Within hours of the FDA announcement in January 2009 that peanut butter was the source of a salmonella outbreak, online buzz on the topic tripled. The news, sometimes bordering on hysteria, quickly spread across blogs, Twitter, Facebook and other social media platforms—very likely reducing the number of deaths and injuries caused by the illness.
The role that social media played in this massive recall is a powerful reminder of how quickly the dynamics of the food industry are changing. Social networking makes the unfiltered voice of the consumer more accessible and immediate than ever before—which means that any response by food processors must be both fast and effective if it is to have any hope of limiting adverse consumer sentiment and the resulting impact on business.
But social media is just one factor driving change in the food industry. The rising number of large-scale food recalls in recent years—like the most recent beef recall from Huntington Meat Packing, diminishing consumer confidence, growing scrutiny from regulators, unprecedented demand for food from emerging nations and increased demands for brand-protection assurance are all converging to create a perfect storm for processors—one that can no longer be ignored.
The impact of food recalls alone, in both human and financial terms, can be quite staggering. The financial costs associated with the recall of peanut products from Peanut Corporation of America are believed to have topped $1 billion. More importantly, nine people died and hundreds became sick from eating contaminated peanut products.
Adding to the severity of this issue is the increased visibility into how food is produced. Recent popular documentaries such as Food, Inc.—touted by Oprah Winfrey’s popular magazine as a movie that “…might change your life”—and books such as Fast Food Nation and The Omnivore’s Dilemma have given consumers a glimpse into an industry that has traditionally operated far from the public eye. As a result, many consumers are now actively questioning the safety of the foods they consume.
In fact, a recent study by IBM found that fewer than 20 percent of consumers trust food companies to develop and sell foods that are safe and healthy. The study also revealed that 60 percent of consumers are concerned about the safety of food they purchase, and a strong majority (83 percent) of respondents were able to name a food product that was recalled in the past two years due to contamination or other safety concerns.
At the same time, rising incomes and population growth in emerging nations have placed upward pressure on meat products, which are a higher-risk category for foodborne pathogens. The unprecedented demand continues to place a tremendous strain on the food supply, increasing the risk of quality control oversights that can create food safety problems.
The convergence of all these factors has brought about increased government and customer-driven compliance requirements for food processors. What were previously voluntary practices in food safety and traceability are now mandates. And while these requirements are well-intended, they pose significant challenges for many processors that have multiple steps in their production processes.
These challenges came to light recently after Inspector General Daniel R. Levinson of the Office of Inspector General (OIG), U.S. Department of Health and Human Services, disclosed some bleak findings on protection of the U.S. food supply. According to the agency’s study:
- Only five of the 40 products purchased during the study could be traced through each stage of the food supply chain back to the farm or border.
- Thirty-one of the 40 products purchased could not be traced through each stage of the food supply chain; OIG was able to identify only the facilities that likely handled the products.
- And for the remaining four of the 40 products, OIG could not even identify the facilities that likely handled these products.
The common thread for the products that could not be traced: lack of lot-specific information necessary for complete end-to-end traceability.
Recognizing the risks involved, a growing number of retailers have instituted food safety audits and mock recalls that require rapid access to accurate summary product-lot information with detailed supporting results. At the request of retailers, many food processors that supply national retail chains are conducting as many as four mock recalls a month. Additionally, some mock recalls are being validated by external audit firms as part of comprehensive food safety audits.
For a food processor, the cost of a failed mock recall can be catastrophic. And, in the case of a safety recall, not having lot-specific information will often force the processor to expand the size of the recall due to its inability to accurately identify the affected lots. This recall expansion alone, which can be greatly curtailed with better and more accessible information, can have a disastrous financial impact on food manufacturing companies.
To address this complex challenge, leading food processors have adopted enterprise software to automate and integrate traceability across the multiple steps in their supply chains. Just as accounting systems act as financial systems of record, enterprise resource planning (ERP) systems integrated with product lot-tracing functionality have become the operational system of record for many companies in the food industry.
An operational system of record with lot-tracing capabilities enables the business to trace back to the source of all ingredients, and trace forward to the disposition of all food products made and sold—all within just a few minutes, if not seconds. The increased confidence provided by this level of tracking—along with proof of “in-control status” for customers, auditors and regulatory inspectors—enables food processors to establish a competitive advantage, save thousands of dollars and prevent the potentially catastrophic consequences of a failed safety audit or comprehensive recall of all lots (and potentially products) on store shelves or consumers’ pantries.
Considering the ever-growing regulatory pressures worldwide, greater consumer awareness, the impact of social media in magnifying the severity of a food scare and the increased safety risks inherent in the extended global supply chain, having the right technology in place is no longer a luxury. It’s a strategic differentiator that is imperative for surviving and thriving today and in the years ahead.
Jack Payne is the director of solutions consulting at CDC Software, a global enterprise software company. For more information about CDC Software visit www.cdcsoftware.com.