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Retail Trends

Policing the Supply Chain

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E very year, one in six Americans — 48 million people – are struck with a food-borne illness, according to the FDA. More than 100,000 are hospitalized and thousands die.

In 2006, 71 people contracted E. coli from contaminated lettuce at Taco Bell, according to the CDC. That same year, nearly 100 people in the Midwest became ill with E. coli from an outbreak traced to food served at Taco John’s restaurants in Iowa and Minnesota.

Then the CDC and FDA announced 628 confirmed cases of Salmonella infection in 41 states from August 2006 through May 2007. These cases were linked to Peter Pan and Great Value brand peanut butter manufactured at a ConAgra plant in Georgia.

Despite public outcry and numerous lawsuits, food-safety violations continued. A record 143 million pounds of beef were recalled in 2008, 36 million pounds of ground turkey were recalled for Salmonella in 2011 and, most recently, 146 were sickened and at least 30 killed by Listeria food poisoning in contaminated cantaloupe.

Meanwhile, retailers, restaurateurs and suppliers were being sued by victims and politicians were debating reform. Last year, President Obama signed into law The FDA Food Safety Modernization Act, the largest overhaul of the American food system since 1938.

Erik Autor, the National Retail Federation’s vice president and international trade counsel, says NRF worked with grocery manufacturers to help form the Food Safety Coalition that acquiesced to FSMA. “As a whole, we supported it,” Autor says, and the National Council of Chain Restaurants, a division of NRF, “endorsed it with the idea that it was actually going to improve public confidence in the food supply system [and] improve inspection and certification.”

For the first time in history, the FDA has a legislative mandate to require comprehensive, prevention-based controls across the retail and restaurant food supply chains. In total, 18 changes took effect with FSMA.

But complying with the new law means more than just following government mandates, says Donal Mac Daid, vice president of supply optimization for Aldata, a software and service solutions provider in the food safety arena.

“For retailers, implementing traceability capabilities is about more than just complying with government mandates,” he says. “It’s about building trust with customers and protecting their brand.”

Legal fallout
Wall Street analysts downgraded the stock of Taco Bell parent company Yum! Brands after the first lawsuit during the 2006 E. coli incidents, citing the potential effects of customers’ food safety concerns. The stock dropped 5.6 percent over the course of three trading sessions.

“If you’re at Taco Bell and you have an E. coli outbreak associated with somebody eating one of your tacos because the lettuce hadn’t been handled properly, that has an impact on your brand — not just at that store but everywhere,” says Kevin Payne, senior director of marketing for Intelleflex, which provides a range of solutions for fresh produce, perishable food and pharmaceutical temperature monitoring and asset tracking. “The media writes it up and all of a sudden people are running away from Taco Bell as fast as they can.”

It seems with every food safety issue comes a lawsuit. Perhaps the most infamous is the 1993 case in which 73 different Jack in the Box locations were linked to an E. coli outbreak. More than 700 people in four states became ill, 171 were hospitalized and four died. Attorney William Marler represented a claim against Jack in the Box and parent company Foodmaker, obtaining a $15.6 million settlement. The landmark case became the blueprint for food safety outbreaks for personal injury attorneys, and the genre of law has become so popular that litigators formed the Food Safety Trial Lawyers Association.

“If consumers are going to be put in harm’s way, justice demands they be forewarned,” attorney Fred Pritzker said at a Harvard University panel on food safety in February.

That leaves retailers stuck in the middle. Most of the time the recall is not their fault, but their brand is just as impacted, if not more so, than the recalled brand.

“Retailers are going to be left holding the bag,” Marler told Bloomberg News in a November article about the cantaloupe Listeria cases. “The grocery stores and retailers who sold the product — from big-box stores to road-side stands — are going to have to step in and fill the gap.”
Marler is reportedly seeking $100 million in damages from Walmart and others in the cantaloupe supply chain. The potential for litigation plays a major role in retailers changing their food supply system, Mac Daid says.

Automated alerts
Retailers have more technology than ever before to protect themselves. At the store level, Walmart recently installed PAR EverServ SureCheck and Temperature Measuring Devices for food safety measurement and check list management. PAR EverServ SureCheck is a web-based tool for managing critical control points and inspection programs for retail and food service organizations.

The enterprise-faced product configures a checklist in a hierarchical server and is deployed into a PDA’s wireless network on a PAR cloud server, says Russ Megonigal, director of product management for PAR.

“People on the store side collect data through the PDA, and there is no back office server required in the stores,” Megonigal says of the solution, used by retailers including Whole Foods.

The device is affixed to a selected area and a retailer is alerted if the temperature drops below the targeted degree mark. “If your freezer is supposed to be zero degrees and it’s 10 degrees, the solution can actually page the maintenance person to come over and take a look at it,” Megonigal says.

Technology is also giving retailers a look at the food before it gets to the store. Once product arrives at manufacturing facilities or distribution centers, Aldata’s system reads and stores the barcode’s origin data so it can be easily traced to the source, Mac Daid says.

In some cases, retailers may distribute their products to other stores in the region. “A retailer may ship 10 crates of eggs to one grocery store and six to another, requiring generation of additional product identifiers,” Mac Daid says. “Our system ties these subsequent product identifiers to the general lot number for a quantity of products.

“This capability allows for a comprehensive view of where the products came from, where they are at any given time ... and their ultimate destination.”

In the case of a product recall, Mac Daid says, the Aldata system traces all affected products by their identifiers to their specific location — whether they are in a manufacturing facility, distribution center, warehouse, in transit or in the store. Manufacturers, suppliers and retailers can identify which specific items must be recalled.

“Within their traceability strategy, a number of global food retailers have also adopted events-monitoring functionality that, within minutes of a safety warning’s receipt at the company’s headquarters, enables them to prevent further sales of affected product across all stores,” Mac Daid says. “Alerts can automatically be triggered via e-mail, SMS or text messaging to all managers’ cell phones.

“These systems can also push out the change to the stores’ point-of-sale system, preventing any further sales of the product” and allowing retailers to use their loyalty system to notify customers who purchased recalled items.

RFID tracing
Intelleflex offers similar technology, using RFID technology tags and readers to follow food throughout the supply chain. The tag records the product’s waypoint information every time it passes an Intelleflex reader — at the packhouse, distribution center and other transit points — creating an electronic data log for track-and-trace capability.

In one Intelleflex case study, the temperature of a pallet of blackberries from Mexico was tracked all the way to the packhouse. “We found ... there is a significant variation of temperature from the time it is harvested in the field, depending on the time of day, to the packhouse, depending on how far away the field was,” Payne says.

In the packhouse, pre-cooler temperature is measured to make sure the produce is being chilled to the proper level — not over-chilled and frozen, which would destroy the fruit, Payne says.

“They are also monitoring the temperature from shipping from the packhouse to the retail distribution centers in the United States,” he says. “They found that in the back of the trailer truck where there are typically 26 pallets of produce, the temperature varied from pallet to pallet as much as 100 percent .... So some pallets would age twice as fast as other pallets.”

The system has also tracked the same type of lettuce sold in most U.S. grocery stores, tracing details that indicate when it was harvested, dried and placed in plastic bags.

“What happens is sometimes those plastic bags on pallets will sit on an airport tarmac, and you may get very high humidity,” Payne says. “This creates an environment where you are going to get a growth culture for human pathogens. E. coli and Salmonella are going to thrive in that kind of environment.”

Payne says Intelleflex allows anybody in the cold chain to have a temperature record. “If you see a spike somewhere in that shipment history in terms of temperature, you might want to pull that pallet of bagged spinach ... out of your supply chain and test it,” he says.

These types of technology save the food supply chain money, he adds. According to a 2008 United Nations report, 30 percent of all U.S. food — $48.3 billion worth — is thrown away every year. But the technology also reduces liability, giving retailers more tools to prevent possible E. coli outbreaks, negative brand exposure and litigation. Payne says growers, shippers, distributors, retailers and even insurance companies want temperature data throughout the food chain.

“If you are able to document temperature data, you’re [at] a lower risk,” Payne says.