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The Great PTI Leadership Let-Down

Jim Prevor’s Perishable Pundit, May 11, 2010

Our extensive discussion of traceability brought us to our most recent piece, titled Problems Persist With PTI, and this piece brought a response from a man who has been in the forefront of the trade’s traceability efforts, Bruce Peterson.

Now running his own consultancy under the name Peterson Insights, Bruce worked on the grower/shipper side as President/CEO of Naturipe Farms, and is, of course, best known in the trade for his founding role in establishing Wal-Mart’s produce and perishable operation.

As always, you provided a thought provoking — and evoking — piece on PTI and you offered many salient observations. But I thought I might offer some additional thoughts on this important subject.

In my mind, PTI never set itself out to be a system wide “solution” to traceability. The steering committee of PTI absolutely recognized the complexity and challenges associated with providing transparent supply chain visibility that would allow for some degree of trace-back capabilities at the case and pallet level. It is important to remember the climate in which this discussion was taking place.

As you recall, the industry was reeling from a crisis in which people died from consuming a fresh produce item. Major newspapers were routinely talking about “dangerous” fruits and vegetables. And several things became apparent in the produce supply chain:

1. While most major grower/shippers and most retailers had — and currently have — a product trace-back system, everyone had their own nomenclature and process. So while you had some degree of “vertical” traceability, you did not have horizontal traceability.

2. While the threat of government regulation was not imminent, there was concern that in the absence of the industry attempting to wrestle with this issue, the government might “weigh in”.

My understanding was that PTI was never a “destination,” but the start of a “journey.” And we should also remember that it was envisioned that it would be 7 years before the elements of PTI could be enacted. It was clearly understood that produce traceability was a huge undertaking and over a year was spent on trying to “take the first bite out of the elephant.”

For me, the achievement of PTI was to get a common consensus on nomenclature, that being assigning a G-TIN as a prefix to a product code. Without a common method of nomenclature, you would NEVER have the opportunity to provide ANY degree of system-wide transparency.

I agree with you that PTI is exponentially more complex than setting PLU standards, but it still comes down to the same thing. Major receivers have to agree on a set of standards and then execute those standards in their company, with their suppliers. And don’t dismiss the adoption of PLU standards as something that was easy to do within a company. If you recall, retailers had their own coding systems and had internal system support that matched those systems. The produce leaders at the time had to go to their respective company leadership and adopt the industry standard. How Dick Spezzano, Bob DiPiazza, Harold Alston, and others did that was invisible to the industry, but they got it done. So when they went to the industry and said that they were going to adopt those standards, they did it.

We need to remember something else as well. The PTI committee worked on this for a year before the guidelines were released. If the members on the committee were having internal challenges getting it accomplished, they needed to say so. And if they felt reluctant to make their voices heard, then that’s a pity. Because for me, the tragedy of PTI is not the fact that it is not a complete, system-wide solution to traceability. Again, I don’t think it was ever postured as such. For me, the tragedy is that some very notable companies said publicly that they intended to “begin the journey” and then, for whatever reason, didn’t follow through.

I recognize this is easy for me to say as I don’t have a “chip in the game”, so to speak. There may be, in fact, some very tangible reasons why a specific company is not going to do what they originally said they were going to do. But those leaders need to summon up the courage to let the industry know where their company stands. To continually reaffirm that “everything is on track” is disingenuous because those trying to comply are running into a lot of push back from those very same receivers.

You can build a case that association membership, at the volunteer level, is perhaps different today. I can’t speak to that. And it’s also very true that the respective staffs at these associations continue to become more sophisticated. But as far as I know, no one on staff cuts a P.O. No one on staff has a receiving process. No one on staff has any experience at all running a complex supply chain. So those members of the volunteer leadership that DO those things need to lead this initiative.

For the most part, those people have more financial responsibility in a week (and in some case, a DAY) than all of the trade associations COMBINED do in a year! And THOSE are the voices that need to be heard

— Bruce Peterson
President
Peterson Insights
Bentonville, Arkansas

Like most things in life, Bruce’s letter reminds us that this comes down to leadership, a subject that has been a frequent subject of our attention.

We would agree. Yet we would also say that certain conditions tend to encourage certain behaviors. Bruce is correct that there are certain companies that said they were going to do certain things and haven’t done them. Obviously nobody can think this to be exemplary behavior.

But the truth is that some companies signed onto this initiative under threat of what was, in effect, public shaming by their own associations — this led many people whose silence would have spoken volumes to sign up.

What is done is done, but the question is what kinds of mechanisms are more likely to generate honest feedback?

Some of these are tools. When the Pundit conducts focus groups where people’s opinions are heavily influenced by both the moderator and by fellow participants, we use all kinds of mechanisms to make sure this influence is minimized. To start with, the moderator has to be convincingly neutral as to the outcome. Then you have to use all kinds of tools, such as secret ballots, to find out what the group is really thinking.

It is also true that the discussions over PTI were kept needlessly confidential. We pushed here to add a wholesaler to the group, a constituency that had been completely neglected. But it is not clear why anyone should have been excluded who wanted to participate and, more important, there were many bright and knowledgeable people whose input was never received because everything was kept top secret.

To us, it has echoes of the discussions over proposals last year for a generic promotion order — an industry-wide proposal, which would have needed mass support to succeed, but was negotiated in secret and then “explained” to everyone.

So the PTI meetings were closed, transcripts were not released, nobody but the selected few was in on the meetings.

There was a decision made that closing the discussions would make it easier to come to agreement. This is undeniably true. But there is an iron-clad trade off — it also makes it harder to get support for the agreement.

That is really what has happened here. Because there was no transparency, many didn’t pay any attention. When it finally came time for implementation, people who had not focused on the issue suddenly raised a red flag.

Also, many who “agreed” didn’t really have the authority to agree. This is particularly true at retail, where the companies handle many different products. Retailers don’t want 100 traceability systems, so they want a solution that covers all their perishables, not just produce.

When Bruce speaks of the internal battles that great produce retailers of the past have waged, he whispers a secret truth. If Wal-Mart, Kroger, Safeway and Supervalu at retail and Sysco, US Foodservice, Markon and Pro-Act on the foodservice side all actually implement PTI at their facilities and require PTI compliance of their vendors, then PTI will be the new standard and will gradually become ubiquitous as other buyers sign on, confident that the vast majority of product out there is PTI-complaint.

If these eight companies — signatories all to PTI — don’t implement it and don’t limit their purchases to PTI-compliant product, then it will not become a standard and no amount of press releases from PMA, United and CPMA will change that fact.

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