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Pressing The Reset Button On PTI

Jim Prevor’s Perishable Pundit, May 25, 2010

We’ve written much on traceability, including pieces here and here today.

Two recent articles detailed that the mood of the industry was moving away from supporting the PTI — at least as originally announced:

Problems Persist With PTI

The Great PTI Leadership Let-Down

Now the executive committees of the Canadian Produce Marketing Association, Produce Marketing Association and the United Fresh Produce Association have come out with a joint statement supporting the PTI concept, eating a little crow as to how it was presented and making some minor changes to the deadlines.

Here is the whole release:

PTI END GOAL UNCHANGED, CHANGES COMING TO LEADERSHIP, MILESTONES, OUTREACH

The following statement has been approved by the Executive Committees of Canadian Produce Marketing Association (CPMA), Produce Marketing Association (PMA) and United Fresh Produce Association (United Fresh). It will serve now as the guiding direction for the Produce Traceability Initiative (PTI) from our associations:

Produce Traceability Initiative Action Plan Restatement
May 2010

[As approved by the Executive Committees of Canadian Produce Marketing Association, Produce Marketing Association and United Fresh Produce Association]

In the three years since we organized a steering committee of industry leaders to evaluate the need and potential methods to implement whole-chain traceability, our industry has made tremendous progress in strengthening traceability across our industry.

The Produce Traceability Initiative (PTI) Steering Committee recommended industrywide adoption of GS1 global data standards for identification, tracking and capturing of key information about products and lot codes through the use of Global Trade Item Number (GTIN) assignments and their application to case coding. The committee also recommended a number of milestones based on the earliest potential dates at which it was believed different sectors of the industry might be able to incorporate such practices.

A tremendous amount of progress has been made toward adoption of these standards. But, we also have heard clearly from a cross section of the industry that some aspects of the PTI are proving more complex than anticipated, that there is uncertainty in commitment across the industry, that solutions not originally anticipated by the PTI Steering Committee may offer cost-effective and efficient options in achieving PTI goals, and that meeting the identified milestones will be problematic for certain sectors.

The Boards of Directors of CPMA, PMA and United Fresh have extensively reviewed all of these issues, and provide the following consensus recommendations for the industry.

1. We reaffirm our commitment to whole-chain traceability through the standardized global data platform of GS1. While this will be a challenging, multi-year transition toward standardization for our industry, we believe the entire food industry is moving in this direction, and that the produce industry will accrue benefits in traceability, efficiency and operations similar to past standardization initiatives such as Price Look-Up (PLU) coding and pallet size standardization.

2. In order for this initiative to be successful, it must have widespread and uniformly supported across the retail and foodservice industry, with consistent application. A primary goal of standardization is to prevent multiplicity of unique demands. Therefore, we are engaging leaders of the retail and foodservice industry to ensure that there is broad commitment and consistent expectation for this standardization initiative.

• In the foodservice sector, we have held discussions with leaders engaged in the Foodservice GS1 US Standards Initiative spearheaded by International Foodservice Distributors Association, National Restaurant Association and GS1 US to expand the use of these same standards. Their objective is to drive benefits in both enhanced supply chain efficiency and traceability. This initiative will impact directly on the produce supply chain as it will also require the use of the same GS1 standards recommended by PTI. There are lessons the PTI can incorporate from this initiative to help us reach our goal.

• In the retail sector, we are also strengthening our alignment with other fresh food initiatives so retailers have a more comprehensive value proposition built on the same GS1 standards in use across all fresh food categories sold in their stores. This requires a broader retail initiative addressing fresh foods and a coordinated approach with the foodservice sector so that suppliers to both sectors have a harmonized approach.

3. There has been much discussion about why Milestones 4 and 5 calling for case labeling of produce are set one year before Milestone 6, which calls for receivers to record or capture this data from case labels. Our Boards have reviewed this issue and believe it is appropriate to make these milestone goals simultaneous, placing Milestones 4 and 5 concurrently with the present anticipated date for Milestone 6.

4. With implementation of PTI, member companies are finding many questions about best practices and practical, cost-effective solutions at every stage of the supply chain. These include such disparate issues as the best ways to label cases in field packing, exchange GTIN data between seller and buyer or a common data pool, and capture outbound data from a retail distribution center to individual stores taking advantage of current voice-pick systems in warehouses.

Therefore, we recommend that a series of pilot projects be conducted in a variety of different commodity sectors, incorporating all segments of the supply chain from grower through retailer and restaurant. These pilot programs should address specific challenges identified by the different sectors, include use of different technologies and solution providers in order to evaluate multiple processes, and be transparent to all industry members as we share in lessons learned.

We intend to create these pilot projects under the auspices of the PTI, and also intend to engage commodity and regional associations as well as individual member companies in implementing pilots to address specific concerns applicable to their sectors of the industry. As projects are completed, we expect the PTI to make a thorough review of potential goals and milestones, consistency of commitment to adoption across industry channels, and best use of industry resources to achieve the desired goal.

5. There has been much discussion of the PTI milestones as potentially punitive deadlines for industry members. Our Boards recognize that adoption of any industry standardization initiative will result in early adopters who seek to gain efficiencies and marketplace support, those who transition to standardization more slowly, and those that lag behind. "In hindsight, we believe the PTI milestones should not have been written as “must comply” dates but rather as “target goals” to achieve. We recognize that meeting implementation milestones will vary by company, and that ultimate adoption is a marketplace decision, not an association directive."

6. Finally, we recognize the need for an even broader and deeper engagement with industry stakeholders in the leadership of the PTI. We are now undertaking a process to generate broader involvement with all stakeholders, and will work closely with each sector of the supply chain in development of the PTI pilot projects and future planning.

Our associations recognize and applaud the widespread commitment of our industry to produce traceability. A very large number of companies continue to perfect their strong internal traceability systems, and many commodity sectors can largely track product from the consumer back to its farm origin within a very short time. We remain committed to the creation of a GS1 standards-based system linking the different segments in our supply chain from the store or restaurant back through each step of the chain, while recognizing that our current commitment to food safety and traceability allows the majority of produce to be traced step to step back to the farm today.

Here are the key points:

A) Much of the release focuses on reaffirmation of the notion that the core nomenclature agreed to by the PTI Committee is the right way to go.

B) There is a somewhat vague reference to efforts to coordinate with the foodservice industry and other fresh food groups at retail. The release doesn’t say it, but there has been push-back from retailers and foodservice distributors who have made it clear that they don’t want produce-specific systems but want systems that will work across their operations.

Although efforts to engage with these other groups are a positive thing, it is not clear that going ahead with PTI “milestones” makes sense or will get support. If the key issue blocking retail and foodservice acceptance is the lack of a comprehensive plan for traceability across all items, it is not clear how agreeing to have meetings solves the problem. Maybe it is a sign we need to halt any deadlines or “milestones” until comprehensive plans are articulated.

C) One of the big controversies has been why the milestones that call for case labeling of produce had been set for a year prior to the milestone calling for receivers to record or capture the data. They changed this to make the milestones simultaneous by postponing the requirement for grower/shippers to do case labeling.

This sounds fair and probably is a step in the right direction but, in truth, the dynamic of the industry requires the receivers to go first. All shippers are going to do what is necessary to get and keep customers. If Wal-Mart wants RPCs, it gets RPCs — if it wants GS1 codes, it will get GS1 codes.

There are really only two issues with PTI:

Are receivers actually going to be set up to use this, bearing in mind that scarcely any of the individuals representing receiving organizations that endorsed the PTI has the actual authority to spend money equipping DCs with scanners, etc.? Notably missing during this three-year process are any press releases announcing the Board of Directors at receivers approving funding for becoming PTI-compliant.

Even once equipped, will the receivers constrain their supply chains to PTI-compliant product — even if it is more expensive? Once a store adopted standardized PLU codes, it was a big mess to handle anything not so coded. It is not obvious that lack of PTI compliance will be such a problem.

So the key point ought to be to reassure shippers that receivers will use and demand PTI-compliant product. Moving the shipper and retailer function to a simultaneous execution is a positive, but there has to be some distinction between the retailers’ already established strategic partners and other occasional suppliers that are not yet aligned with the retailers. What really should happen is a two-phase approach where retailers will work with their close strategic partners to be ready virtually simultaneously; then other, less closely connected shippers will move after the retailers have set up the system and begun showing preference for it.

D) The humbling moment in the release is this:

“In hindsight, we believe the PTI milestones should not have been written as “must comply” dates but rather as “target goals” to achieve. We recognize that meeting implementation milestones will vary by company, and that ultimate adoption is a marketplace decision not an association directive.”

This was a very good thing. Much of the bitterness over PTI was a matter of companies feeling that their associations, instead of serving them and helping them, suddenly were dictating to them.

If this new spirit animates future discussions, cooperation will improve significantly and people will be willing to speak out more frankly.

E) The rest is kind of a catch-all, trying to both promise broader and deeper engagement and trying to address the reality that PTI has limitations and will not, at least not in its current form, provide anything approaching complete farm-to-consumer traceability. It also promises various pilot projects to try and address concerns of specific industry sectors.

All in all it is a positive response, but the reality is that this is not a matter in the hands of the associations. Their deadlines and attitudes (although they can move things a bit one way or the other) are secondary considerations.

The standard is out there: Are big buyers actually going to get the money from their boards to implement the plan, and then are they actually going to constrain their supply chain to vendors who meet the standard?

If this doesn’t work, don’t blame Danny Dempster, Bryan Silbermann or Tom Stenzel. Execution here will require leadership from industry members.

The question is: Will that leadership be forthcoming? No association press release can answer that question.

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