Editor’s Note: The posting below contains some inaccurate information about GS1 Global Traceability Standards (see comment posted below by John Keogh, Senior Vice President EPCglobal Canada and Traceability). A follow up posting has been published which provides a more accurate and detailed overview of the GS1 Canada Product Recall service.
GS1, the global organization responsible for RFID, EDI, and bar code standards, has been developing Global Traceability Standards (GTS). HP recently issued a press release announcing it was selected by GS1 to provide a massive, hosted database, open to multiple supply chain parties, to power a GS1 food recall solution. The initial project is with GS1 Canada, but HP told me the plan is to expand the initiative to other GS1 national entities, like GS1 U.S., in the future. Further, the focus of the initial project is the supply chain starting at a manufacturing facility and ending in a retail store. In other words, GS1 is not yet focused on the total supply chain that begins on a farm and, in theory, ends at a consumer’s house.
A recall database is the perfect application for cloud computing. Traditional recalls are an unwieldy and slow serial process, where a government agency asks for a recall, retailers search their systems and pass data to the relevant upstream partners, who then search their systems and pass data along to their upstream partners. In September of 2006, for example, spinach contaminated with E. coli killed three people in California. Despite the U.S. Bioterrorism Act of 2002, which has a “one up, one down” provision that requires companies to provide supply chain records within 24 hours following an incident, the farms that were the source of the contamination were not identified until March of the following year. (Since the GS1/HP solution currently does not go all the way back to the farm, it would not have provided much help in this recall scenario).
Further, as my colleagues John Blanchard and Paula Hollywood point out in an article entitled “Doing More to Ensure Food Safety” (available to ARC clients only), “major retailer supplier audit requirements regarding mock recalls and plant security are at least as rigorous as current regulations, and certainly more enforceable. As a result, these are becoming de facto industry standards.”
So how does the GS1/HP solution work? The GS1 Global Traceability Standard (GTS) provides a standard way to identify SKUs, their point of creation, and all physical locations the products travel on their route to market. A manufacturer would place the correct bar code labels on its cases and pallets, scan the pallets as they go out the door, and upload the scan data to the database in the sky. 3PLs, distributors, and retailer partners in the supply chain would follow the same process. GS1 Canada will charge for this service, based on the number of products being tracked and the size of the organization.
Unless all partners in a supply chain follow this process, the traceability trail is broken. Therefore, it is likely that the “800-pound gorilla” in the value chain, most likely a retailer, will need to force its “partners” to use this solution.
In addition to safeguarding their reputation, retailers could significantly reduce their recall costs. Currently, retailers report the problem and invite consumers to bring the recalled goods back to stores to get a rebate. This process is annoying and time consuming for consumers, can clog the stores, and requires extra staffing at the help desk. In the future, it might be possible to send customers that have a loyalty card an email and/or phone message telling them about the recall and how to dispose the product, and the email could contain a coupon that would reimburse customers for the cost of the product. This process would be easier for the consumer and less costly for the retailer.
This program is still a work in progress. In the past, GS1 promoted data synchronization, a process for manufacturers and retailers to save money by improving their data accuracy around product introductions and retirements. Data synchronization, however, never really gained much traction. Pilot tests suggested the ROI was just not that impressive, often because companies lacked the internal master data quality necessary to make data synchronization a success.
But my guess is that this initiative will gain traction (assuming GS1 does not overprice the service), particularly after the program expands to other nations and encompasses a larger part of the traceability supply chain. Cloud computing is the perfect way to eliminate the data latencies that occur in the traditional “one up, one down” recall process.
