Engel's coefficient, the percentage of food costs to total spending, is generally regarded as an indicator of the standard of living in each country. Yet it may convey different meanings depending on individual culture and ethnic characteristics.
In terms of having meals three times a day - breakfast, lunch and dinner, there is no significant difference between the rich and the poor. However, there are as many as 60 million people, 1 percent of the world's population, that are suffering from starvation, whereas as much as 4 percent of the world's food production has to be disposed after it has passed its expiration date. If only the amount of the disposed food could be reduced to 1 percent and the saved food was given to the starving, we could defeat the famine in the world. This could be called "The 21st Century's IT-engrafted Version of Jesus Miraculously Feeding 5,000 People," for this will be a similiar miraculous achievement as Jesus was once cited as doing.
As an example, in North Korea (DPRK), the number of disabled and malformed children is said to be increasing at an alarming rate and the major cause cited is infant malnutrition, especially among babies under 2 years of age. On the other hand, in South Korea, more than 4 percent of dairy products, a much higher rate than any other groceries, end up being thrown away due to the expiration date.
(Milk production in 2007 for Rep. of Korea was at USD 582 million while it was USD 25.5 million in the DPRK).
In addition, reprocessing the extra milk in order to store it longer does not bring enough economic benefits but worsens the situation. Annually in Korea, approximately KRW 3 trillion worth of expired food has to be disposed and KRW 30 trillion in Japan.
Now, who could deny the responsibility for those disfigured children, when, after decades, the two Koreas are likely to be reunified
Current Food Production and Supply Chain System as well as Problems
Visible marking of production and expiration dates on processed food products is mandatory. Under the current competitive market system, it is inevitable for food producers to supply their goods excessively. Thus, 4 percent of the whole grocery products, on average, are disposed of.
Through a modified, digitalized and improved distribution system it is possible to cut down the disposal rate of the overdue food to 1 percent and a significant amount of the saved food can be donated to the needy.
The "Barcode" system which was first developed and introduced by IBM in 1973 has been playing a crucial role in food production and distribution worldwide. In the 80's the patent period for IBM expired and the ISO15420 international standard code system has recently been implemented. The barcode system has been contributing so much to the modern world that now it is almost impossible to manufacture, distribute and sell products without it.
In the case of products with limited circulation periods such as groceries, pharmaceutical products and cosmetics, their expiration dates have been only manually (visually) identified and there has been no automated identification system available. As a result of that, even the cutting edge management systems including SCM (Supply Chain Management) and ERP (Enterprise Resource Planning) information technologies could not bring any substantial improvement.
The current system leads to:
Consumers who visit stores to buy groceries tend to choose the freshest product among the same priced items. Consequently, even though there are many products displayed to be sold, the newly arrived products are clearly preferred over those "older" goods -even if it's a day or two- by most consumers.
Figure 1: Current Barcode
Figure 2: the ERP, SCM system under current Barcode system
Figure 3: Compare SCM and D-SCM
The Time Barcode system The Time Barcode consists of two parts, the existing 13-digit one and the 5-digit one for extra information including production and expiration dates. The Time Barcode system is fully compatible and interoperable with the current system for equipments such as POS terminals and Barcode scanners. It does not require any additional hardware. Only with a simple software upgrade, existing systems can perform various functions as shown in Figure 4. The Time Barcode system enables us to perform various tasks, such as discounted sales for products according to the elapsed time, real-time inventory control and automatic sales control (in the case of expired products). Time Barcoded products can be sold under a flexible price scheme in accordance with their freshness. Consequently, consumers can decide whether they buy “less fresh” products for discounted price or “very fresh” products for the full price. The discount rate is automatically applied every time when a customer checks a product out. According to a Food R&D research report, over 70 percent of consumers expressed their preference for discounted “less fresh” groceries over full priced fresh goods.
Figure 4: Time Barcode
As for sellers, they would also benefit from automated inventory control under FIFO (First-In, First-Out) scheme, which becomes possible by introducing the flexible price system rule based on the elapsed time. Moreover, retailers and manufacturers can use those functions to optimize the supply quantity by real-time stock monitoring and subsequently reducing the cost caused by disposing expired products. This will save a significant amount of resources which, in turn, can be used for the poor by donating them to organizations such as Food Bank. The issue of consumer protection and food safety is now raising more and more public attention. Blocking the sales of certain products manufactured on a specific date, place or even from potentially contaminated ingredients can be done only by scanning the Time Barcode at the terminal in the grocery, in the case of food safety incidents. It will also automatically block the sales of expired goods. Such a system is called a Digitalized Sales Control System.
Figure 5: Discounted sales under elapsed time system using Time Barcode
Even though it seems to be very challenging to expand this system to some traditional markets and stores which do not use the POS system, the system can be easily implemented in any premises with POS system. In the Seoul Metropolitan Area, for example, more than 85 percent of shops and stores are now using the POS system. If the Digitalized Sales Control System is fully implemented, it will become a more dynamic and effective control system that will replace the current analogical control system. Every year, the number of products with mandatory production information is dramatically increasing. Among those products, there are livestock products such as beef, poultry and agricultural fresh products. Especially for agricultural and marine products, GAP (Good Agricultural Practice) is regarded as important. However, GMP (Good Manufacture Practice) for processed products is also crucial. The label should also contain correct information on production history such as origins of each ingredient, whether the GMO crops were used or not and manufacturing dates (for some fresh products, even exact time). The ingredients for each processed good are always different from one another depending on their production lot, which makes it almost impossible for the manufacturer to correctly print the information on the packages. This Item Level Traceability by production lot can only be achieved when all the information mentioned above is digitalized and traceable from the very beginning of the production. Using Dynamic Supply Chain Management with the Time Barcode system, it is possible to trace down not only the place of origin of one product but also the origin of its individual ingredient.
Figure 6: From Farm to Table : Production Traceability System
Figure 7: Traceability example
Temperature Traceability System Temperature Traceability is applied under the TTT (Time Temperature Tolerance) scheme, as it is significant to keep certain goods within tolerable temperature range throughout the supplying procedure. This requires on-going monitoring on changes in temperatures (temperature tacho-meter) and traceability. The dynamic supply chain management with Time Barcode enables us to track down the changes in storage and delivery temperatures. Currently, Pulmoowon, a well-known Korean tofu manufacturer, is using the dynamic supply chain management system on its products while disclosing necessary information to its consumers including records of temperature and changes of ingredients in processed food, which changes every day per lot. The other KFHI food safety traceability and Dynamic SCM project was launched by Korea Ginseng Company in 2010. The dynamic supply chain management system with Time Barcode can reduce the current waste rate from 4 percent to 1percent, as it will provide not only food traceability but also digitalized logistics for food products. The profit gained from the system can be shared among manufacturers, retailers and system integration companies. The un-sold food will be then distributed to food bank services free of charge prior to expiration dates. It may sound somewhat idealistic and theoretical but in the world, there are currently as many as 60 million people, which is 1 percent of the world’s population, that are suffering from starvation. If 1 percent of the world’s food could be given to them, there would be no famine on Earth, and that would be as miraculous as when Jesus was said to have fed five thousand people with five loaves of bread and two small fish.
