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The bioterrorism fallout

The bioterrorism fallout

Tougher traceability measures are forcing food exporters to upgrade their supply chains or risk being alienated from lucrative markets.

The US government's Public Health and Bioterrorism Preparedness and Response Act of 2002 redefined requirements for importers and triggered moves worldwide to adopt similar legislation effectively requiring supply chains to become more transparent. The tough new compliance regime was put into place in the US in mid-2004 and similar measures are due to be implemented in the European Union from 1 January 2005. In New South Wales, the state government has also announced new legislation to regulate the food industry.

The first US proposal requires all companies to register with the Food and Drug Administration (FDA) and give prior notice about when "specific food shipments will be arriving at US ports of entry and what those shipments will contain". Notification must be made two hours before arrival by land, four hours by air and eight hours by sea.

Fonterra, which supplies commodity dairy products to customers in 140 countries, has already implemented stringent traceability measures which it is using to keep its costs down. It is working closely with its top 15 customers, including its own New Zealand Milk Products operating company, which represents 40 per cent of its volumes and revenues.

The dairy giant sees its quality management, compliance and traceability as key market differentiators and can trace and recall a shipment from anywhere in the distribution chain. This is part of a long-term philosophy which chief information officer Marcel van den Assum refers to as having 'one version of the truth'.

This is being achieved using its SAP enterprise resource planning system and a range of standardised tools which capture data and report across the entire supply chain giving key data for management and reporting.

Stay ahead of the game

New Zealand winemaker Allied Domecq (formerly Montana Wines) has deployed Intentia's Movex ERP system to bring its disparate systems together and has been working on optimising its supply chain for traceability for nearly two years.

The company has had to use systems to track specific varieties of grapes from the vineyard all the way to the bottle for some time in order to comply with the Appalachian laws which require them to prove the origin of grapes. Now the company, which exports about 25 per cent of its wines, is looking at tracking cartons as these are shipped to different locations around the world.

Discussions are ongoing about how to make the best use of Intentia's Trace Engine to facilitate this. The engine can work with most ERP systems right down to using an Excel spreadsheet as a data source.

Meanwhile, every lot and batch of grapes has a bar code that logs detailed trace information which is scanned directly into Movex and the company's production system. The detail provided allows handpicked grapes in particular to be tracked all the way back to 'a parcel of vines in a single row'. Through the system, a row of grapes and the day they were picked can be isolated.

Records are kept during crushing and storing. During bottling, each batch has a bar code that identifies the origin of the grapes in each blend along with details of the winemaker.

Allied Domecq can also track individual suppliers from bottle makers to those who provide chemical and packaging as part of the end-to-end supply chain traceability program.

Most larger New Zealand and Australian food and beverage companies are already registered with the FDA and going through the first stage of the program. However, there are concerns many smaller exporters are not taking the changes seriously.

Colin Clarson, solutions designer and virtual team member for the food and beverage team at Intentia Australia, tells MIS New Zealand the industry is facing an issue equivalent to the Year 2000 'bug' and warns people not to dismiss the concerns as simply scaremongering.

"Y2K was highlighted as a major catastrophe in waiting, but when nothing happened everyone turned around and blamed the IT industry. What they didn't see was the work done to make sure nothing happened."

He says the ongoing nature of the food regulations is that they are going to get tougher and businesses need to be prepared. If there's a problem with a product it has to be traced back to its origin. However, links in many supply chains are still mainly paper-based.

"The biggest change will be replacing manual systems with something that is automated so companies can get reports to regulatory bodies in time. The US is talking about two business hours - that makes it almost impossible for a paper-based system to hold up," he says. The bare minimum is 'one up, one down' which means you have to explain where you purchased the product from and where you sent it.

Organisations uncertain about compliance need to run an audit to determine the flow of materials in the supply chain and look for gaps. Typically a quality assurance person or operations manager should be given responsibility to ensure things are up to speed. The majority of food and beverage companies have excellent in-house quality systems but are not good at extending that outside their walls with a view of the whole supply chain from a single system.

Managing complexity

The problem becomes more complex when a company is purchasing something that's already been processed and further processing that into something else. For example, the cookie maker who's purchasing flour, butter and chocolate.

If they used a batch of butter in production they should be able to trace that back to the fact they purchased it from Fonterra and be able to contact them to follow it further down the chain.

Each organisation in every supply chain needs to be collating information into a storage facility so they can dip into this at any stage, pick up a batch identifier and follow it through.

This can be as simple as using a spreadsheet or creating a small applet to capture the relevant data. The ability to use XML-based transactions coming from many different systems is probably the way forward for many companies.

Indications in the UK and US are the new hardline traceability measures are only going to get tougher.

What the new rules mean for manufacturers and expo

Pressure on supply chains to become transparent.

Product ingredient must be disclosed

Track and trace reports required within two hours.

Paper-based links may make timely reporting impossible.

Learn:

How food and beverage firms are responding to emerging traceability regulations.

Why enterprises need to run an audit to determine the flow of materials in the supply chain.

What short- and long-term strategies could be deployed by affected enterprises.

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