Fresh produce suppliers who ship to Wal-Mart distribution centers must use case labels that comply with the Produce Traceability Initiative by Jan. 1, or their products will be rejected.
The Bentonville, Ark.-based retailer sent a letter to suppliers May 29 outlining the deadline schedule. The letter describes the PTI requirement as part of Wal-Mart"s heightened focus on the quality of its fresh produce, which also includes a new money-back guarantee for consumers.
"These efforts are designed to create a transparency in the supply chain so our customers can be confident in the freshness of the produce," according to the letter.
The requirement applies to products shipped only to distribution centers, not directly to individual stores.
Wal-Mart and Sam"s Club Inc. will be enforcing the deadline schedule at U.S. stores. The schedule includes a grace period. Suppliers must begin using PTI compliant labels by Nov. 1, or their products will be marked as received but "out of spec" unless Wal-Mart has issued an exemption to the supplier.
"We will work with suppliers who are making a good faith effort towards standard case labels," the Wal-Mart letter states.
Effective Jan. 1, produce received at distribution centers without PTI-compliant case labels "will be rejected as out of spec unless an active exception has been issued by the buyer prior to delivery," according to the letter.
Leaders from PTI and other produce industry groups said the Wal-Mart requirement is good news for the industry at large. They said other retailers will probably follow suit.
"Other large retailers are working on this in some form or fashion," said Ed Treacy, vice president for supply chain efficiencies at the Produce Marketing Association, Newark, Del., and member of the PTI leadership council.
"I think it will make the most difference with mid-sized and smaller retailers, though. If there are any on the fence I"m sure this will give them a push."
Dan Vache, vice president for supply chain management for the United Fresh Produce Association, Washington, D.C., agreed with Treacy"s assessment.
"This announcement will definitely move the PTI needle for the entire industry," Vache said. "Regional retailers and wholesalers have been waiting for a national buy-side organization to move forward with the PTI to add weight to their requests for PTI labeled produce cases."
In its letter, Wal-Mart included examples of the labels the chain is requiring. Everything from the size of the label to the placement of information and the fonts and point sizes of type on the label are specified.
Treacy said the labels are identical to the industry standard for reusable plastic containers, which should make the requirement easier for suppliers.
"I was there when Loblaws, Safeway and Kroger developed the RPC label standards," Treacy said. "They had been 2-by-10 inches and were required on two sides. Now with the new size they are less awkward and expensive and only have to be on one side."
Treacy said his advice to Wal-Mart suppliers who are not yet using PTI-compliant labels is to start working on the transition "yesterday."
"If people think they can wait until October because the deadline is Nov. 1, they are going to be surprised," Treacy said. "It takes some time to get it right. Some suppliers are reporting it takes multiple tries to find a solution that works. It"s taking most people three to six months."
Although the PTI-label requirement is only for Wal-Mart U.S. and Sam"s Club, those in the Canadian fresh produce industry are watching the situation closely.
Jane Proctor, vice president for policy and issue management for the Canadian Produce Marketing Association, said current work in the Canadian government regarding food safety and traceability will likely lead to similar requirements for suppliers. She said the Wal-Mart announcement will encourage implementation north of the border.
"Implementation of traceability based on standards is crucial to assure (both) governments of the commitment industry has made to the safety of the food supply and ensure there are no trade disruptions as produce flows between our two countries," Proctor said.