July 15, 2014

PTI Progress: Retailers begin implementation of traceability plan

It took a few years for the Produce Traceability Initiative (PTI) to develop industry acceptance, but it gained major traction in the United States this year, courtesy of  Wal-Mart.

In May 2013, Wal-Mart issued a timetable for PTI compliance to its produce suppliers for both of its retail outlets, Walmart and Sam’s Club. Effective on Nov. 1, 2013, all fresh commodity products delivered to Wal-Mart distribution centers were required to have standardized case labels consistent with PTI standards.

Effective on Jan. 1, 2014, produce out of compliance would be rejected unless an active exception had been issued by the buyer prior to delivery.

According to Dan Vache, vice president of supply chain management for the United Fresh Produce Association, Wal-Mart’s announcement got the attention of the produce industry.

“There’s no doubt that when Wal-Mart made their announcement, that really put people in a place to say that this is real,” Vache said. “We’ve finally got a really big player that’s coming into the pool and making this happen. When Wal-Mart speaks, people listen.”

Vache said that he anticipates another major retailer soon will announce its adoption of PTI guidelines for fresh produce suppliers. He anticipates that the announcement will be forthcoming in June.

“They’re poised to do it, we know they’re going to do it, but they haven’t released it publicly yet,” Vache said. “They’re very adamant about their supply side being PTI compliant.”

He said that the commitment by shippers to PTI compliance has picked up substantially during the past year. Last year at this time, Vache said he was seeing about 25 percent of produce cases with PTI labeling. During a recent visit to distributions centers, Vache saw between 40 to 60 percent of cases that were PTI compliant.

Vache said the supply side has always led the way in traceability, and that it’s the retailers that have been slow to incorporate PTI into company policy. Part of the reluctance by retailers is due to cost of investing in the necessary equipment. However, another factor has been the recent mergers in the retail grocery industry, such as Albertsons buying Safeway and Kroger purchasing Harris Teeter.

“With all of the mergers and acquisitions that are going on, they really lose a little bit of emphasis on this type of activity (PTI),” he said.

“We continue waiting for leadership to develop and come to the surface with the buy side,” Vache said. “The key to make it (PTI) come to fruition is to have some leadership on the buy side.”

Ed Treacy, vice president of supply chain efficiencies for the Produce Marketing Association, has witnessed the evolution of PTI from a concept into a growing reality within the fresh produce industry.

Treacy said Wal-Mart was serious about its commitment to PTI.

“We actually heard and confirmed at least one shipment was refused for non-compliance because they hadn’t labeled the cases,” he said.

Treacy said that one of the advantages Wal-Mart has found with the implementation of PTI is an easier means to assist in inventory rotation. The standardized labels that Wal-Mart is using on returnable plastic containers (RPC) also contain a pack date.

He said that the additional information was not part of the standard PTI label, but is part of the industry standard RPC label, with many retailers requesting the RPC label format.

“The  retailers use it to assist in rotation out of the back room of the store, so if they have the pack date on the case label they can rotate the product in the proper sequence,” Treacy said. “Prior to that, most of the retailers, when they didn’t have a pack date, were writing or stamping on the date it was received, which is not necessarily a true first in and first out.”

Treacy said that Whole Foods announced last fall that it would implement PTI compliance with Advanced Ship Notice (ASN) by this June, along with a comprehensive ratings system for produce.

Whole Foods will grade its suppliers on a list of variables, including sustainability, pest management, pollinator protection and soil health. Beginning in September 2014, Whole Foods will provide its customers with a three-tier rating system of “good,” “better” and “best” for the produce.

Treacy sees it as an opportunity that Whole Foods has taken to advance PTI even further, and he welcomes any measures that promote implementation of PTI.

He expects to begin hearing more PTI implementation announcements from retailers as the year progresses.

Treacy understands that many shippers and packing houses are reluctant to become PTI compliant until their customers require compliance. However, he advises suppliers to prepare in advance of the day when they will have to be PTI compliant.

“We’ve seen a host of companies really pay for more than the cost of implementation and the labeling itself by using the information on that label in their current process,” Treacy said. “If you’re not going to use it, at least go figure it out, and then when you get the call or the letter your implementation is not going to cripple your company. Because if you have to implement PTI in a hurry, it is going to be much more expensive and much more disruptive to your business than if you took your time and thought through the changes required.” 

Bill Schaefer, contributing writer

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