Adding Traceability Labels to Field-Packed Produce

Transcription

1 Adding Traceability Labels to Field-Packed Produce A Study Sponsored by the California Strawberry Commission April 2009 Revised October 2009 Executive Summary The Produce Traceability Initiative requires by Q standardized labels on every case of fresh produce shipped in the US. For field-packed producers this means they must identify produce that is packed in multiple, disparate fields with a label that needs to show information that may not be known until the day, or time, of harvest. This whitepaper discusses a model and cost analysis to identify the best method available to field-packed producers to achieve compliance. The model and analysis suggest that the least expensive solution for case labeling in the field suggested by the model is to print and apply labels to cases post-harvest at the cooler. We end with a discussion on whether for field-packed produce, item-level traceability can achieve the same goal with a smaller economic footprint.

2 Introduction The Produce Traceability Initiative (PTI) calls for every case of produce shipped in the US to be labeled with a standardized case-label by Q This label will show the commodity, the packing quantity and configuration, a Global Trade Item Number (GTIN), and a shipper-assigned lot number. The GTIN is a globally unique identifier that identifies the produce item using a GS1-assigned Company Prefix and shipper-assigned item reference number. By showing this information in a standardized way and with the GTIN and Lot number in a machine-readable format (a GS1-128 barcode conforming to GS1 standards), the industry will be able to keep track of every case as it passes through the distribution chain (whole chain traceability) as long as every participant in the chain records the GTIN and lot number upon receipt and upon shipping. This traceability approach requires that each case have what - in effect - is a label, i.e. it has data printed on it that is time- and product-specific, such as a lot number and a packing configuration. For line-packed produce this will generally not pose a challenge labels can be printed on demand and applied in line or after palletization. For field-packed produce however, it represents two significant problems. One, labels must reflect constantly varying data (e.g. date, lot, packing configuration) that is not necessarily known in advance. Two, adding a traceability label in the field will require additional labor and equipment in an environment that is unfriendly to electronics and where slowing down piece rate labor is unacceptable. Produce such as berries, grapes, certain leafy greens, and melons are commonly field packed. This white paper discusses a model we created to compare the relative costs of different methods for labeling cases of field packed strawberries, to comply with the PTI objectives. Fundamentally there are two major dimensions that drive the available methods: (1) whether to use preprinted or print-ondemand labels, and (2) where to print/apply/scan the label. - -on- There are two ways to label cases with varying data - one is to print contemporaneous labels on demand when the variable data is known, the other is to pre-print semi-serialized case labels (where the lot number is a serial number that may be the same on a pallet or a number of pallets) and to assign variable data to the serial number on the label later by scanning it. Serialized labels cannot show contemporaneous data, as they are printed in bulk in advance. For some shippers, the packing configuration may change mid-harvest requiring taking multiple rolls of serialized labels into the field (to cover each configuration). Further, for many types of produce where different SKUs can be packed in the same field a pre-printed GTIN could not be more specific than the shipper name and commodity type. See Fig 1. 2 Adding Traceability Labels to Field Packed Produce

3 Fig 1. The left hand label is a compliant with PTI guidelines, right hand label is printed in advance and is serialized The PTI does not currently allow for a serial number in place of a lot number, so one objective of this analysis is to determine whether serialized cases would offer such significant savings that this would justify a second look. (Note, there are other objections to serialized cases such as data proliferation, complexity to creating 1 and inability to read the lot number visually.) The second dimension of a labeling strategy is where the labels are printed and applied to the cases (and scanned, in the case of pre-printed labels). Logically, this can be done pre-harvest, at the point of harvest, or post-harvest at the cooler. These two label strategy dimensions create six possible labeling methods, as shown in Table 1 METHODS Prior to Harvest At the time of Harvest Post Harvest at the Cooler PTI Label Printed on Demand 1. Print in morning at ranch, hand label in field when packed 2. Print in the field and hand apply when packed 3. Print and hand apply on the pallet when received at the cooler Serialized Labels Printed in Advance 4. Auto apply at box manufacturer and scan in the shed prior to sending to field 5. Auto apply at the box manufacturer and scan in the field when packed 6. Auto apply at box manufacturer and scan on the pallet when received at the cooler Table 1. All Six Possible Labeling Methods 1 A hybrid pallet label is conceived as a way to simplify receiving at the handler. It includes a GS1-code for each quantity of cases from a given lot. 3 Adding Traceability Labels to Field Packed Produce

4 The Analytical Model Each of these six methods has advantages and drawbacks. We created an analytical model to attempt to size the relative cost impact and the intangible impact of each, using reasonable assumptions. The model starts with a set of values for a prototypical farm, in our case a strawberry grower shipping 10 million trays of berries. In the appendix we detail the model and the assumptions used. The costs are either labor impact or equipment costs. Impacts on productivity are not included - but are instead assumed to be ameliorated by adding labor (we ll revisit this assumption in the conclusion). We made reasonable estimates of the costs for each method. To paint a balanced picture of total cost, the model is run forward for an arbitrary 5 years, and the total cost is discounted to a present value (PV) at a nominal 15% discount rate. This is a common technique to compare the total cost of a project in The intangible costs are items that are difficult to model economically, but nevertheless pose a burden on the shipper. These are not given financial values or relative weighting - but simply summed as of equal unit cost. Specifically, in our analysis each method was evaluated against the following criteria: Whether it avoids significant trash in the field. A major problem with field labeling is the generation of prodigious quantities of backing tape that must be disposed of. Whether it complies with existing PTI standard. Pre-printed labels would require a change of guidelines by the PTI to be accommodated. Whether the method can also be useful in improving labor data collection (e.g. associating a case with a picker) Whether the method can accommodate changes in packing configuration or SKU in the field during the day (or whether new labels would be required) proofing). It is important to anticipate mislabeled or missed cases. Methods that have a positive, reinforcing step (e.g. no label, no pay) will be preferred. Whether the labels can include additional data that retailers are expected to request (beyond PTI), such as Pack Date. Each of the six methods is then run through the model using the same set of initial assumptions, to determine the tangible and intangible costs of each, relative to one another. The results of the model are then displayed in a matrix, with the axes oriented such that methods nearer the top right quadrant represent the better options. analytical convention to make the Figure 2 shows the results for a prototypical 80 million clamshell (10 million tray) grower/shipper, using the assumptions in the Appendix. 4 Adding Traceability Labels to Field Packed Produce

5 Fig 2. Model Results for a 10 million tray shipper Note, that the model is very sensitive to the assumptions entered - and therefore the actual values should be taken as directional and relative - not absolute answers. Analysis Discussion The primary benefit of the model is the forced comparison of all possible methods using consistent metrics. This avoids the arbitrary evaluation of approaches, and the risk of ignoring possible methods altogether. The second benefit of the model is to identify the relative attractiveness of a particular method, and potentially to remove some methods from further consideration. The third benefit of the analysis is to identify the major cost drivers - to both improve accuracy of the model and to know where to focus cost-reduction efforts. According to this analysis and the assumptions we used, while pre-printing serialized labels (methods 4, 5 and 6) is a cost-effective approach, it poses logistical and compliance challenges. The PTI guidelines state that the GTIN should include the packing configuration and a date-specific lot number. Serialization cannot show this on the label, and therefore this information can only be accessed by querying a third party database. From a traceability point of view, this does not necessarily reduce the effectiveness or accuracy of the system. As long as each participant in the supply chain records each case GTIN + serial number, then in the event of a recall of a given commodity or shipper, the databases can be queried to determine the path affected produce took through the supply chain. This is exactly 5 Adding Traceability Labels to Field Packed Produce

6 how the PTI system is conceived the difference being any recall would require the communication of all the affected serial numbers. Secondly, it is not necessary to give every label a unique serial number a pallet of cases could all use the same serial number. On balance, there is probably sufficient reason to continue to explore the use of serialized labels for certain packing situations. Methods that involved hand-labeling of trays in the field (Methods 1 & 2) were costly due to the anticipated added labor required on each crew and the potential for slowing down the harvest and receiving process. According to the model and the assumptions we used, the most attractive (least costly) method is to print and apply labels to trays once they are palletized and have arrived at the cooler (Method 3). This approach has several benefits: 1. The labels are PTI compliant and reflect the actual produce harvested with no need to forecast usage and print in advance 2. The activity is concentrated at a natural choke point (the cooler) avoiding the need to add equipment and activity in the field 3. The equipment can be housed in a packing shed, rather than being in the field 4. i.e. a missing label is obvious, whereas pre-serialized cases may have no data assigned to them, yet this error would be undetectable 5. No change is required to harvesting practices in the field 6. The labels will be uniformly applied across all growers using that cooler 7. The cases can be easily associated to a pallet tag, simplifying trace-forward 8. If a cooler serves small growers, this provides a mechanism to include those who may otherwise be disenfranchised by the cost and complexity of adding external traceability. There are however several challenges that must be overcome: Cases will be labeled after being removed from the truck and staged this will require additional space and time at the cooler and pallet moves to ensure access to all sides of the pallet for labeling. (It is impractical to label cases while still on the truck) Pallet arrivals to a cooler are very non-uniform with peaks at the end of the day. This creates a potential manning problem. This approach will not work for pallets that there is always an outer panel to label without de-palletizing. This is not true for all packing styles. This method only works if the label can be placed on a single end panel (not two end panels or around a corner). The model suggests an additional cost per case or tray of approximately 3 cents is likely for Method 3. This includes the cost of acquiring a company prefix from GS1, the physical label, plus the labor and amortization of hardware at the cooler. 6 Adding Traceability Labels to Field Packed Produce

7 Other lessons from the model Running a sensitivity analysis on the model shows that the advantages of Method 3 are predicated upon the ability to label a pallet of cases at a pace of approximately 2-3 seconds per case (3-5 minutes per pallet). Label application can be facilitated by use of a label gun, rather than manually peeling and applying labels however we know of no practical equipment to print/apply large PTI labels manually in sufficient quantities. The way to make Methods 1 or 2 economically feasible would be to assume no or little impact on labor in the field from hand labeling trays (either slowing down the picker, or adding labor at the point of receiving). This is not obvious but could warrant experimentation. For example, field-printed PTI labels could replace pack-date labels that are already being applied. Conclusions Compliance with PTI poses some challenges to field packed producers in the form of workflow changes, additional costs, and negative labor productivity impact. Success of the PTI requires widespread adoption, so a low cost, easy to implement method is essential. The analysis presented in this white paper found that printing and applying labels after harvest at the cooler may be the least cost method but is not without challenges. However, if labels with GTIN + serial numbers (or lot numbers that were not date specific) were allowed within PTI, additional methods could also become attractive. The analysis also suggests a rule of thumb that traceability will likely add 3 cents a case. This model is a theoretical exercise and we invite others to revisit and challenge our assumptions. We do not presume or suggest that this method is the only approach, and growers may find that alternative methods better suit their business. 7 Adding Traceability Labels to Field Packed Produce

8 Topics for Further Discussion The goal of the PTI is to create external traceability the ability to trace a potential contamination back to the source and then trace forward to determine where contaminated product may have gone. While this paper proposes a means to achieving case-level traceability labeling, it is worth exploring the role of item-level traceability which many field-packed shippers are already deploying. PTI is specifically not providing guidelines for item-level traceability. Item-level traceability provides the consumer with the peace of mind of knowing where their produce comes from, whether it is subject to a recall, a link between a questionable item and harvest event data, and a mechanism to collect feedback at the item level. Case and item level solutions are not mutually exclusive. Outbound scanning is not planned until Can item-level traceability provide a shorter path to whole chain traceability, enabled by trace-back to the GTIN, Lot number, and harvest date from the item, with one-up, one-back traceability from shipper to retailer based on a lot number? This is especially practical for commodities that go straight to the store and are not rehandled and re-packed such as berries and grapes. A common criticism of item-level traceability is that a consumer throws away packaging long before getting sick. Once databar can be read at POS, however, a traceability code on an item (e.g. a clamshell of berries) could actually collect very detailed data that would facilitate a traceback enquiry. Small shippers will be more impacted by the cost of adding case labels relative to larger shippers. In an item-level at POS traceability model, a small shipper could use a UPC or databar to identify their brand more precisely than the current generic PMA number used on UPCs (33383). This would achieve a narrowing of recalls and prevent implication of unaffected brands. * * * About the Author Dr. Elliott Grant is the Chief Marketing Officer for YottaMark, Inc. He founded YottaMark with the vision that giving products a unique identity will help defend against counterfeiting, diversion, and fraud, and create a new channel for consumers to get more information about the products they purchase. Elliott holds a Masters degree and a PhD in Engineering from Cambridge University. In 2008 he was his work in food traceability and the development of the HarvestMark traceability solution. 8 Adding Traceability Labels to Field Packed Produce

9 APPENDIX MODEL ASSUMPTIONS Prototypical medium scale hand packing shipper Annual volume (million clams) 80 Average clams/tray 8 Annual trays (million) 10 Average trays/crew 160,000 Number of crews 63 Number of farms per ranch 5 Number of ranches 13 Case label size (sq inches) 6 Cost of print on demand traceable tray label (per label) $0.010 Cost of pre-printed traceable tray label (per label) $0.008 Hourly labor rate $10 Length of a single farm season (months) 8 Fully loaded FTE cost for a season $18,027 Cost of PC+software+printer $ 3,500 Cost of HH scanner with s/w $ 2,500 Number of coolers 3 Time to label or scan a case on a pallet at a cooler (secs) 2.0 Number of material supply sheds to serve this volume 2 Cost of GS1 $ 16,000 9 Adding Traceability Labels to Field Packed Produce

10 Hard costs METHOD 1 METHOD 2 METHOD 3 METHOD 4 METHOD 5 METHOD 6 Cost of labels and traceability service $ 100,000 $ 100,000 $ 100,000 $ 80,000 $ 80,000 $ 80,000 Additional labor to prepare materials/logistics (FTE per shed) 0.5 $ 18,027 Additional labor to generate labels & hand label cases at coolers (FTE) 4.1 $ 73,638 Additional labor to hand label cases in the field (FTE per farm) 0.5 $ 563, $ 563,333 Additional labor to scan cases at cooler (FTE) 4.1 $ 73,638 Additional labor to scan cases at pony truck (FTE per farm) 0.1 $ 112,667 Additional labor to scan out cases at supply shed (FTE per shed) 2 $ 72,107 Cost of PC+printer (# labels/printer) 1 $ 9,115 Cost of PC+printer (# per crew) 1.2 $ 262,500 Upcharge for label application (cents/label) 0.25 $ 25, $ 25, $ 25,000 Cost of printers (# per ranch) 1 $ 43,750 Cost of scanners (# at each crew) 1.25 $ 195,313 Cost of scanners (# at each supply shed) 2 $ 10,000 Cost of scanners (# at each cooler) 4.1 $ 20,425 Wasted packaging. Assume always print for the upper end, and pack the average. label $ 13,444 label $ 13,444 TOTAL COST 1 YEAR $ 738,554 $ 925,833 $ 182,753 $ 200,550 $ 412,979 $ 199,063 TOTAL COSTS 5 YEAR (PRESENT VALUE) $ 2,372,839 $ 2,486,096 $ 591,177 $ 589,950 $ 866,161 $ 560,444 average cost per tray $ $ $ $ $ $ Intangible costs/benefits METHOD 1 METHOD 2 METHOD 3 METHOD 4 METHOD 5 METHOD 6 Avoids significant trash in the field (sq ft of backing tape) 416,667 NO NO YES YES YES YES Complies with existing PTI standard - no allowances required YES YES YES YES YES YES Can use case label for labor data collection NO YES NO NO YES NO Flexible to changes in packing configuration in the field NO YES YES NO NO NO Involves positive data entry (i.e. error proofing) NO YES YES NO YES NO SKU Specific Labels, Include Date if required YES YES YES NO NO NO TOTAL SCORE (assume equal weighting) Adding Traceability Labels to Field Packed Produce

11 GLOSSARY PTI GTIN GS1 Produce Traceability Initiative launched in 2008 by the PMA, CPMA and United Fresh Global Trade Item Number Not-for-profit organization responsible for maintaining Company Prefixes and barcode standards SKU Stock Keeping Unit. An item typically described by a particular commodity and packing configuration POS Point of Sale 11 Adding Traceability Labels to Field Packed Produce