Product safety interventions are necessary costs in food processing, and the industry has spent lavishly in the 21st Century to prevent contaminated finished goods from leaving the plant.
When there is a breach in safety defenses, both the public and supply-chain partners are placed at risk. Food passes through many hands between the farm and the fork, which is why one-up, one-down traceability and rapid communication with trading partners is critical. The need for visibility is just as true for fruits and vegetables as other product categories and particularly true for fresh-cut produce, which passes through more hands than fresh-from-the-farm goods.
That reality was the impetus of the Produce Traceability Initiative (PTI), a collaboration of three trade groups and GS1, the global successor organization of the UPC Council. Spurred by the E. coli O157:H7 contamination of spinach in 2006, the United Fresh Produce Assn., Produce Marketing Assn. and the Canadian Produce Marketing Association kicked off PTI in October 2007 with the stated goal to “build better transparency” in the distribution of fresh fruits and vegetables.
“It’s moving along at a glacial pace,” concedes Dan Vaché, United Fresh’s vice president-supply chain management. More efficient communication between trading partners will drive out costs, but companies need to make investments in new technology.
Growers and packers are doing their part, but until all trading partners upgrade their systems, many of the cost savings won’t materialize. The good news is that the foundation is in place, with scanable and human-readable labels being affixed in the field. Ironically, growers have the least to gain: For them, PTI is essentially a cost without a return.
More good news arrived in January when Walmart and Sam’s Club began requiring suppliers of fresh produce to apply PTI-compliant labels on shipments arriving at their distribution centers. Temporary exceptions are granted to firms working toward the labeling goal, but otherwise produce shipments will be rejected. Publix Super Markets had given PTI a similar push, but the chain lacked the market clout to get a critical mass of shippers behind the effort.
More than six years of pushing and prodding was needed to get PTI to this point, and the financial benefits of the initiative won’t be reaped until major players scrap the hybrid pallet labels that serve as a bridge to the ultimate goal of advance ship notices (ASN) transmitted via electronic data interchange. Besides greatly improving the speed and effectiveness of recalls, the paperless system is expected to drive out distribution costs.
Paramount Citrus’ newest packing house in Delano, Calif., was built with PTI compliance in mind, and 14-digit GTIN codes based on GS1 standards have been affixed to every carton moving through the facility since it opened since in 2012, according to Jason Blake, vice president-California packing operations.
“We’ve always had good traceability,” says Blake, and the 650,000-sq.-ft. facility is the first in the firm’s nine-plant network to be in complete PTI compliance. The GTIN code identifies where the product was packed, its item code and the production date to help downstream partners achieve FIFO rotation efficiently and effectively, he adds.
“Packing house” connotes an operation light years away from the Delano plant. Vision systems that sort and grade millions of pounds of mandarins daily feed into automated packing and palletizing systems that blend flexibility with high speed.
Engineers from St. Louis-based Intelligrated went through two score of design iterations on the end-of-line system. “The machines are PTI ready,” promises Dave Stinson, Intelligrated’s vice president-western operations. Scanners will be positioned on infeed belts to the five palletizers already in place (three more will be added in the fall) to capture case-level codes, which will be married to the pallet load. For now, the firm is concentrating on Paramount’s precision-placement and high-speed requirements (approaching 50 cases per minute). Until retail customers are able to leverage ASN, there is little reason to close the data loop.
Before paperless transactions can be executed, considerable infrastructure work remains to be done, acknowledges Steve Roosdahl, director-supply chain management for the Oppenheimer Group, a Vancouver, B.C.-based global produce distributor. “A lot of the front-loading came on the supply side,” he says. “We were adding cost, and no one was stepping up” on the retail side. But he expects Wal-Mart to migrate to ASN capabilities in the near term, enabling its suppliers to begin realizing benefits from their investments.
Oppenheimer conducted a two-year pilot with Safeway to demonstrate the cost savings from EAN, particularly improved inventory management from advance visibility to shipments and any substitutions. The produce sector increasingly mimics packaged foods, with buyers demanding mixed pallet loads instead of full pallets of a single product.
Reconciling what was ordered with what was shipped can turn into a paperwork quagmire, with key-entry errors making a hash of data accuracy. Simply moving from hybrid pallet labels to ASN would save Oppenheimer $120,000 a year, Roosdahl concludes, but data reliability will save multiples more. “ASN offers significant promise for driving traceability and improving supply chain efficiency,” he summarizes.
Capitalizing the hardware needed for ASN might best be viewed as an opportunity cost, suggests United Fresh’s Vaché. One unnamed distributor upgraded to a voice-pick system in conjunction with ASN implementation. Savings from a reduction in pick errors were calculated at $500,000, an efficiency gain that will increase in importance as mixed pallet loads become more common.
Workers were able to pick five more cases per hour, saving another $200,000 annually. “They almost paid in the first year the cost of their system,” he says, with another $20,000 savings in paper costs.
Produce’s positive, “good for you” image has taken multiple hits in recent years; only now, seven-plus years after the fact, are spinach sales returning to pre-E. coli levels. The FDA attributes 3.15 million of the nation’s annual cases of foodborne illnesses to produce, with three quarters of illnesses attributable to fresh-cut products. Those products’ vulnerability to cross contamination and the lack of a post-production kill step make fresh-cut a prime candidate for recalls.
Whether pre-cut or whole, fruits and vegetables are global products, with perhaps half the produce in U.S. grocery stores originating off shore. “It’s not if but when we will have an outbreak,” Vaché points out. “We have to be able to react quickly.”
Knowing where a product came from is at least as important for processors, distributors and customers at the retail and foodservice level. As PTI gains transaction throughout the supply chain, those supply-chain partners not only will be able to provide the answer, they’ll be able to deliver it at a much lower cost.