There are numerous traceability challenges facing organizations as they make, process, distribute and sell food products, the reasons they now need to overcome the barriers, how they might approach this, and what they stand to gain as they achieve greater transparency both throughout their operations and along the supply chain.
From the food we eat and the medicines we take to the gadgets we buy and the vehicles we drive, consumer buying choices used to be based on trust. But this trust has been eroded over time by a spate of media scares which have led customers to question the integrity of brands they once relied on. As a result, customers are now paying much closer attention to the information available about a product’s origins, and the processes involved in making and bringing goods to market. Restoring consumer confidence means that supply chains need to work harder to tighten controls, improve visibility across their processes, and provide a joined-up picture of a product’s journey from the field or factory to the customer’s front door.
Whether companies are making or handling food items, pharmaceutical goods, electronic devices or vehicles, the ability to trace individual products right back along the supply chain to their original source is now paramount. This traceability must extend to individual ingredients, raw materials or components, and the processes and transitions involved in getting products to market.
In the food sector, growing concerns about the exact content of foods, the integrity of meat supply, animal welfare, working conditions for people, and environmental factors means consumers and regulators are becoming a lot more interested in the detail on product labeling. Increasingly, the primary reason for improving product traceability is customer confidence. Industry regulators are demanding greater transparency too – not only for health and safety reasons, but also so that advertising claims can be substantiated or contested. That includes statements about a product’s organic/’natural’ status, its carbon footprint, and ethical properties (such as Fair Trade and ’free range’), as well as testing and quality control processes.
Risk reduction
Another common driver is risk reduction. Here the emphasis is on ensuring that any faulty or contaminated product batches that have already entered the market can be located and contained quickly, so that companies can avoid the huge cost and brand damage associated with blanket recalls. Transparency is also important in establishing cause and responsibility if something goes wrong. Achieving comprehensive traceability is not easy however. Information capture and recording behavior and methods vary considerably from one industry and one company to another. The greater the number of raw materials/ingredients involved, and the more involved and complex the supply chain, the harder it is to maintain a clear line of sight across a product’s journey.
Yet manufacturers, distributors, wholesalers and retailers cannot dismiss the requirement. Failure to respond to consumers’ demands for more granular product information could result in a loss of business. Large retailers and original equipment manufacturer (OEM) customers which are now expected to show increased detail to consumers will push that requirement back down the supply chain, preferring to do business with suppliers that can support them in their transparency and traceability initiatives. From the farmer and the production facilities they serve, to the chemical manufacturers providing raw ingredients to pharmaceutical and cosmetics companies, no link in a supply chain can escape the need to capture, record and pass on accurate and exact traceability data. Having insufficient resources or inadequate technology is no longer an acceptable excuse for a company not to do its bit.
Verify history
Traceability, in the context being considered here, is the ability to verify the history, location and application of a specific, identified product from creation to the point that it is brought to market – by means of continuous tracking and recording. To be of comprehensive use, detail must be recorded about where the product (and its constituent parts) came from; where each element has been along the way, and when and what happened to it at each stage. The more detail that can be captured, and the more this can be preserved in its original form to protect its integrity, the more reliable and valuable it becomes. Often, traceability information is compromised and detail is lost as a product passes from one company to another along the supply chain – for example as raw materials are combined in a manufacturing or processing plant, or as goods are repackaged and rebranded.
As supply chains become increasingly global, consistency in information provision can be particularly hard to maintain – for example where manufacturers and distributors may be working to different requirements and standards, recording different information in different ways. Information about where and how products have been processed, stored and transported is important too. These factors could have a bearing on quality, freshness, or scope for contamination/cross-contamination (with implications for allergy sufferers, or general health and safety, in the case of food). Information also needs to be location- and time-specific, so that in the event of an issue companies are able to pinpoint which production line was involved and which workers were on shift. Date and time information is also essential to ensure that the use-by date of a final product reflects the shelf life of all raw materials. Traceability is particularly important in the food industry, and for other products where quality is critical – such as medicines, medical devices, safety equipment, products for babies and children, and vehicles and their components. But it also has value in almost all industries, for reasons of quality control, regulatory compliance, risk reduction associated with product recalls, and the ability to support the increasingly stringent requirements of OEM customers, retailers and consumers. Some notable sector-specific requirements are outlined below.
Food & beverage
The food and drink supply chain is the UK’s single largest manufacturing sector and accounts for 7% of GDP. The sector employs 3.7 million people and is worth £80 billion per year. But Britain imports 40% of the total food consumed, according to Global Food Security, and the proportion is rising. The UK horsemeat scandal of 2013 highlighted everything that can go wrong in a complex supply chain where traceability is compromised. The controversy arose when several lines of supermarket foods, including frozen lasagnes and burgers labeled as beef products, were found to contain horsemeat. The initial uproar was down to the fact that eating horsemeat is taboo in the UK. But, even more sinister was that the event uncovered large-scale mislabeling across the packaged meat products industry, with multiple cases emerging of cheaper products being used to replace or bulk out more expensive meats.
Reports pointed to cross-contamination of chicken with beef and pork waste, causing anger and distress to those whose religion dictates that they avoid pork. The ensuing crisis in public confidence as consumers realized they could no longer trust what they were eating led to a massive slump in sales of processed meat products. In the supply chain, meanwhile, a blame game began as farms, processing facilities and supermarkets each denied responsibility for the deception. Under EU law, ’traceability’ means the ability to track any food, feed, food-producing animal or substance that will be used for consumption, through all stages of production, processing, storage and distribution.
Strict controls
But what the horsemeat scandal showed was that the existing measures have not been robust enough to prevent fraudulent practice. As a result of the scandal and its aftermath, the European Commission has been working towards extending mandatory origin labeling of all types of meat used as an ingredient in foods, and the unprocessed meat of sheep, goat, pig and poultry, to improve the level of food information provided to consumers. Mandatory origin labeling could be extended to other unprocessed meats such as horse, rabbit, game meat, etc, as well as milk; milk as an ingredient in dairy products; single ingredient foods; unprocessed foods; and ingredients that represent more than 50% of a food.
For consumers, confidence will be restored only when there are much stricter controls in place and when there is complete, unambiguous labeling that is more closely monitored and vetted by the authorities. Consumers are paying closer attention to food and drink for many other reasons too. Already more likely to check labeling for information about fat, sugar and salt content, customers increasingly also want to know more about the source of products – for example whether they’re British and local, or whether they are Fair Trade. Interest in organic and free-range produce is on the rise again too.
Concerns about genetically-modified produce and the potential for ‘outcrossing’ are also causing consumers to pay more attention to food packaging. Meanwhile those with allergies or other diet restrictions want to be sure that they are successfully avoiding ingredients they can’t or don’t want to ingest. Also under review are best-before and use-before dates, as a better balance is sought between food safety and unnecessary waste. For complete consumer confidence, food producers and handlers need to be able to offer as much detail as possible about how products came from the field and factory to their table. Origin labeling and the traceability chain behind it needs to go deep, pinpointing where the product was grown, bred and made – down to the country, county, farm, field or greenhouse, and even the precise plant or animal, and the conditions in which these were grown or bred. This level of information is not only important for consumer safety, and confidence about food quality and integrity, but also so that contamination or infection outbreaks, environmental issues, and localization targets can be monitored and managed.
Transforming with technology
Given the costly implications for companies that are not on top of supply chain traceability, it is surprising that improving this capability is not an urgent priority. Yet too many organizations still see this as an expensive cost that adds no value to the business. They also perceive end-to-end traceability as an onerously complex challenge to overcome, because of the different parties involved. Where companies have no choice but to make significant improvements, for the sake of regulatory compliance and/or to win back customer confidence, one approach is to employ Six Sigma style process changes to ensure a comprehensive approach to quality control. If they get their own house in order, they will be in a stronger position to fight their own corner in the event of a problem, and to work with partner organizations along the supply chain to extend any improvements. To combine reliability with efficiency, however, companies need joined-up technology: an optimum blend of systems and software that can capture and record the right information at each stage, so that it can form part of a holistic, traceable record of an individual product’s journey.
It is a misconception that achieving traceability automatically requires new systems. Often, a lot of the information required for product traceability already exists; it is just that it is distributed across a number of disparate systems and cannot be easily consolidated to create the holistic, bigger picture that is now needed. If an investment in new software is needed, it may only be to pull all of the fragmented data streams together in a central place (unless any manual processes remain which also need automating).
More often the barriers or gaps appear between organizations, up and down the supply chain. In a food supply chain, a market garden farm may be attentively recording information about each lettuce it takes from the ground, recording information about where it was grown, when it was harvested, tracking each plant from the soil to a tray, pallet, and the particular picking machine and operator involved. Unfortunately, though, weaker links along the onward supply chain could undo all this good work. At this point of origin, product information is at its richest.
But once the produce leaves its source, the traceability line often gets weaker as detail is lost. Advanced shipping notifications (ASNs) typically only pass on basic information about the type and quantity of products on a pallet. And with each subsequent process – for example as the product passes to a wholesaler and is repackaged – more information is separated from the item, and lost forever. As the product moves on to a shop or production environment (where it is used to make something else), only the tiniest level of detail is carried forward with it. If a problem is discovered down the line, or the consumer has a complaint, the issue becomes hard to trace because the information chain has been broken in several places.
Data richness
What’s needed to overcome this is a flow of information between systems and between the different parties along the supply chain so that data richness is preserved on an end-to-end basis and traceability isn’t compromised. All parties need to work more closely too. A more controlled and compliant supply chain will be achieved if there are fewer relationships, each of which is more tightly bound. This will help pave the way for the integration of systems and sharing of information – not just for the purposes of product traceability but to keep suppliers abreast of trends and projections that will help them predict demand. An integration specialist will be able to knit together a wide range of different systems so that they can interact and exchange information. An effective way to achieve this is using web services that preserve the integrity of existing systems but allow these to be interrogated remotely over a secure network, on demand. Purpose-built tools exist too, to enable reliable supply-chain data exchange between different systems, allowing ASN or production information to be converted for use in an overarching supply chain management system – one that maintains complete tables of data across the entire cycle of a product’s creation and delivery to market. Although use of the cloud is not essential to bring all of this together, managing all of this consolidation and end-to-end traceability via a remotely accessible central resource can help reduce administrative processing. This could enable correct labeling to be printed locally in China at the point of manufacture and put straight onto pallets, so that all of the providence information is shipped with the product, embedded in the label or radio frequency identification (RFID) tag. This could cut inbound processing work by as much as 80% as the goods are received, because all of the ‘paperwork’ has already been taken care of electronically. Other technology developments aiding supply chain traceability are standards such as universally recognized GS1 barcodes, and the XML format for exchanging and displaying data electronically. In due course, Radio Frequency Identification (RFID) tags are expected to become the dominant standard for identifying products automatically.
The options for data capture are broadening all the time too, making it easier for companies to create rich information directly at each touch point – for example through the use of ever more sophisticated mobile devices, voice recognition and portable document scanning (for capturing driver notes, etc at the point of receipt, for example).
To establish a comprehensive picture of a product’s journey that will fulfil operational, regulatory and consumer requirements for traceability, manufacturers, suppliers and distribution partners should be looking to develop and join up capabilities, so that each of process is recorded against the individual item as well as every item, vehicle, person, machine, process, location, etc that it is in contact with throughout its journey along the supply chain.
While the technology to achieve a comprehensive line of sight along a product’s path from original source to the end customer does not need to be anything revolutionary, success will require skilled integration so that all of the selected data sources contribute to the bigger picture – in a way that’s consistent, secure, reliable and of real business value. If the information being compiled does not aid traceability at the point and time this is needed, all of the effort involved in creating the audit trail will have been worthless. Because wider supply chain traceability depends on the involvement of multiple parties, individual companies may find it difficult to drive and effect all of the changes needed to deliver a step change in visibility and compliance. Again it may be useful to engage the help of external specialists, for example industry-sector advisors and software integrators.
They will be able to apply known best practice, and piece together fragmented systems so that they can exchange data and create an uninterrupted flow of related information. As ambitious an undertaking as all of this might seem, many companies already have the necessary building blocks; it is just that they are not yet working in harmony to deliver the insight needed. A logical progression of stages to work through might look something like this:
1. begin by looking at the current and then the required capture and management of data. As such activities grow, so must the knowledge of how to use the data to achieve the end results needed.
2. next, consider information openness across your company’s own supply chain. By making it easier for partners to access information, companies will start to improve transparency and foster a culture of collaboration, reducing the danger of cover-ups.
3. establish a clear audit trail, whether system or paper based, along the supply chain – one that can be used practically, ie. which yields usable insight in a reasonable timeframe.
4. employ good, sound processes for quality control, such as Six Sigma or the equivalent.
5. play an active role in relevant industry organizations where you may pick up useful advice, and benefit from peer experiences. Communication and ideas-sharing is invaluable. Explore how other industries handle traceability too, especially if they are further down the line.
If companies wait until they are forced to undergo transformation, they jeopardize their ability to plan for these benefits. The advantage of taking steps while time is still on their side means they get to gear the new measures to their own advantage as well as that of regulators and customers. But even now the clock is ticking as traceability rises up the agenda for governments and industry authorities.
by Advanced Business Solutions (Squaring the circle: Transforming
traceability in the supply chain)