Product safety podcast – Interview with Matthew Smith

Interview with Matt Smith, President and Founder of supply chain transparency company ICIX

(You can watch this video before reading or listening to the podcast for a quick graphic illustration of the ICIX system.)

Now listen to the audio podcast:

Gail:             Hello, this is Gail Greatorex from Product Safety Solutions in Australia. Today I’m speaking with Matthew Smith who is the founder of a company called ICIX and I’ve known Matt for a little while now. The company is going gangbusters and it’s introduced a lot of new ways of managing data and communications to the advantage of the consumer product market. Welcome Matt.

It’s great to see you here, we are in Brussels at the ICPHSO Conference and also International Product Safety Week. It’s a great opportunity to get together and also meet up with others in the field. It’s a good chance to sit down with you and hear a little bit about what you do. Could you please just introduce the company and how it works generally?

The value of data

Matt:           Maybe I’ll go back to the start. So, it was actually founded with a gentleman by the name of Tim Marchington and myself in Australia, so we’re proud of that. I was living in The States at the time and we introduced it to the US market specifically around food safety to start with, and then that was really at the events of 9/11 and all the bioterrorism concerns and the threats within the supply chain that retailers and brands were now facing.

In about 2007–2008, we had some big toy recalls—the year of the recall—that then spawned the years of regulation to follow. Then we kind of shifted aisles, so we moved from the food aisle to general merchandising and ultimately to the footwear and apparel aisle within the retail space collectively. So, we have big retailers and brands.

Gail:            They’re huge markets, you know, food is diverse in itself, but at least it has the one characteristic of being consumable, edible, whereas the broad range of consumer products knows no bounds really.

Matt:           Right, and that poses tremendous challenges, especially from a technology standpoint. And how do you technically solve for these broad ranges of types of products, whether you eat them, wear them or use them is and was challenging and took us a long time to get our brains around how to do that. That’s what you meant when you said we were going gangbusters. I think that’s holistically how we do what we call our data model that has really game-changed a lot of the data aggregation and intelligence we can provide our customers.

Gail:            So, data is really the key to the sort of work that you do.

Matt:           You hear the term ‘data is the new oil’, ‘data is the new water’—whenever we’re talking AI (Artificial Intelligence), we hear all these terms. But it’s true, and I look at data as raw information; we are living in the information age. As consumers, we want to have information in the way we want to have it. That’s a power play for a lot of these customers now.

Gail:            The value of that sort of data to businesses, including the ones that supply to the consumer market is being increasingly understood.

Matt:           Has to—I don’t think you can hide behind anything anymore, that’s critical, and companies realise this, which really adds to the importance of getting to it, and that’s not always easy, especially for big companies.

Gail:            You mean that they don’t always understand straight away what the value is?

Matt:           Yeah, and you hit it on the head before, Gail, there’s such a broad array of products in the market, that how do you start to systematically unpack that?

Gail:            I know that you’ve done some work with toy companies and a lot of the services that you can provide are associated with the supply chain and managing the supply chain, because now that supply chains are so long and complex in themselves, there’s many points at which things could go wrong. It’s a challenge for a manufacturer or an importer in particular to understand where the risks are and how to manage them. Can you tell us a little bit about how ICIX can help in that?

They’re really networks within networks is a way to look at them. It’s a matrix of different businesses that play different roles. They’re not linear because I could be your customer, I could be your supplier, I could be an importer for you and a distributor and still be the same company

Matt Smith

Matt:           I think there’s a term there that’s really used broadly which is ‘supply chains’ and it kind of suggests that it’s linear, and you said it perfectly—It’s complicated and is anything but linear.

So, they’re really networks within networks is a way to look at them. It’s a matrix of different businesses that play different roles and they’re not linear because I could be your customer, I could be your supplier, I could be an importer for you and a distributor and still be the same company.

Gail:            But also like a manufacturer of a component, will themselves have several different raw materials suppliers, and they might change.

Matt:           Those raw material suppliers, though they may be raw material suppliers to the component supplier, let’s use those terms very loosely, they’re actually finished goods to those businesses. So, it may be the silicon that goes into a computer chip that goes into a toy. Well the guy who provides the silicon, or the company that provides the silicon, that’s their finished good.

That’s why it has taken us 16 years to really get it right.

Matt Smith

And that is starting to illustrate the way we look at the world. A product is a product, is a product. It may have relationships with the other products, called finished goods or assortments, or ingredients, or components, but they’re just other products.

So, as you go through that network of businesses, and it’s not a chain because, as I said, that silicon guy may be the chip maker called Dell, that has a component supplier that provides capacitors. So, it’s very multidimensional. And so again, going back to what we do, which is technology, how do you understand that, relate it, and then garnish data, or facilitate the garnishing of data out of it? That’s why it has taken us 16 years to really get it right.

Critical information at suppliers’ fingertips

Gail:             Your colleague Matt Goodman was telling me last night, you’re able to gather and retain data from testing reports for instance, and you’ve got a relationship with some of the leading test companies in the world. And so, the individual raw data from tests can then be brought to bear to provide assurance of compliance to the manufacturer or anybody in that supply network, and it’s on demand.

Matt:           Yes

Gail:            And it doesn’t necessarily rely on an individual manufacturer getting that test report and trying to understand what that means.

Matt:           Compliance is critical today and I believe we live in an age of integrity. Where can we, as consumers, expect that the products we buy are meeting the integrity that we expect? And so maybe five, ten years ago, you’d hide behind a good PR firm when things didn’t go well—that doesn’t exist anymore. That escape doesn’t exist anymore. You have to live in an age of integrity. You have to be able to provide information with integrity, right through your supply. Whether that ends up in a consumer’s hand or it’s just a protection of your brand that you need to take care of, you have to act accordingly.

There’s actually three flavours of data that are associated with two core entities within business. There’s information of a company, whether you’re a brand retailer, whomever, there’s two types of data: (One) You collect data on other trading partners: your suppliers, your vendors, your brokers, your farms, your factories, at the facility level; and (Two) with the product that you have the commercial relationship about.

If you look at a commercial equation: in between two businesses is a product, if you distil it all down to that, that’s what it is. The only reason we have a business relationship is because we have a product in between us. Now that product could be a service, but in our world and what we do with ICIX and our customers, it’s a physical product. So therefore, all the data that you want to know about is, either about the trading partner — so maybe that’s social compliance, their environmental impact at the factory level or it’s about the product (where a product is a product is a product), and it comes in three flavours:

It’s first party data. ‘The data I know about you that I have. So that’s the data I already have on you. And that could be just created from internal systems like point of sales, or purchase orders, or inventory, or shipping data that I have.

Then there’s second party data. ‘The data that my trading partner provides me. That may be a self-assessment, that may be a product spec., that may be information about the facility that I’ve asked them to provide; maybe it’s an insurance certificate.’

And then there’s third party data, that comes from a third party verified source. So that can be a lab, it could be a certification, but it could be something like a financial institution like Dun and Bradstreet.

So, they’re the three flavours. I’m breaking down how we look at the world in ICIX. It makes it simple for our customers to really start to focus on what’s important. It’s either product or trading partner information and it’s either first, second, or third-party datasets.

Gail:            So how does that help people with understanding compliance, or even demonstrating compliance?

Matt:           Let’s talk about a big toy company. They’ve got certain regulations they have to meet for the products that they sell into certain markets. As we know, the markets, even within states in the US vary, definitely varies when you go to Australia and New Zealand and Europe. These regulations, although they’re doing their best to normalise or come to some sort of international standards, we’re a long way from that—because we live in different cultures that have different perspectives on what is good and what is not. So, what we do to our customers is say ‘You have to understand: What are the products? What’s in them? Are those components or ingredients meeting your expectations that you’re telling the consumers that you’re providing?’

Let’s give an example: say, a matchbox car—in that matchbox car we’ll have paint, we’ll have plastics, we’ll have metals, we’ll have potentially other alloys that would go into it, moving parts, choking hazards, all of the ‘good stuff’, right? Then there’s labelling, so there’s the packaging which is also product, it’s just another product. On the product that I have compliance requirements which could be a thing called a label. We allow them to say that these are all of the products that I have bundled together, to call a matchbox car, and each of those components have their own life cycle.

Gail:            Yes. Good point.

As a cost of business, I don’t want to retest, reverify, make sure compliance is done individually for each coloured matchbox car . . . I don’t need to match anything other than the paint to make sure that those paints are now compliant

Matt Smith

Matt:           And so, we then take the data, whether it’s first, second or third-party data applied to those components. We know they relate: the wheels, the moving parts, the plastics, the chassis of the car, the paint that was put onto the chassis, all come together as a finished good called ‘Matchbox Car One’. But all of their data then says, okay, now I’ve got a yellow version and then I got a green version. I’ve got a red version. Everything’s the same except for the paint. As a cost of business, I don’t want to retest, reverify, make sure compliance is done individually for each coloured matchbox car because I will not make any money. So, we allow our customers to say now because it’s the same product, essentially except for one variant, all I have to understand is that variant. So, we know that the green car and yellow car I don’t need to match anything other than the paint to make sure that those paints are now compliant. And so that’s probably not a really straight good answer, but it’s not as very easy equation either.

Gail:            That’s why you’ve got your business is that you’re trying to break down the complex into something more manageable.

Matt:           Technology, whether it’s a broom that made it easier to clean things with a lever back in the day, there was still technology making things more simple.

Active transparency—better than traceability

Gail:            And so, in terms of traceability of your products, if you need to go back and investigate a problem, somewhere further back down the supply chain, either after it’s caused an injury or if you’ve just noticed a flaw when you received the product. What benefits are there in your data management system that provide for that?

Matt:           There’s two terms that get thrown out there, probably somewhat interchangeably, but they’re not, technically. There’s traceability and then there’s transparency.

Traceability means the physical movement of the product, which is expensive to understand, and as a business case, do I need to know where that particular lot number came from at all times? Which is traceability. Or do I need to have transparency so in a moment in time I can go back and understand? Which is what we focus on: the transparency. We call it active transparency.

Traceability means it’s a by-lot-by-lot equation, which is expensive to manage and bring in. Now we can do it, and we do do it for some higher risk products.

But for someone that says—‘Hey, we’ve got some issues’, and when we do a quality test, we have a specification, some second party data with our trading partner where they have agreed that these are the upper and lower limits for this product that we’re going to accept. Now when we get a product test in and it says the upper limit is getting breached or getting close to breach, I have a problem or potential problem of this lot of cars that are coming off the production line.

‘So, I can then have transparency? I want to actually go and see what’s going on there.’ So that’s what we do. We enable them through data to say, look, you’re hitting a variance. It’s not necessarily going to be a good thing, or is an issue, or maybe it goes in an audit report that said they didn’t do so well compared to what they did last year.

‘Is there something going on?’ ‘Are they in a production cycle that’s too high?’ ‘Are they not coping with the load that we’re giving these companies?’ That’s what we allow our customers to do: start to understand that the impacts they’re having and the requests they’re making on their supply chain, are they coping with it, on an ‘at-will’ basis?

Gail:             So, you’re really unpacking any kind of issue and sort of pulling apart. You’re able to pull apart easily the elements that apply to a particular product and how it’s performing.

Matt:           Exactly—the performance of it.

Gail:            Performance is critical and so as we were saying, it’s the performance of the entire (product/production/distribution) thing as a whole, which might be broken down into their own individual components.

When (a client) has had a recall, we throw an Artificial Intelligence lens on top and look what we didn’t pick up this time. So next time when we start to see those similar trends, maybe we want to stop early up the cycle and just have a look what’s going on’

Matt Smith

Matt:           With our platform, we’ve recently migrated all of our technology onto Salesforce as one of their partners and using all of their tools. They’ve spent hundreds of millions of dollars on artificial intelligence. And we can take that and say, well, when we see those trends, is that potentially going to lead to problems? When we have had a recall, we can actually throw an Artificial Intelligence lens on top and say, look what we didn’t pick up this time. So next time when we start to see those similar trends, maybe we want to stop early up the cycle and say, ‘Hey, let’s just double click here and have a look what’s going on? Because last time we saw this, that led to a recall which didn’t do so well for our brand.’

Gail:            You mentioned Salesforce there. Can you tell us a little bit about that company?

Matt:           I have to say I’m in love with that company. They impress me in all the right ways. We built our own platform, we spent a good amount of money and tens of millions and in fact over $100M on our previous platform, but it was a fraction of the money you need to spend in today’s technology.

Salesforce is now the fourth and soon to be the third largest software company in the world. They’re the largest employer in San Francisco. They are philanthropic, they do a lot of great stuff, which is near and dear to our hearts at ICIX. It’s what we do. Why do we do what we do? Because we want to make sure that the good products and not the bad get to the market easily.

That’s what we do at ICIX. Good products make it to the market easily, bad products don’t. That’s what we try to do. The DNA of ICIX is we want to make sure that companies, and the products they bring to market, have as minimal impact on the environment, and social impacts, and are doing what they’re supposed to be doing.

And then educating the industry. These large companies that have these resources is one thing, but they’re not the ones who are necessarily going to be the bad actors. The bad actors typically don’t have the resources. Now, whether they don’t have the resources because they don’t want to spend the money, or they just don’t have the resources because they don’t have the money, makes a difference. But the knowledge and information that is rife in this room we sit in today, in Brussels at the EU, where big companies have knowledge. It’s the little company we’ve got to educate.

Gail:            Well, if you can sell the benefits, you can streamline the process, you can eliminate some of the risks. I think with product safety, even though we know the good actors are doing the right thing, the more you raise the bar, the more the bottom end will hopefully come up to meet it.

Matt:           It has to, or you don’t survive. Again, in this age of integrity, I don’t think you get away with it anymore and it’s changed, and we’ve been doing this now since 2003. The world’s changed where product safety is no longer a dirty word, where it used to be. Right now, it’s at the board level, typically, that the conversation that ‘Our brand is based on the quality and safety of the products we sell to our customers, and if we’re not doing a good job’ . . . The ease of switch today as consumers has never been more available to us. Whether I choose Alibaba, or Amazon, or Toys R Us that I used to choose.

Recalls and product removal

Gail:            Your system also has some benefits in terms of facilitating product recalls, should that be necessary.

Matt:           We have recall, or product removal, technology. So, if we have an issue with a product, we can alert all of our trading partners that we’ve given that product. Typically, I look at the product recall as a notification, and then there’s a removal process. So, from a brand, the need to notify is Step one.

Gail:            It’s one of those slightly vague terms.

Matt:           It is. Absolutely. And so we’ve looked at it for over a decade now and the best approach, and so again in theme with what we want to do is make sure we help bad products get off the shelf fast to protect consumers; and we’re all consumers and we all have people we love and care about who we don’t want to give bad products to. We’re looking now, again with our partners at Salesforce, we do what we call a one percent pledge, so it’s one percent of our products, our profits and our people’s time towards charity.

One of the new initiatives we’re doing as we start to roll into 2019, sooner rather than later, is offering a product recall notification platform for free. So that if I am a brand and I’m part of the network, which most companies are (and you can, there’s no cost to be part of the network), I can alert anyone when there’s a product recall notification.

Product removal is a whole different ball of wax. We have to go in through a whole process and we have tools to enable that, but to alert trading partners that there’s a product removal coming through and that’s through the notification: what’s going to happen, why it’s happening, what are the instructions to pull those products? We’re going to give that away for free.

It’s going to be in conjunction with a food bank offering, so an alert to say that ‘I have a product that I can no longer sell, but I can donate.’ We’re going to also facilitate those transactions and make it easier for companies, who need to give food products away because they can’t sell them commercially anymore, a lot easier toolsets to engage on.

Gail:             Sounds very promising.

Matt:           Yeah. Yeah. Something that we’re very excited about for sure.

Gail:            Yes. Perhaps we could have used something like this a few months ago in Australia when we had the strawberry contamination issue.

Matt:           I noticed, everyone noticed that unfortunately, but yeah, absolutely. So how do we facilitate that notification? Just remove these products? Here’s the lot numbers. This is what we’re talking about. This is what we think is affected and as with many recalls those expand. Right, we saw it in Australia, was thought it was an isolated event, but it never really is.

Gail:             It had an interesting little timeline, this strawberry contamination, and it was a needle was found inside a strawberry in a punnet and it caused national alarm, as well it might. And then there were two or three further incidents and then there were a couple of copy cats, which was unfortunate. But, everybody thought, oh, I’m not buying strawberries anymore.

But then Facebook started sharing pictures of truckloads of strawberries being dumped. And everyone’s going, ‘Oh, we’d better support the strawberry farmers, this is terrible.’ Then everybody came up with ways of using strawberries that had been cut up, made sure there were no needles in it or you pureed them, and it got back on track. It may be something a system like yours might’ve avoided having the dumping and the great expense to the producers quicker.

Matt:           Yes, absolutely. Whether it’s a foreign object like that or whether it’s a safety issue on food, or any other product really. How do you use that waste? There is a stat in The States that is quite alarming, where 41 million people go hungry every night, yet at the same time there’s tens of thousands of tons of food dumped every day. San Francisco, where my home was for so long, has a huge homeless problem. But at the same time, we’re landfilling food continuously because there’s no connection of where it needs to go to.

Gail:            This is using technology and big data to help solve a social problem in a way.

Matt:           As well, yeah, absolutely. It’s a massive social problem.

Gail:           Social, but also an economic problem.

Technology should always be used to make things easier and better.

Matt Smith

Matt:          Economic, social, it’s many dimensions. Technology should always be used to make things easier and better. That’s the definition of technology for me, so say, well, I don’t care if it’s a broom. It’s just easier to sweep up with a long handle that you can use as a lever versus you know, your hands.

Gail:            That sounds like a good note to finish on. I’m impressed with all of the work that your company is doing, and I appreciate the opportunity to talk with you.

Matt:           We’re excited, and the more we can help good companies be good companies, and we’re all about that, and make sure, as you said, raise the bar up so that the bad actors can be flushed out sooner rather than later.

Gail:            Yes, indeed. Well, all the best with it.

Matt:           Thank you Gail.

This interview was recorded in Brussels, Belgium in November 2018.

See the ICIX website for an outline of its services on general merchandise.