In the midst of the largest egg recall in U.S. history, members of the U.S. Senate debated the Food Safety Modernization Act of 2010. This act proposes new traceability requirements intended to address food safety issues through inspection of records and facilities. It would also authorize the U.S. Food & Drug Administration to refuse entry to imported food lacking proof of compliance with applicable standards.
Increased oversight of food safety will undoubtedly place a significant burden on food producers and distributors. But regulatory oversight is just one of many daunting challenges confronting the industry. Product recalls can cost millions of dollars per occurrence. They are also a lightning rod for the media and lawyers, meaning hard dollar costs of a recall can multiply quickly and your company’s reputation could be destroyed overnight.
Fortunately, not all food safety issues occur on a catastrophic scale involving recalls of a half billion eggs and daily media coverage along with the mobilization of an army of lawyers. More often, the producer or processor discovers that quality controls have been accidentally breached, contaminating or compromising raw materials or finished product. A great example of this happened at a food processing company where I previously worked: a bird flew into a fan near a production area killing the bird and contaminating the batch of mashed potatoes that was being processed into powdered form. The result was that the three most recent hours of production, plus a day or two of production at either side, were scrapped.
Luckily, the product hadn’t shipped yet and, since we’d recorded the lot numbers, we were able to pull the lots. Too many cases only get identified once a consumer is affected, at which point it’s too late. The issue highlights the importance of traceability, not only as a lynchpin of a company’s ability to react effectively to crisis situations but also as a key element to enabling companies to work effectively and confidently during the regular course of operations.
Food safety and traceability keep many food company executives awake at night, yet most companies are not willing to invest heavily in traceability until they have a problem. Some may resist because they weigh the cost of a trace system against the relatively low frequency of food safety issues. But this approach is much like driving a car without having insurance.
The growing call for oversight and regulation, whether from the FDA, USDA or other organizations such as GS1, clearly shows that traceability is fast becoming an absolute necessity. But creating end-to-end supply chain traceability can be a major and costly task. The best advice is to avoid trying to boil the ocean. Start with your internal supply chain and expand over time to cover more of the supply chain. Lot traceability is a core component in the food safety concept. Leverage the lot tracing capabilities of your own ERP system to manage what happens in your own processing operations. That should enable you to identify where the raw materials and packaging came from, how you have transformed them, how the raw materials were consumed and where you shipped the finished product.
The more precise data you have, the more you can limit the consequences of a product recall or products withheld from market. Traceability solutions add so much visibility and transparency that you can execute a product recall within hours and with high precision. The alternative — manual or semi-manual trace-back — is a time-consuming, step-by-step process that is prone to error. This forces companies to recall more products for an added margin of safety.
Another option is to deploy a traceability tool that works directly with your company’s supply chain software. In choosing a tool, be sure that the features that are built into the product align well you’re your company’s processes, or be prepared to re-architect some processes to conform to the product – bearing in mind, some product features are drawn from industry best practices, many of which are worth contemplating.
Evaluate the features not just in terms of their ability to track, but also – more crucially – their ability to support decisions in a time of crisis. When a situation hits, you don’t want software that is complete and rich in detail but slow and challenging to use. At Lawson, we architected our Trace Engine (at www.lawson.com/trace) to provide traceability, but also querying capabilities, quick response and usability so that the people involved in a recall or in a quality audit process have tools to help quickly and easily analyze information and make the proper decisions. The goal was to create a usable, effective decision support tool — something along the lines of business intelligence or analytics for a CFO.
While risk management is a genuine motivator and a valuable outcome of adopting a traceability solution, there are a number of other compelling reasons to implement a trace solution. Detailed documentation of all ingredients and processes establish a foundation of public trust. When you can show your customer exactly what went into your product, or give an auditor direct access to the system to review your quality controls, you can significantly enhance trust and your reputation. And in the end, the most important motivator should be a company’s commitment to ensuring that its products are safe, high quality, and meet the needs of consumers — helping to build the brand, not tarnish it.