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The Cost of Compliance: What It Takes To Be In Compliance With the Product Traceability Initiative

Being in compliance with the product traceability initiative is extremely important for food manufacturing and distribution companies. Traceability has often been viewed as a hindrance to an operations ability to maximize the production flow while keeping safety and quality of their products when in fact traceability in most cases, increases the production by limiting errors. The product traceability initiative, or PTI, was created to give companies a concrete set of guidelines to use that define traceability and best practices throughout an entire supply chain.

About The Produce Traceability Initiative

Before you can worry about being in compliance with the product traceability initiative, it is important that you understand what exactly the PTI is. The PTI was created in 2007 by a partnership between the Canadian Produce Marketing Association, the Produce Marketing Association, and the United Fresh Produce Association. The goal of the product traceability initiative is to leverage technological best practices to improve the way that distributors can track produce, which allows industry professionals to cut down on the amount of poor quality shipments that consumers get exposed to through food retailers.

The PTI website outlines the 7 milestones to PTI implementation. Most of these milestones have to do with creating and assigning numbers that can remain consistent throughout product shipping so that buyers can use them to track their shipments. The numbers are assigned using an identifier system known as GTIN, or Global Trade Item Number.

Potential Costs Of The Produce Traceability Initiative

There are two sides to consider when you are weighing the costs of being in compliance with the product traceability initiative. The first side is thinking about the actual implementation costs of the PTI itself. In most cases, the biggest costs that produce and food companies face will come in the form of upgrading their systems to support and manage the proper storage and encoding of traceability information in addition to the information associated with the assigned GTIN numbers. A document on the PTI website suggests that companies that use technology like barcode readers will face lower costs ( vs. paper based traceability) [overly obvious statement]to implement the standards of the PTI, and while this statement may be true, we have found that the optimal combination is when companies combine traceability software with their current hardware and accounting system.

The second side that you should consider when thinking about being in compliance with the product traceability initiative is the cost of not being in compliance with this initiative. David Kane at Food Manufacturing writes that the upfront costs of software systems used to meet the requirements for being in compliance with the product traceability initiative are significantly less than the costs of losing money on shipments rejected due to quality or retailers withholding up to 30% of each unit cost to cover potential liability costs. When you look at the produce traceability initiative this way, you begin to understand why it is so important to be in compliance with the PTI.

It is important for each organization to examine their own labeling and tracking situation so that they can get an idea of their specific costs for PTI compliance. While these costs will vary depending on how far along your company is with product tracking and the move to a fully electronic recordkeeping systems, it is safe to say that investing in PTI compliance will provide plenty of return in the form of more shipments being accepted by buyers in your supply chain.

To learn more about the Produce Traceability Initiative and PTI software solutions or to schedule a demo, please contact us. We would love to help!

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