Supply Chain Integrity - An Opportunity

SUPPLY CHAIN INTEGRITY:
AN OPPORTUNITY NOT JUST A COST
© Source Certain International Pty Ltd – 2017
Cameron Scadding (Executive Chairman – Source Certain International)
Supply Chain Integrity Seminar - FoodPro2017

WE (CONSUMERS) HAVE VERY HIGH EXPECTATIONS
2Confidential © SCI 2017

WHAT MATTERS?
• Think like a consumer
• What holds it all together?

4
TRANSPARENCY
HYPER-
CONNECTED
BIGGER IS NOT
ALWAYS BETTER
Confidential © SCI 2017
WE HAVE CHANGED

HEADLINE MESSAGE
Lets turn the light on, fix the problems that we can now see and give consumers a
reason to trust us. It will create value!

TAKE HOME MESSAGES
1. Consumers in export markets already trust Australian food.
2. Often, these consumers (e.g Chinese consumers) do not trust the
supply chains that deliver the food to them.
3. Securing supply chains from source to consumer is essential to fixing
this problem.
4. The value of the “Australian” promise is why the adulteration,
substitution and counterfeiting problem exists. The promise is cheap,
the reward is high, the consequences are small (to nothing).
5. There is no silver bullet – this issue is a complex one and requires a
supply chain wide solution.
6. Open supply chains are a reality – a supply chain solution may be
difficult to implement but we must do what we can to manage the some
of the business risks associated with this problem.
7. Transparency is coming to food supply chains – you must be authentic
with your promise and to build trust you must be prepared to verify this
promise.
Confidential © SCI 2017 6

FOOD: A GLOBAL BUSINESS
7
• The way food is grown, sourced, aggregated,
distributed, represented and sold is more
complex than ever.
• This complexity combined with the regulatory
limitations provides opportunity.
• Consumers have high expectations of these
supply chains. Not only the food that they
deliver but also the information.
• What happens when the promise is not met or
even worse something happens to a consumer
(Food Safety Incident for example).

FOOD SUPPLY CHAINS
8
• Food supply chains are a vital connection
between producers and consumers.
• The demand or trust of a product can be
destroyed by a single incident.
• Security and integrity in each segment of the
supply chain that connects consumers to the
source of their is critical.
• In food - TRUST is all you really have.
• How important is transparency?

ALL OF THESE VALUE PROMISES ARE CREATED BY
THE SOURCE AND DELIVERED BY THE SUPPLY CHAIN
9
Free Range
High
Quality
Safe
Working
Conditions &
No Slave
Labor
Provenance
e.g. Swan
Valley, WA
Organic Natural GM Free
Ethically
Sourced
Grass Fed
Pasture
Raised
Farm
Fresh

THE SITUATION IN AUSTRALIA
10
• Consumers in Australia generally trust
Australian foods and the supply
chains that deliver the food to them
• Biosecurity strategies
• Food Safety Infrastructure
• Complacent?
• Implication of everyone being good
guys?

EXPORT MARKETS: EXAMPLE -FOOD IN CHINA
11
• Food safety incident after food safety incident - high profile and some
resulted in fatalities.
• Amongst consumers in China, there is a general mistrust in the food
delivered through their supply channels.
– Melamine in infant milk powder
– Meat bleaching
– Fish species substitution
Time 19 September 2016. http://time.com/4498998/china-
meat-food-safety-bleach-police-guandong-shenzhen/

MELAMINE IN INFANT MILK POWDER
2008 Melamine Issue in China 2016 Nationwide Australian Formula Shortage
• 300 000 people affected
• Six infant deaths, 54 000 babies hospitalized
• 11 countries banned Chinese formula imports
• Those prosecuted and convicted were jailed or given the
death penalty
• Shortage of infant formula nationwide in Australia.
• Purchase limits imposed by the major retailers.
• The concern is still real for consumers in China and
Chinese-born mothers living in Australia

Big Business + Big Opportunities = Criminal Infiltration
Most substituted products:
– Vanilla Extract
– Maple Syrup
– Wines
– Juices
– Coffee / Tea
– Saffron
– Honey
– Milk
– Olive oil
These sorts of lists are built from reported case
13
http://www.cbsnews.com/news/60-minutes-agromafia-food-fraud/
FOOD FRAUD: GLOBAL PERSPECTIVE

• FDA defines this as economically motivated
adulteration.
• Australia tends to focus on IP (brand protection) and
food counterfeiting.
• Food Fraud is broader than this and refers to any fraud
that happens within the food supply chain.
• The focus (highest profile) is deceptive conduct,
substitution and adulteration but also includes tax
avoidance, money laundering and other organised
criminal activities.
In the context of AUSTRALIA à CHINA
• EMA (Economically Motivated Adulteration)
• EMS (Economically Motivated Substitution)
14
Source
Supply
Chain
Consumer
FOOD FRAUD: ONE OF THE SUPPLY CHAIN THREATS
IN EXPORT MARKETS

RECAP- THE CONSUMER &
THE PROBLEM
15
SOURCE
(CHARACTERISTICS)
MILK POWDER
AUSTRALIA
ORGANIC
BRAND
MILK POWDER
CHINA • Milk
Powder
• ChinaD
• Milk
Powder
• Australia
• Organic
• Brand
W
• Milk
Powder
• Australia
• Organic
• Brand
D
• Milk
Powder
• Australia
• Organic
• Brand
W
SUPPLY CHAIN CONSUMER
$ $$ $$$$$
$$$ $$$$ $$$$$
D DISTRIBUTION
W WHOLESALE

WHAT ARE THE CURRENT SOLUTIONS?
China’s ‘diagou’ shoppers leading Australian retail drive
The Sydney Morning Herald, 27 Jan 2016. http://www.smh.com.au/business/retail/chinas-daigou-army-
plan-fresh-assault-on-our-stores--and-this-time-theyre-coming-for-our-cherries-20160126-gme8ec.html
• Estimated 40,000 of these
shoppers accessing AU retail
outlets to supply their clients in
China.
• P2P approach where the client
communicates with the buyer –
often the buyer will show their
client themselves removing the
items from the shelf in AU.
Daigou Personal Shopper Packaging-based traceability
security systems
Paper-based quality control
and quality assurance
traceability systems
Unique-to-product barcode
or other labelling
Trackable QR code scanning
to connect consumers with
product information
Security packaging seals
ARE THESE SOLUTIONS ENOUGH?

SOURCE CERTAIN
A NEW, BETTER WAY: VERIFIED SUPPLY CHAIN INTEGRITY
VERIFIED SUPPLY CHAIN INTEGRITY
FOR ALL SUPPLY CHAINS
1

WHO & WHAT IS SOURCE CERTAIN INTERNATIONAL?
• Source Certain International (SCI) is a global service business
with global access to use the unique TSW TraceTM provenance
(origin) process. This process comprises;
a) Highly experienced and globally recognised forensic
investigators and analytical scientists.
b) Use of state of the art laboratory and analytical
instrumentation to test products.
c) A well established and recognised process for profiling
(fingerprinting) products to determine or verify origin.
• SCI substantiates the source of products and delivers “Verified
Supply Chain Integrity”.
• SCI by providing accuracy, clarity and transparency of origin claims
builds confidence in supply chains. This confidence enhances
brand and assists in management of brand reputation risks.
• SCI can help develop confidence for all supply chain stakeholders
and critically helps build trust with the consumer.
• SCI offers a real, science based, security solution for supply chains
to combat fraud and substitution.

Risk Management –
Assists with Managing Recall & Crisis, Supply Chain Threats
(Economically Motivated Adulteration & Substitution, Fraud),
System Verification
Supply Chain Security –
Surveillance: Independent third party presence within the
supply chain
Builds Trust with Consumers –
Connects and communicates with consumers
Compliance –
Satisfy regulatory or other statutory requirements with
respect to origin verification and declarations
SCI VALUE PROPOSITIONS
BRAND ENHANCEMENT, PROTECTION & COMPLIANCE
19
VERIFIEDSUPPLYCHAININTEGRITY

HOW WE DO IT - REAL VERIFICATION
A ROBUST SCIENTIFIC METHOD FOR THE
DETERMINATION OF PROVENANCE

SCI ORIGIN TECHNOLOGY
What is TSW Trace TM
TSW TraceTM has been developed by
TSW Scientists over the past 40 years.
TSW TraceTM is a method that
robustly determines the provenance
of an item.
TSW TraceTM uses a variety of
scientific approaches to determine
the fingerprint of a sample and link
it to its origin.
TSW TraceTM is routinely employed
as a Forensic tool and is delivered
by Expert Forensic Chemists and
Investigators.
SCI HAS EXCLUSIVE, GLOBAL LICENSE FOR APPLICATION OF TSW TRACETM TO ALL
PRODUCTS
TM

SCI SERVICE VALUE
TSW TRACE™: FORENSIC VERIFICATION
• NO silver bullet solution to supply chain security and integrity.
• Data based traceability is a minimum requirement.
• Security labels, data tracking and secure packaging are part of a solution.
– Risk of counterfeit labelling OR substitution and adulteration of products inside ‘authentic’ packaging.
• Forensic verification of the product itself is an absolute way of linking a product to its source
and build integrity and confidence.
TM
Source Certain’s REAL verification assurance that the actual product that has travelled
through the defined supply chain can be physically linked, through scientific analysis, to
its production source or origin is independent of any labels on packaging and the human
intent to defraud.
FORENSIC VERIFICATION

Paper-based quality control
and quality assurance
traceability systems
Unique-to-product barcode
or other labelling
Trackable QR code scanning
to connect consumers with
product information
Security packaging seals
SCI SERVICE VALUE
SCI SERVICE vs PACKAGING-BASED SYSTEMS
Packaging-based traceability
security systems examples:
Packaging-based traceability systems in no
way lay claim to the integrity or authenticity of
the actual product, only the packaging.
• The packaging itself and any traceability
information (labels, barcodes, QR codes) can be
copied in implementation of counterfeiting
strategies.
• There is inherent potential for label duplication or
substitution, including:
– Direct duplication of ‘unique’ QR or
barcodes,
– Creation of false codes on duplicated
packaging linking consumers to different and
unrelated source verification information, or
– Substitution or adulteration of a product
through re-packaging false or fake product
inside ‘authentic’ and ‘unique’ packaging.
• Not all products are sold in packaging.

WHAT DOES SCI BRING TO SUPPLY CHAINS?
24
Farmers /
Producers &
Their Story
Consumers &
Their Need for
Information
Transparency & Integrity
Confidence & Trust

SOURCE CERTAIN SERVICES
25
Source Certain Services fall within one of three categories:
- Compliance with a Source
Verification Standard
- Statement of Compliance
for production sources
Verifiable supply chain
integrity:
- Source Check
- Source Secure
- Source Certified
- Support service
- Investigation Unit

SOURCE CERTAIN SERVICES
2. SUPPLY CHAIN SECURITY
• Risk Management
• QA / QC
Source Check
Brand differential &
value creation
Source Secure
Dynamic consumer
communications
Source Certified
EXTERNAL COMMUNICATION
- Value adding, mass
communication options available.
- Communicate that supply chain
is secure.
CONSUMER COMMUNICATION
- Add-on to Source Secure Service.
- Consumer facing, on product,
Source Certified trademark.
- Dynamic communication option for
consumer regarding service and
source of food specific to product and
supply chain.
INTERNAL COMMUNICATION
- No external (consumer
engaging) communication.

27
Australian Food
Products –
Export to China for
sale via e-Commerce
Example Products:
Beef, Dairy, Wine
SERVICE EXAMPLE
AUSTRALIAN FOOD: E-COMMERCE IN CHINA

28
Objectives:
1) Secure the export supply chain from Australian production sources to e-Commerce
platform consumers in China for Australian food products.
2) Facilitate verification of Australian food product or batch identification (has the food
product come from a covered supply chain source?)
3) Build trust with consumers by connecting them to the source of Australian food products.
Supply Chain:
Australian
Farm/Supplier/
Producer
Processing/
Packaging
Distribution
(Aus➤China)
Consumer
SERVICE EXAMPLE
AUSTRALIAN FOOD: E-COMMERCE IN CHINA
Distribution
(E-Commerce)

BUILDING THE SOURCE SECURE SERVICE
29
1.
Supply Chain
Mapping & Risk
Assessment
• Definition of
supply chain
segments
• Supply chain
segment risk and
threat analysis
2.
Stakeholder
Induction &
Education
Sessions
• For supply chain
participants
• Outline of
objectives of
service and
service activities
• All stakeholders
on notice
3.
Supply Chain
Communication
• Inside supply
chain
communication
strategy
implemented
• All stakeholders
on notice of
security strategy
implemented
4.
Reference &
Verification
Sampling
• Independent
sampling
conducted by SCI
• SCI staff present
and visible in
supply chain
5.
Verification
Testing &
Reporting
• Forensic testing
of sample to verify
source
• Failed
verification
initiates
investigation and
further action
6.
Consumer
Communication
• Source Certified
TM option for
service customers
• Communicate
directly with
consumers
• Provide
consumers with
information on
supply chain
security
SECURING A SUPPLY CHAIN: SOURCE SECURE SERVICE COMPONENTS

CONTACT INFORMATION
CORPORATE OFFICE (PERTH)
2/27 Clark Court
Bibra Lake WA 6163
Free Call: 1300 872 233
Customer Service Locations
SINGAPORE
7 Temasek Boulevard
Suntec Tower One, 44th Floor
SINGAPORE 038987
Call: +65 6430 6626
MORE INFORMATION
www.sourcecertain.com
CONTACT
Email Enquiries: info@sourcecertain.com
Cameron Scadding
cameron.scadding@sourcecertain.com
www.facebook.com/SourceCertainInt
www.linkedin.com/showcase/15179871/

Supply Chain Integrity - An Opportunity

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