FINANCIAL TECHNOLOGY AND OTHER RELATING ISSUES
2. Theoretical framework, Literature review, and Methodology
The concept of traceability
In the past, the food industry has witnessed many scandals related to food quality and safety. The causes were not only from the internal problems of the food such as chemical composition, bacterial contamination, microbial contamination, chemicals that affects toxic to consumerưs. But also many other related issues as environmental pollution, changing farming practices, or even technological innovation. The cause of the un-clean food was not accurately determined, making it tougher to manage, control, and ensure food safety and hygiene, then the number of un-safety food was rising in the world. The food industry needed to have solutions to control food more safely to handle this situation. The system of traceability was born due to that purpose. It helps government agencies to monitor and manage the number of contaminated food which was rising. However, at that time, science and technology had not developed, traceability was deployed in the old way, relying only on manual recording in books to track the origin of forming products. Therefore, traceability at that time has many shortcomings.
Until the end of the 20th century and the beginning of the 21st century, science and technology boomed and developed. Traceability has become a global solution and does not use only in the food sector. This technology has been applying in many different fields such as health, agriculture, production, business, etc. The scope of traceability has expanded widely. Then, the concept, the methods to trace products also need to be more comprehensive and diverse. It helps manage products in an adequate, accurate, and overview manner. The concept of traceability that countries applying is based sorely on the definitions issued by international organizations. Specifically as:
- At the Article 18, Regulation (EC) No. 178/2002 regulated: “The traceability of food, feed, food-producing animals, and any other substance intended to be, or expected to be, incorporated into a food or feed shall be established at all stages of production, processing, and distribution.”).
- In the Global Traceability Standard (GTS) of International not-for-profit Association about designing and implementing of global standards and solutions (GS1) đưa ra khái niệm:
“When considering a product or a service, traceability can related to: origin of materials and parts; processing history; distribution and location of the product or service after delivery”.
- According to the national standard TCVN 12850: 2019, traceability is: “The activity of monitoring and identifying a unit of product or service through each stage according to the time and location of the production, processing, storage, preservation, transportation, distribution and trading process. ".
It means, when considering the origin of a product or service, it may relate to the source of the material or the section, the piece; manufacturing process history; the delivery and placement of the product or service upon delivery. To sum up, the definition of related terms are mentioned such as: the definition of chain of custody, chain of ownership, critical tracking event, key data element, data carrier, parties, organization, supply chain, etc.
- In the ISO 9000:2015 Standard of International Organization for Standardization (ISO) mentioned the definition of traceability as “Traceability is the ability to trace the history, application or location of an object”.
In simple terms, traceability is a solution to help retrieve the product information from the beginnings as raw materials, production process, etc., to transportation, distribution.
Traceability is attached to goods in the form of a code, which is encrypted and is capable of downloading information to the user quickly when scanning with a smartphone.
General principles
In national standard TCVN 12850:2019, it has mentioned the general requirements for the traceability system in an organization also the entire supply chain. Mưanwhile, it is also applicable to all areas of production and business, regardless of the size of the organization or the supply chain. Specifically, the standard sets forth requirements (TCVN, 2019) such as:
- The principle of "One step before - one step later": ensuring the ability to monitor and identify the previous production and business stages and the next production and business stages in the production and business process for customers. with a product.
- Principle of "main data element availability": key data elements must be collected, stored, and updated promptly in reports detailing important events in the production process.
export and supply chain.
- Principle of “transparency”: the traceability system must meet minimum transparency requirements using static data about customers, suppliers, products, and production conditions.
- Principle of "participation of all traceability parties": the traceability system must include the participation of all traceability parties of the organization.
Businesses are required to follow these principles when implementing their traceability systems. To ensure that the traceability system complies with the above four principles, enterprises also need to meet specific system requirements such as interoperability, diversity, identity, traceability system, management system, or traceability data requirements such as data requirements, data interchangeability, traceability data within the organization, data supply chain traceability, traceability data management requirements, etc.
The benefits of traceability
Nowadays, the traceability system has developed and brought more values and benefits to all the consumers, businesses, and the country. According to TraceVerified – an organization providing solutions – There are four characteristics of traceability can be referred to Traceverified (2019) as follows:
(1) Information is updated in real-time
With traditional methods, the storage of information takes place by recording between many stakeholders. In this way, information passing through many parties can be misleading, misunderstanding, or affecting the transparency and transmission to customers. However, the application of high technology and the connection of the internet continuously on the data system to trace the origins helps the information being updated directly, and in real-time.
Typically, in the agricultural field, traceability plays an important role in ensuring information related to farming. The necessary information is updated accurately, in real-time.
After harvesting, the information related to products can be updated immediately on the data system. The information will be integrated within code on the traceability stamp affixed to the packaging of agricultural products. Customers will know properly when the products were picked, the processes, the time of cultivation, whether the cultivation meets the regulations as in the standard.
(2) Updated data is difficult to change
When updating information on the data system, the user can only change it within a fixed time. Then, the editing function will be locked, avoiding changes for their unjustified purposes. In addition, to save information from leakage or information hacking, the information will be kept safe through many layers due to new technologies and delivered to the buyer in the most accurate way. With this edit lock function, companies need to update information carefully, accurately, do it right from the beginning, and avoid having information changed many times, causing a loss of transparency of the data. Besides, consumers feel more confident and assured about the traceability information integrated into stamps attached to products and goods.
(3) Quick and smart retrieval
With the dense infrastructure and network connection system, when users scan code through the access stamp, they will immediately receive information and retrieval results and in detail. In addition, through the intelligent retrieval system, users can also know the exact condition of the product as the expiry date of the goods, whether the product is real or fake.
(4) Smart linkage with other solution utilities
Other applications such as shipping, e-commerce, etc., can also use the information within this great data system to manage their activities. The related data, systems need to be constantly improved and updated through new technologies. So, it will bring transparency to the market and bring traceability solutions closer to consumers.
Countries around the world have recognized these values that traceability brings early on. The use of QR codes for traceability is no longer strange to organizations, consumers, and stakeholders in these countries. They have put traceability into use and become mandatory in some regions of the world. In most developed countries, traceability is an essential and compulsory element for many products, especially nutritional ones. Nations around the world have been applying traceability for a long time. Since 2005, the European Union (EU) has made it mandatory for member countries to use traceability. According to the FLIS (Food Labeling Information System) tool introduced by the European Commission, imported goods into these member countries must identify signs for each manufacturer and synthesize them into a complete system. Goods must be monitored and have retrieval signs by each factory, including importers. Specifically, companies that want to import into the EU must have a label on their products that contains all the information required by the EU market. So, consumers can identify and trace the origin when their imported products are defective. The person importing these consignments into the EU is also required to be responsible for all imported products are labeled and affixed following relevant regulations. (European Commission, 2021). Due to these regulations, the EU has well-controlled the food, products, and goods imported into this market, minimizing the consumption of low-quality products and unclear origin. Compared to the EU, the United States (US) has also issued several laws to regulate traceability. In January 2011, the country released the Food Safety Modernization Act (FSMA), which requires enhancing monitoring, tracing, and record-keeping for high hazardous foods to protect public health. (United States, 2011). In the Health Security Law of this country, each point along the chain must have an account identified for the place of delivery. Every information emitting point in the production chain must have someone responsible for it. More than the EU, the US market focuses on intentional risk prevention, thereby preparing a response plan, including accidental hazards. Other countries as Ireland, Canada have strict regulations in the use of labels to identify products and production facilities. To sum up, these developed countries are very concerned and attach great importance to the origin of goods, especially ones that directly affect consumers' health.
In Asia, member countries have also gradually approached and successfully applied traceability technology to manage products and goods circulating in their markets. For
example, in India, since 2006, manufacturers and processors of grape products have established and applied the GrapeNet electronic traceability system. This electronic traceability system allows stakeholders in the supply chain of grapes and grape products, customers, and consumers to look up and retrieve information about grape varieties, time, and process cultivation, also the time of grape harvest, the raw materials for the manufacture of the products, or other processes involved in, etc. With this system, grape producers in India can join the world's system and help them gain belief totally from the EU import market.
Thailand - a country famous for tropical fruits - has issued a national standard on electronic traceability, built a portal for people to register for free use since 2010. Accordingly, bananas, bananas products, and durian products sold at small stores in Thailand are all affixed with a QR Code. So, the consumers can instantly access detailed information about these fruits, and at the same time, the system brings obvious economic benefits to Thai farmers.
Since 2005 Australia has had regulations on issues related to traceability for livestock and mandatory identification tags for cattle, sheep, and goats. These cattle information and tag codes are also registered on the Australian Cattle Portal, supporting cattle meat production throughout the supply chain. The entire life of an individual animal from birth to slaughter, and even their movements, is monitored through the national animal identification system and registered in the facility system data.
From these examples, traceability is a solution that countries around the world are aiming to apply. The most developed and leading countries worldwide have been using traceability technology in their production and business activities to manage products and goods most conveniently and comprehensively. Traceability has become a strategic priority for organizations around the world. In addition to enabling increased supply chain quality, efficiency, and transparency, the sharing and use of traceability data enable the development of solutions that enhance supply chain security and safety. It is an inevitable trend that Vietnam will have to accept to keep up with the world.
2.2. Literature review
Traceability is a relatively new topic in Vietnam. Therefore, there are not many studies related to it.
- In the paper “Assess the needs of enterprises and consumers for a traceability tool that applies code and barcode technology” (Lam Huu Danh et al., 2020), there are three conclusion as: The first point is “traceability is a new definition and awareness to a large number of customers”. Second, he found that “the most important function of a traceability system is to identify the counterfeit goods, fake goods”. And the third conclusion is
“customers is curently identifying the counterfeit goods based on their experiments”. The paper hasn’t shown the oppotunities or challenges for the enterprises but it pointed out that traceability is an effective tool that helps organizations and customers to ensure the quality in production and customers’ rights.
Due to the lack of research in this topic. It is a new and up-to-date topic for analyzing the opportunities and challenges for Vietnamese organizations. Since there, the author hopes that the article can bring new points to other related studies in the same field.
2.3. Methodology
The article mainly uses the method of collecting secondary information from seminars related to this topic. The used information is from the annual reports of the Ministry of Industry and Trade, the opinions of individuals answering interviews of the mouthpieces, newspapers, television stations, presentations at seminars, seminars, introduction to traceability at Government-affiliated organizations, press agencies, ministries, departments, branches, thematic reports of the Ministry Industry and Trade.
The dominant method of data analysis used in this paper is a generalization, synthesis, and analysis to make research conclusions, as a scientific and practical basis for proposing appropriate solutions to take advantage of the database to overcome challenges and grow.