INNOVATION OF PRODUCT LIABILITY PREVENTION MODEL FOR FOOD PROCESSING INDUSTRY IN THAILAND

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INNOVATION OF PRODUCT LIABILITY PREVENTION MODEL FOR FOOD PROCESSING INDUSTRY IN THAILAND Powered By Docstoc
					 INTERNATIONAL JOURNAL OF MANAGEMENT (IJM)
  International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –
  6510(Online), Volume 4, Issue 2, March- April (2013)
ISSN 0976-6502 (Print)
ISSN 0976-6510 (Online)                                                         IJM
Volume 4, Issue 2, March- April (2013), pp. 285-291
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Journal Impact Factor (2013): 6.9071 (Calculated by GISI)
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        INNOVATION OF PRODUCT LIABILITY PREVENTION MODEL
            FOR FOOD PROCESSING INDUSTRY IN THAILAND

          Pasuta Phunyathip1, Damrong Thawesangsakulthai2, and Sakda Thanitkul3
    1
        Technopreneurship and Innovation Management, Chulalongkorn University, 1405-1409
    2
        Technopreneurship and Innovation Management, Chulalongkorn University, 1405-1409
                    3
                      Faculty of Law, Chulalongkorn University, Soi Chula 42,

  ABSTRACT

          Product liability law brings entrepreneurs to have a burden and a greater risk. They
  have a responsible for prove the safety of product; prevent the defect, and a remedy when
  damage occurs. Especially the entrepreneurs in food processing industry, the damage will
  affect the health of the consumer. It aims to find a prevention model for entrepreneurs in food
  processing industry to prevent the liability from the Unsafe Goods Act B.E.2551. This study
  uses a qualitative method by literature review and in-depth interview with one large
  purposively selected sample plant then synthesize the legal factor compared with the
  entrepreneurs safety system. The innovative prevention model from this study will help
  entrepreneurs to prepare themselves for the rise of the product liability lawsuits in Thailand
  and to increase confidence in the product to consumers.

  Keywords: Innovation, Product liability prevention model, Risk Management, Unsafe Goods
  Act B.E.2551, Food processing industry

  I. INTRODUCTION

          Environmental change is a cause of production limitation in each country and the
  movement of the food resource becomes more global including food contamination has
  become a key concern [1]. Open of the free trade area for commercial according to the
  international commercial condition makes many countries changing their measurements in
  order to obstruct goods from foreign countries by using the sovereignty of the state in going
  out regulations and using standard voluntarily as tools [2] [3]. Product liability law is one of
  the popular tools in the world and marks as a world trend [4] [5] [6] [7] [8] [9] [10]. The
  product liability law is not only use for protect in-house consumer but also to be an efficiency
  tools using for international trade barrier [11] [12] and block low quality product from
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foreign countries because of the inequality trade [13]. The Product liability law is increased
duties especially for the importer to take responsibilities with their product [11] [14]. Where
Thailand is in the position of exporter country so Thailand has affected by this law and is also
disadvantage commercial in international market [11] [12].
         The product liability law is the tort law presents under the special law that uses the
principle of strict liability [15]. The faults according to this law occur by determining the
liability by the law [12]. However, no statistical data can identified that product liability laws
able to reduce complaint cases yet. It would clear that the manufacturing increases
carefulness and attention rate more and more [16].
         In Thailand, the committee had a draft of the product liability law and arranged a
meeting to receive comments on the year 1999 [17] and enacted in a government gazette in a
name of “Unsafe Goods Act B.E. 2551” on February 20, 2008 [18]. This law has been
accepted an important concept in the form of the United States law such as the strict liability,
res ipsa loquitur (Thing speak for itself), Punitive Damage, Defense of the operators in the
supply chain and distribution [19]. It has an effect to entrepreneur especially in food
processing industry because its damage will affect to consumer health. Moreover, Thailand's
food industry is important in term of an industry that brings money into the country more
than 700,000 million baht in the year 2009-2010 and plays as the largest food exporter
country in Asia, the 5th in the world food trade surplus and the 12th of the food exporter in
the world [20]. The key question is how entrepreneur prevent themselves from the “Unsafe
Goods Act B.E. 2551” and maybe the Product Liability Prevention Model is an answer.

II. OBJECTIVE OF THE STUDY

       The objective of this study is to create a model innovation of product liability, thus to
prevent potential product liability against the processed food industry in Thailand.

III. RESEARCH METHODOLOGY

        The purpose of this research is to create a practical novelty with regard to which
search process and content is not known. Therefore, qualitative research is used by
conducting an in-depth interview with one large company in the food processing industry,
with high-standard of manufacturing the products for sales in the domestic market and for
export. The research includes studying relevant documented information.

IV. PRODUCT LIABILITY PREVENTION MODEL

        The research results show that it is possible to create an innovation of the model of
management to prevent product liability against the processed food industry in Thailand, and
to be a guideline for entrepreneurs in the processed food industry and other industries, to
objectively apply to a preventive measure with regard to product liability based upon a
provision and the purpose of the “Unsafe Goods Act B.E.2551”. Entrepreneurs can apply the
process and store necessary evidence to affirm a defect of the products as shown in Figure 1
and it can be explains the model structure in the following 4 parts:
        1. Manufacturing perception to produce food safety
        2. Manufacturing‘s Product Liability Prevention Focus
        3. Organization Structure & Accountability

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                                 March-
6510(Online), Volume 4, Issue 2, March April (2013)

       4. Output




                                                                       1. Manufacturing perception
                                                                          to produce food safety




                                                                        2. Manufacturing‘s Product
                                                                        Liability Prevention Focus




                                                                        3. Organization Structure &
                                                                              Accountability



                                                                                 4. Output




       Figures 1 Product liability prevention model for food processing industry in Thailand
       (Adapted from the ISO 31000: 2009 framework [21] and The Conceptual framework
                          of Design for Safety and Liability [22])

1. Manufacturing perception to produce food safety
      There are 2 sources of the manufacturing perception to produce food safety:
      a. Force input
      b. Voluntary input

        a. Force input
        Force input means regulations or standards that entrepreneur must do befbefore send
products to the market. Otherwise it shall be deemed to be guilty and have not authorized to
                                          B.E.2551”, “Food Act B.E.2522” etc.
distribute such as the “Unsafe Goods Act B.E.25

       b. Voluntary input
       Voluntary input means activities that have no state enforcement then entrepreneur can
choose to practice or not. It can be considered in 3 types:
           i. Standard
          ii. Marketing Requirement
         iii. Insurance Requirement


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          i. Standard depends on the nature of the industry and usually a requirement of the
consumer to ensure that the products are manufactured in compliance to consumption. There
are many standard in food processing industry such as: GAP; Good Agriculture Practices,
GMP; Good Manufacturing Practices, and HACCP; Hazard Analysis Critical Control Point.
          ii. Marketing Requirement is something that customer or partners needs such as
the implementation according to the British Retail Consortium Standard; BRC Standard or
other special demands.

           iii. Insurance Requirement as importance as a tool to spread the risk of product
liability. And the insurance company has the right to deny the requested by the entrepreneur
or accept in a high premium.

2. Manufacturing‘s Product Liability Prevention Focus
       When the entrepreneurs comprehend manufacturing safe foods, they are to consider
an issue focusing on the prevention of product liability. There are three unsafe types which
will have preventive activities in every manufacturing and distribution process.
       To prevent an unsafe product, it can be considered that there are the following 3
unsafe types:
       a. Manufacturing Defect
       b. Design Defect, and
       c. Warning Defect

       a. Manufacturing Defects
       The manufacturing defect can explain in 3 meaning as:
           i. When the product departs from its intended design, even if all possible care was
exercised [19] or
          ii. The defect that may occur in the procedure [12] or
         iii. The company produces the product differing from those designs and the damage
occurs as a result of the product [23].

        b. Design Defect
        The design defect means the unsafe point that concealed in the engineering of product
[24] or scientific ideas that can be and reasonable to avoid by designing a different formula
for the safety or reduce the risk that unsafe but has not done [24].

        c. Warning Defect
        Lacking of sufficient information for user to avoid the dangers of the product, the
sufficient information means the information for user that can reduce the risk or danger which
may arise as a result of using the product. However, there are 2 basic objectives to warn or to
give the information to customer as follow [24]:
            i. To reduce the risk of injury and accidents.
           ii. Inform in order to get admit.

3. Organization Structure & Accountability
       The entrepreneurs’ scope of knowledge in respect of safety and the protection of
unsafe products will define organizational safety activities which are present in each
responsible level of the organization. An executive will determine a policy and its objective,
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6510(Online), Volume 4, Issue 2, March- April (2013)

and then transmit the policy to be a practice in each process for manufacturing safe products,
which is separated into the two following periods:
       a. Activities before the distribution; and
       b. Activities after the distribution.

        a. Activities before the distribution are activities where the manufacturing of food
products can be separated into three processes, i.e. input, process and output, which have the
following sub-activities in each activity:
            i. Input is a process at the beginning of the manufacture with regard to design and
receiving raw materials.
           ii. Process is the transformation of raw materials into products. This step is very
important for manufacturing safe products. Therefore, there are a lot of standards in place, as
well as the performance of risk analysis and the control of a critical point, i.e. manufacture
activity and the monitoring of activity after manufacturing.
          iii. Output is an activity performed after the raw materials are processed; to monitor
safety before being used by consumers. This activity involves storing products and reviewing
product deliveries to consumers again.
        In each step of manufacturing, there will be a safety operation to ascertain that the
products produced follow the relevant regulations, laws and customers’ requirements by
applying standards, rules and controls for manufacturing and applying a risk management
procedure in seven steps, such as: Establish the context, Identify risks, Analyze risks,
Evaluate risks, Treat risks, Monitor and review, and Communication and Consult. The seven
steps listed above relate to analyzing and controlling any risk occurring in this industry so
that the utilization of good risk control will reduce the chances of product defects.

       b. Activities after the distribution are listening to customers’ comments, customer
complaints, product recalls, and the provision of additional information after sales, and
customer service support. Such activities significantly show a consumer responsibility, and
there might be a special department for this proposed after sales customer service.

4. Output
      Output of this model can separate in 2 outputs as:
      a. Safety goods
      b. Evidence for Product Liability Law

      a. Safety goods are a result of an analysis, quality control, and activities in
manufacturing process that concerned in safety.

         b. Evidence for Product Liability Law is a result of all safety activity in
manufacturing process to prevent a defective product such as a design product record, a
manufacturing quality control record, and a safety check of products before delivery etc. The
document should store completely and keep in a long period sufficient to product liability
litigation. The sufficient period should be at least 10 years after a sale date which cover the
limitation in the normal case of damage.




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International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 –
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V. CONCLUSION

         This study tries to find an answer for an entrepreneur problem with Thai Product
liability law. The result of the study is the Product Liability Prevention Model. It classified as
a process innovation and uses a qualitative research method. It is developed by combine the
body of knowledge in law and engineering and use in food processing situation. This model
use as a direction for entrepreneur to keep the product liability evidence which to confirm
that the product is safe and can prove under the product liability litigation.

VI. ACKNOWLEDGEMENTS

       This research was supported by research grants from "the 90-year Chulalongkorn
University" Ratchadapiseksompotch Fund, Chulalongkorn University. And I would like to
grateful Associate Professor Damrong Thawesangsakulthai, who is not only my advisor but
also my inspiration for this study. Professor Dr.Sakda Thanitcul, Professor Susom Suphanit,
Associate Professor Dr.Supawan Tantayanon, Associate Professor Dr.Suwimon Keeratipibul,
Assistant Professor Dr.Pongpun Anuntavoranich, and Associate Professor Dr.Kanchit
Malaiwongs, who refine presence and incubate the body of knowledge to get me accomplish
this work. My dad and mom, who give me a life and always encourage me. My sister;
Kanyanut, and Pantira who are always beside me. Manussanun, my niece, who often cheers
me up. My husband’s family, who care for me. Special thanks for my husband, Sansiri
Yomna, who takes care of my life and try to do everything for me. All my friends for the
moral support.

REFERENCES

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[4]     C. Clarridge, Product Liability Bill Becomes a Hot Topic in Harrisburg, Philadelphia
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