Presentation regarding Produce Traceability as presented to FDA & FSIS on December 9 & 10, 2009 in Washington, D.C.

1. Leveraging & Harnessing
Existing Systems and Enabling
Technology
Deborah White
SVP & CLO
Food Marketing Institute
December 9-10, 2009
dwhite@fmi.org

2. Food Safety Priorities
• Prevention
– Preventing adulteration at point of production
should be highest priority
– Only safe food should enter the food supply
• Response
– Retail and distribution sectors utilize effective
systems to remove adulterated food from the
distribution system quickly once the food has
been identified

3. Tracking Food
• Recent prolonged outbreak investigations highlight need
to id tif
t identify and find adulterated food that has entered th
d fi d d lt t d f d th t h t d the
food chain more quickly
• Retail and food distribution industry complies with
Bioterrorism Act “one up/one down” requirements
• New programs:
– Maximize existing information
– Pilot projects first
– Interoperable
– Consider all options for better identifying adulterated food in the
supply chain, not just new recordkeeping requirements
– Improve public health

4. Today s
Today’s Distribution System
• Today’s distribution center (DC) is highly efficient*
– Hundreds of suppliers send millions of cases that are repackaged into thousands
of shipments to hundreds of stores
• Median DC size: 583,655 ft2
– Range: 60,000 ft2 5,800,000 ft2
• Avg Deliveries to DC: 500 per week
– Range: 248 874
• Median # cases received by DC: 510,000 per week
– Range: 176,731 975,000
• Median # cases shipped f
from DC
C store: 2,200,000 per 4 weeks
– Range: 120,000 13,804,000
• Median # deliveries from DC store: 1,972 per 4 weeks
– Range: 54 12,783
• Median pounds of food shipped: 47,500,000 lbs per 4 weeks
*FMI, “Distribution Center Benchmarks,” 2007

5. Today s
Today’s Distribution System
• Simple Process: In-Bound (Records)
In Bound
– Wholesaler orders from vendor (Purchase
Order)
– Vendor ships order to DC (Shipping docs,
manifest)
• Vendor bills DC (Invoice)
– DC receives pallet from vendor (
p (“License
Plate”)

6. Today s
Today’s Distribution System
• Simple Process: Outbound (Records)
– Store places order with warehouse (store order)
– Selectors travel thru warehouse to pick individual
p
cases to complete order
• 65% of DC’s use voice-directed order selection systems
– Store order of hundreds of cases palletized
– Order shipped to store (store invoice)
– Order received by store
• Median: 42 cases stocked on shelf per hour

7. Today s
Today’s Distribution System
• Performance
– Avg Cost To Handle Each Case
• Median: $0.39 per case (inbound + outbound)
– Time To Handle Each Case
• 20.57 seconds per case (outbound)
• Additional distribution mechanisms
– Cross-docking
• 94% of warehouses cross-dock product
– Brokers
• Combined orders for lower volume items
– Direct store delivery
• 30% of retail sales
f t il l

8. Today s
Today’s Consumer
• Recession and economic woes are REAL
• Price of food is critical
– Recession has impacted grocery shopping (70%)
• Shoppers “trading down,” substituting and eliminating to save
money on groceries (Trends 2009)
(Trends,
– Low price is the single most important factor to consumers
selecting a primary store (Trends, 2009)
– 36M Americans receiving federal food assistance (
g (NYT,
,
11/29/09)
• 20,000 people added per day
• Consumers still time-starved (Trends, 2009)
• Nutrition important (Trends, 2009)
– 89% of consumers very/somewhat concerned about nutrition
– 92% of consumers believe home-cooked meals more nutritious

9. Important To Get It Right
• Increased distribution efficiencies have kept food
p
prices low and supply abundant
– Reducing efficiency increases cost and reduces
abundance
– Food retail/distribution system profits: $0.01 per dollar
• No choice but to pass costs through the chain
• Consumers are struggling – do not increase costs unless
clear benefit to public health
• Any changes that will impact distribution system
y g p y
must improve public health and reduce burden
of foodborne illness

10. Therefore…
Therefore
• FMI supports improved ability to identify
and locate contaminated food
– Maximize existing information
g
– Any new systems must be fully interoperable
– Start with pilot p j
p projects involving all
g
stakeholders
– Look at all options
• Private sector/government collaboration &
transparency is essential