Track and trace compliance — Interview with Kevin Wilson on enhancing supply chain security and why it matters
I recently spoke with Kevin Wilson, SAP Solution Engineer - SAP Event Practice Lead at Qdata, USA, on a topic that's getting a lot of attention lately: product traceability and track and trace compliance.
Kevin examines the strategic drivers, trends, and solutions to help ensure product authenticity and traceability. He delves into the complexity and value of creating a safe and secure supply chain (counterfeit reduction), including cost impacts, recalls, and pedigree (chain of custody) and describes how the SAP solution set maps to meet compliance requirements. Kevin provides customer examples, and discusses integration scenarios for creating a unified data model to generate product genealogies and analytics. Follow up with Kevin for more in-depth learning on SAP solutions and business process design that helps to support product track and traceability at the upcoming SAPinsider Supply Chain Management Conference, March in Orlando.
You can read the interview here, or listen to the podcast, below.
Marcy Rizzo: This is Marcy Rizzo with SAP Insider. I'm speaking with Kevin Wilson. Kevin is SAP events solutions architect at Q Data USA. Kevin, I see that you're co-presenting an extended session at the 2012 SAP Insider SCM Conference, this spring, on product traceability. The title of your upcoming session is "The Latest Guide to Track and Trace Compliance, Tips for Enhancing Supply Chain Security."
I'd like to ask you a few questions about who this content is directed to. Perhaps you could start by laying some groundwork. My first question is, can you give us a definition of what is meant by track and trace compliance? Is this a toolset, a concept, a process? And then secondly, tell us about the audience.
Kevin Wilson: Sure. Thanks, Marcy, for inviting me.
We first start by looking at what is meant by track and trace then we can delve into some of the specifics.
The track portion of track and trace is basically referring to the ability to show where a particular item is at a point in time together with its current status and information. On the other hand, the trace portion of track and trace refers to the ability to show where a particular item has been and who has possessed the item for the entire lifetime of that product.
With that being said, to be track and trace compliant implies that you have the ability to track the status, the location, the owner, and other required information of each of your products throughout the entire chain of the custody of life of the product and then to be able to report on the entire chain of custody to date at any point in time.
To answer the specific ques
tion around whether those are a toolset, a concept, or a process, the simple answer is yes. It is all three. Track and trace is certainly a widely accepted concept that makes a great deal of sense in specific industries. For example, in the pharmaceutical industries where they have an ever increasing need to ensure counterfeited drugs are not inserted into the process.
Secondly, track and trace follows the process of an individual item from cradle to grave.
And lastly, the only tangible way of recording where the item is and where it has been and who has had it in his possession is by means of a system. That information needs to be electronically stored in a standard way so that it may be retrieved by anybody in the supply chain wishing to verify its authenticity.
In terms of industries that would be targeted, in general, any industry that involves the movement of sensitive or valuable products through the supply chain, in particular the pharmaceutical industry, the chemical industry, automotive, retail, and wholesale industries are great candidates for track and trace functionality.
Marcy: Thank you. That's very clear. Now, maybe you can explain to us why it's so challenging to create a safe and secure supply chain that measures against counterfeiting. Describe what some of the cost and process impacts are in tracking a chain of custody.
Kevin: Sure can. With the advent of electronic communication, the emergence of large offshore manufacturing expertise, and the explosion of ecommerce for the promotion and selling of everything from drugs to household items, and the continuous pressure to drive down costs, it's no surprise that almost all of the supply chains today span the globe. To get the work done by the most cost effective means and sell on the Internet no matter what is the most important thing, right? Maintaining control and visibility of your supply chain p
rocess is the challenge. Different countries all have different laws. They have different regulations and mandates that need to be complied with, and many are contradicting each other, between the countries that are involved in the same supply chain.
Marcy: Regarding the specifics of pharma in counterfeiting, maybe you can just help us understand some of these mandates that manufacturers and distributors are increasingly facing. And maybe it goes beyond pharma. What are some of these mandates and how do people stay on top of the dynamic regulatory environment?
Kevin: Sure. We can go into that. But, before we do that I just want to mention one of the studies that was done in October 2005 by the University of Arkansas and the Information Technology Research Institute. It computed that RFID reduced out of stock by 21 percent over non-RFID based stores. It's not just countries issuing mandates on ensuring that products are tracked and traced throughout the supply chain, but companies are also jumping onboard to help them drive through these costs.
Just in terms of some of the mandates that are out there, in 2003 the Department of Defense mandated what they call IUID, which is Item Unique Identification. How we define that is when you uniquely identify an item and exchange information about that item in a standard format, you can electronically track that item, giving you improved data quality, inventory control, enabled rapid fraud detection, and visibility from cradle to grave. So when the Department of Defense tells you to do something, you try to do it unless you don't want their business.
In the second industry that was jumping on that, ePedigree was a concept that was thought up by the U.S. Food and Drug Administration in 2006. It came out in their 2006 compliance policy guide for the Prescription Drug Marketing Act. Basically, it stated that a drug pedigree is a statement of orig
in that identifies each prior sale, purchase, or trade of the drug, including the date of those transactions and the names and addresses of all parties to date.
An ePedigree is simply an electronic document which satisfies a pedigree requirement. The primary purpose of an ePedigree is to protect consumers from contaminated medicine or counterfeit drugs.
There's two very powerful organizations in the government that are mandating, basically, the use of track and trace.
Marcy: It's clear that this initiative impacts compliance, impacts security. It really affects service levels and the penalties are so hefty. I think it would be important to understand what the SAP solution set is that solves this pretty massive set of mandates, not only from retail giants like Wal-Mart, but the FDA, the Department of Defense. What is the solution set?
Kevin: Sure, we can go through that. SAP provides two very specific solutions to that whole space, to enable the ability to fulfill materials track and trace requirements. Then, actually, later this year they'll also be releasing a new product to help events tracking capability, but we can talk about that at a later stage.
The first product is Auto-ID Infrastructure. It's a solution that enriches standard ERP processes with serialization data. The second one is the Object Event Repository, which is an enterprise-level repository for the events observed for serialization or serialized items throughout the supply chain.
The first one, SAP Auto-ID Infrastructure, is basically used to interface with attributable devices in order to capture the information, capture the serialized GTIN number, which is your Global Trade Identification number, or Container Trade Number, and transform that information into business process-useful information.
We're taking the whole event, mixing it with business information, and collecting it and coll
ating it to get it back to AII.
AII is also the field-level solution that is used to read the bar codes and the RFID tag and develop an operational data store in its own right, as well as a sophisticated rule engine. It's quite a comprehensive solution.
The second part, OER, Object Event Repository, is an enterprise repository, as I mentioned before, of events, providing traceability and visibility to applications and, ultimately, those who need it in the supply chain.
It provides that through a standard interface that gives you the ability to basically track that item. That's where your tracking and tracing will be coming out of the Object Event Repository, but we need the information to come in from somewhere. That's going to come in from the Auto-ID Infrastructure.
The OER is also the host of the information for the pedigree of the item. Where has it been? You would go in there and query the Object Event Repository to understand exactly where that particular product has been, from cradle to grave.
Marcy: Thank you for that description of the solution set. I have one more question on functionality and interfacing with this solution set that you're talking about, which is event management. You haven't mentioned it, and I wonder what the tie-in is with SAP event management.
Kevin: The Object Event Repository is built on an SAP event management platform. The Object Event Repository is ultimately one particular scenario that is available on the SAP Event Management and it's called the Product Tracking and Authentication Scenario. It's enabled and the engine is the event management piece. If you want an understanding of it, management is sort of the toolkit behind it. It provides a lot more functionality than just the track and trace capabilities of the Object Event Repository.
You can actually measure your processes based on plans versus actual
, as opposed to just the normal e-pedigree requirements of track and trace.
Marcy: That sets some good context around this whole topic, so thank you for that explanation. Clearly there is much more to discuss. Kevin, I hear that you might be doing an article for SCM Expert on this. Is that true?
Kevin: I am busy writing it. I'm hoping to get it done at some stage, too, so yes.
Marcy: Good. We're very happy to have you do that. You are an expert on this subject, and someone I know that our subscribers and attendees count on for relevant and reliable information. Listeners, if you'd like to follow up with Kevin in person, he will be a featured speaker at the upcoming SCM event. Actually, he's doing a pre-conference workshop on this subject. That's going to be held in March in Orlando. Thank you so much, Kevin, I look forward to seeing that article.
Kevin: Thank you Marcy.