Presentation Agriculture and Food Traceability

1. PresentationAgriculture and Food Traceability Stein Onsrud, TraceTracker USA, 415 686 3684 Main Content A general introduction to traceability Some challenges in the food industry How to identify and trace products,raw materials and property information throughout the supply chain Some customer exeriences What does it take to get started? Some thoughts on the future

2. TraceTracker Background • Company established in 2000 • Service Provider with technological platform called Global Traceability Network (GTNet™) • Global system launch in December 2004 • Growing number of commercial implementations and pilot systems • Offices in San Francisco, Toronto, Oslo, Frankfurt, Milan, Singapore and Tokyo,

3. What is traceability ? Source: Gemini 03/06

5. Different Ways to Capture Data, but One Traceability Platform GS1 GTIN ERP Systems Local Databases DNA Fingerprint Ear Tags RFID Barcode Manual

6. Legislation/Guidelines Worldwide • ISO 22000:2005 - Traceability in the Feed and FoodChain- Nov 2005 • Global Food Safety Initiative (GFSI) Guidance Document – CIES The Food Business Forum • European Union Food Regulation Directive 178/2002, effective Jan05 • US Bioterrorism Act 2002 • Can-TraceCanadian Food Traceability Data Standard (CFTDS) v1 • The British Retail Consortium Global Food Standard • SQF (Safe Quality Food) 2000 Code. - SQFI is a Division of the Food Marketing Institute • GS1 Traceability Standard – from GSMP’s Traceability Industry requirements team (IRT) • Canadian Food Inspection Agency recall system • USDA Food Safety and Inspection Service Directive 8080 ver4 5/24/04

7. Seven challenges(1) put food industry under pressure • Changing supplier-retailer relationship • Power-shift from manufacturer to retailer • inventory control, order cycle-time reduction Rising concerns over food safety Recalls, GMOs, Labeling, Bio-Terrorism • Globalization • Tailoring products to local taste and special brands • Off-shoring of production • New technologies reshape the industry • New technologies allow better tracking of product flows: • Scan-based trading (SBT) • RFID Regulatory pressures and social responsibility Environmental lobby groups Complex regulatory environment • Brand management • Private labels capture market share from established brands • Brands lose character due to rationalization • Food as fashion: faster cycles Changing demographics and lifestyles Older consumer, higher incomes, diverse population, ethnic groups, changing lifestyles Global traceability required to cope with those challenges (1): Whitepaper of SAP together with Deloitte: „What‘s cooking in the food industry“, 2005

8. Problems as current as today’s headlines E.Coli contaminated spinach recall... ...became a criminal investigation Then it spread to lettuce ....What‘s next? Lack of Traceability Exposes Food Companies to Huge Risks

9. Traceability will have significant economic benefits(1) and also enable regulatory compliance 1. Achieve regulatory compliance 2. Meet market/customer requirements • Lend support to legislation and associated regulations covering the fresh produce supply chain • Address concerns of agro-terrorism or tampering in the food supply chain • Bolster consumer confidence through the ability to identify and recall unsafe products • Retailers begin requiring the use of newer technologies and standards: EDI, GTIN, SSCC, RFID. Traceability required to meet emerging demands 3. Manage risks and recalls and reduce liability costs 4. Improve supply chain operations, product quality, reduce costs • Minimize scope of recalls, reduce liability and cost of product. Enormous financial impact by recalling an entire commodity/brand vs. a specific grouping of product • Proper segregation/identification of product  companies may demonstrate that their product is not implicated in a given product recall • Improve supply chain efficiencies and trading partner collaboration • Maintain Shelf Live through Cold Chain Integrity • Feedback loop in value chain, e.g. from grower to retailer/foodservice to improve product quality, condition, and delivery. (1): Fresh Produce Traceability. A guide to implementation; PMA, CPMA/ACDFL 2005

11. TraceTracker bridges the gaps in the produce value chainRequirements as defined by the produce industry(1) From field to processor: Info gets lost due to mixing Packaging, re-packaging, re-palletizing, reusable containers Splits and Joins Self-service at store Joins and Mixing Seeds, fertilizer, crop protection chemistry Primary producers / Growers Packers Processors Wholesale/Distributors Retailing stores Consumers At various steps transformation events (splits, joins and mixing etc.) occur. These represent a hurdle to traceability that needs to be overcome. Current systems can only support logistical tracking. TraceTracker solution masters 6 different transformation events: splits, joins, mixing, convert, enter and leave cluster (1): CPMA Global Produce Traceability Conference 2004, Report from Facilitated Group Discussions

12. GTNet and EPCglobal NetworkDeveloped integration to EPCIS together with IBM Supports traceability (mix/split/join) + logistics tracking Supports logistics tracking GTNetTM EPCglobal Network • Participants in GTNetTM can participate in EPCglobal Network • If EPCglobal Network should include traceability in the future, TraceTracker will support it Additives Feed Producer Trans Distribution Trans Retailer Additives Traceability needed Logistics tracking needed

13. Retail / Retail / Value Value - - Added Added Ingredient Ingredient Feed Feed Primary Primary Food Service Food Service Processor Processor Producer Producer Producer Producer Processor Processor Producer Producer GTNet – a Whole Chain Traceability System A distributed system architecture that links traceability information between independent members of the value chain Other Traceability Communities GTNet Hub Central Premise and Product Registry Global Link Database • Company / site information • Business processes / practices • Product characteristics, ingredients • Business transactions

14. 4 3 2 1 TraceTracker Solution – How It Works • Global Link Database • TU ID • GLN (received from) • GLN (sent to) • Time/date Stamp Global Link Database Through the Global Link Database GTNet identifies all related Trade Units in the value chain and passes the trace request on to the other companies GTNet Hub The identity of the requestor is validated and the information agreed to share with the requestor is sent back through GTNet Company A initiates a trace inquiry related to one of their Batches / Trade Units. Example: Product Recall Trace Inquiry Globally Shared Traceability Information Globally Shared Traceability Information Globally Shared Traceability Information Trace Response Company A receives all requested information for action or further processing Internal Systems Internal Systems Internal Systems Company C Company A Company B

15. Example: Pin-point Product Recalls / Withdrawals Trace Unit or Batch in focus 1. Trace-back: Establish the cause of the product defect • Faster and more effective product recalls • Reduced costs and management time • Protect company image and brand names 2. Trace-forward: Identify and locate affected batches down-chain Trace Unit or Batch in focus

20. Traceability linked to Google Map

21. Get detailed info about the shipment/batch

22. Some Experiences and Examples of Savings

23. Some examples of savings • From Recall to Pin-point Withdrawal: A company’s losses from expensive recall management can amount up to 150 mill. € ($ 200 mill.) per case *** • Brand Protection: Losses from counterfeited food products rising to 63.5 bill. € ($ 80 bill.) annually *** • Flexible Shelf Life Management can reduce produce deterioration: 20% of fresh crops deteriorate after harvest leading to annual losses of 66 bill. € ($ 82 bill.) *** • Brand creation and product value:Differentiating speciality products by identity and quality preservation leads to higher margins Let‘s help to unlock this economic potential ! *** Source: KIM e.v., Ludwigshafen, Germany (Kompetenzzentrum Innovation und Marktorientierte Unternehmensführung)

24. Cold chain traceability – a significant potential for the food industry 5-7% handling-related losses in the produce chain(1) 75% of handling-related losses due to temperature effects 10-40% of losses can be saved(2) by traceability Savings due to temperature traceability solutions in US produce industry $ 0.9 - 1.3 bn $ 100-500 m 5-7% Apply traceability solutions to monitor temperature chain 93-95% Temperature-inflicted losses in US produce industry amount up to 1 bn USD U.S. fruit and vegetables production in 2002: $24.5 billion Volume of handling-related losses is $1.2-1.7 billion Source: TT Customers in Europe (1): Additional losses in stores not included (2): Depending on individual solution

25. Reduced spoilage – huge financial savings FIFO does not always apply: Shelf life of fruits and vegetables correlates to the temperature conditions of the transport and storage rather than the age • Knowing the temperature history of perishable goods is critical and saves millions • Full-chain traceability can provide this Investment of 1.2 m€ over 5 years: Value of loss-reduction due to traceability approx. 42 m€. ROI of 35 in 5 years

26. Building Brand Value and Customer Loyalty TraceTracker’s GTNet enables Creative Salmon Company to: • Enhance brand value by delivering proof of organic production and sustainable business practices • Strengthen customer loyalty and trading partner relationships through proactive information sharing • Secure access to international markets through regulatory compliance

27. A range of other value propositions What is your most urgent need? Compliance, Productivity, Sourcing and Procurement, Risk Management, New Product Development, Brand Creation and Brand Protection, Product Differentiation, Sales and Marketing

28. Building global traceability How to get started

29. General Traceability Strategies • Compliance-oriented strategy: • Comply to the Law by implementing minimum requirements. • Process improvement-oriented strategy: • Traceability of products through internal processes and organisation, focused on improvement of efficiency of (logistical) processes in relation with customers. • Market-oriented strategy: • Transparency of the supply chain in order to achieve competitive advantage and a unique proposition.

30. Building the TraceTracker Traceability Model 1. Survey actual product and information flows 3. Build internal and whole chain models 2. Define processes and relationships to be used in the model

31. Your Supplier(s) Your Company Your Customer(s) Implementing Global Traceability Incremental Approach • Select your initial trading partner(s) • Agree on objectives, scope, plan • Select one or a limited number of products • “Get Connected” • Add additional trading partners • Add additional products

32. What TraceTracker can provide Your Company • System solutions for both Internal and Global Traceability • A flexible and scalable solution that allows for incrementally adding business objectives, trading partners, products, property information • An IT infrastructure that complements Your in-house IT capabilities • A global delivery organization through strategic partnerships • Traceability expertise and experience TraceTracker gives Your Company the ability to protect Your investment in internal traceability and enables You to pursue business benefits “beyond traceability” through the GTNet. A solution that you can implement TODAY.

33. “Get Connected” with TraceTracker Your Global Traceability Solution Partner “Helping Create Trust” Stein.Onsrud@tracetracker.com Cell: +1415 686 3684