Ken delivers the tomatoes to some of the finest restaurants in town for all of us to enjoy.

Somehow I don’t think that Ken or even a legitimate small wholesaler or purveyor is interested in investing in a traceability system. They will have to be dragged kicking and screaming to the table. The problem is that the system is only as good as its weakest link, and unless Ken is a part of the system it doesn’t work.

We think Greg’s comment, combined with the example, points to the real issue and, in a sense, so does who signed the letter from the three associations: Jane Proctor is the Vice President, Policy & Issue Management at the Canadian Produce Marketing Association, Gary Fleming is Vice President of Industry Technology and Standards at the Produce Marketing Association, and David Gombas is Senior Vice President Food Safety & Technology at United Fresh Produce Association.

These are vitally important jobs. In our coverage of Traceability, we were proud to include these pieces by Gary Fleming:

Guest Pundit: Traceability — A Forgotten Piece Of Food Safety

Guest Pundit — Traceability And The Need For A Common Language

Guest Pundit — Pairing The Global Language With Technology

And this letter from Jane Proctor:

Pundit’s Mailbag — CPMA & PMA To Lead Industry Closer To Global Traceability

We have thought so highly of the contributions Dr. Gombas has made to the industry we gave him an award.

Without a doubt, continuing technical issues will keep this triumvirate busy for the foreseeable future.

Yet, in the end this is not really a technical difficulty.

Whether the standards detailed in the Produce Traceability Initiative actually come to be industry standards depends crucially on the procurement decisions of five companies. If Wal-Mart, Kroger, Safeway, Supervalu and Sysco actually come to the point where they reject any produce that does not meet the standards of the PTI, then these standards will become the lingua franca of produce traceability.

If the buying organizations demand these standards — unless something else is cheaper — then the standards will be adopted slowly, if at all.

Greg Fritz really just told the truth that dare not speak its name.

Our association triumvirate gave the most practical and real life advice one could hope for in recommending this:

“…what is most important is that every business that decides to implement the PTI believes that it makes good business sense. For some, that investment will make sense sooner rather than later. For others, more time and continual learning will be needed.”

Though this is exactly the correct advice for each individual company, the problem is that while each individual company is “learning,” the industry problem remains unsolved.

We thank Jane Proctor, Gary Fleming and Dr. David Gombas, along with CPMA, PMA and United, for their diligence in developing the Produce Traceability Initiative and their generosity in responding to Greg Fritz. We thank Greg for not being afraid to express legitimate concerns.

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