Today's food manufacturers are facing some of the most challenging market conditions ever. They must invest considerable resources to establish and maintain the integrity of their brands, continually improve the responsiveness of their supply chains, and be more innovative and adaptive to changing consumer buying patterns. As they manage these issues, they also must find ways to reduce production costs, meet increasingly numerous and complex regulatory requirements, and produce a wide variety of consistently high-quality products.
To effectively address these challenges, manufacturers must exercise a great deal of control in the product's components or ingredients and in the processes used to make it. New resource tracking and tracing technology is making such control possible, both in the context of a single plant and in a network of plants making the same product.
Many companies are finding that the same processes necessary for consistent production, governmental compliance and supply chain efficiency go a long way toward helping establish brand value and can provide a quantifiable return on their investment. From raw material procurement through manufacturing, shipping and distribution, the timely information derived from tracking and tracing applications drive greater efficiencies into the operation and result in a much more responsive enterprise.
Clearing the Regulatory Hurdles
One of the primary issues driving the need to track and trace food products throughout production is the increased focus on food supply safety. Recent threats to security and terrorist activity have led to the development and enactment of several regulations aimed at food safety. Of particular importance is the Bioterrorism Act of 2002, which is shaping up to have more impact on the food and beverage industry than all other regulations combined. A key requirement of the law is its recordkeeping component, which states that food companies must maintain a record of the tracking of ingredients and products.
Another important regulation is EU Regulation 178/2002. Best known as the legislation establishing the European Food Safety Authority, the regulation specifies the basic conditions for safeguarding food safety. Two provisions merit particular attention: the requirement that it should be possible to trace food and feed at all times; and the requirement that unsafe products should be withdrawn from the market.
These regulations, as well as other requirements from the distribution channel, have food manufacturers reviewing their existing systems to determine how well they can meet the new regulations and what new systems might be required to ensure compliance. In the past, many have relied on manual data collection methods and have provided their best estimate based on paper records. With new tracking and tracing systems in place, manufacturers will have much more accurate information on where products were shipped and what components were in each product. This will allow them to not only meet regulatory demands, but put them in a better position to respond faster, more accurately and more cost-efficiently to produce recall situations.
Oiling the Supply Chain
To reduce extra inventory held in their stockrooms, many retail outlets are communicating the quantity of product sold on a daily basis and expect food manufacturers to ship just enough product to replenish their shelves. Failure to respond to these demands can cost a food manufacturer the contract to deliver the product. In contrast, those companies that are successful in improving the supply chain have the opportunity to receive the best shelf space at retailers and increased revenue.
Better information in the supply chain on product and quantity shipped also allows food companies to reduce inventory in the supply chain, freeing up capital and reducing operating costs associated with storing the extra inventory. To effectively schedule production, the food manufacturers require real-time information on such variables as the status of current production, what is being manufactured, how much has been produced, and whether it has been shipped from the facility.
One of the requirements of a well-implemented product tracking and tracing solution is the ability to provide a view into what is being produced. Many companies are using systems (computerized or manual) that pass the work orders to the production floor and only provide feedback when the product is entering finished goods inventory on a pallet. By having a system that tracks production through each manufacturing area, it has sufficient data to make informed decisions regarding actual completion dates, or to reschedule high priority products through the manufacturing facility.
Accurate Inventory Management
A focus of many continuous improvement processes is the measurement, management, and reduction of raw material, work in progress, and finished goods inventory. The reduction of these inventories reduces the amount of capital invested in the inventories and frees it for other uses. It also reduces the inventory carrying costs associated with the extra inventory.
Inventories within the manufacturing facility can be reduced by implementing tracking and tracing systems that monitor and record actual usages in real time. At many plants, inventory usage is determined based on standards that have been developed. Actual inventory is reconciled to the business system every week or month by taking a physical inventory. To ensure that there is adequate inventory on hand, these plants need to carry additional inventory as a safety stock.
Tracking and tracing solutions can be deployed to gather data on actual material usages in each step of the manufacturing process. The actual usages can then be deducted from the inventory levels maintained in the business systems. This enables the manufacturer to know actual inventory levels and to order just the amount of raw material that it needs.
The pressure to reduce operating costs comes from both retailers and from corporate management, both looking to improve the profitability of their respective businesses. One part of the challenge at the manufacturing plant is to understand where the best opportunities are for improving operations. Manufacturers need to track operations and identify the costs of each step of the production process in order to understand where to focus their continuous improvement efforts.
Tracking and tracing applications can provide much of the raw data to give a more complete view of the actual cost of manufacturing each product. This includes the actual amount of raw material used, the yield from conversion processes, the quantity of good product produced, and the amount of scrap. The data collection also includes the amount of labor that went into each process step, what utilities were employed and their quantity, and the cycle time for each step. Other data associated with the performance of the equipment (its efficiency), production rate, downtime, and cycle time can be monitored. Based on this data, companies can more clearly understand their costs and make better decisions on reducing the cost of manufacturing their products.
The data in the tracking and tracing application can be correlated with the actual cost data that resides in the company's business system. In this way, the actual costs based on the activities at each step of the process can be determined.
Building Brand Equity
The concern is not solely focused on meeting quality standards, but making sure that the finished product's taste, texture, shape, smell, and consistency is the same from batch to batch and at all manufacturing facilities making the product. Brand equity is maintained by ensuring the product is the same, no matter where it is purchased. This is important to the consumers who want the product to taste the same, wherever they buy it.
The challenge for the manufacturing company is to have enough correlated data to allow it to analyze operations to make improvements. The tracking and tracing applications collect all the key data for each process step including raw material used, operating conditions, personnel, and quality of the product. Batches or products that were excellent (yield and quality) can be reviewed to understand optimal conditions. For example, is there an impact on the final quality based on which mixer was used? What about the oven the product was baked in? Can the food manufacturer use two different suppliers for an ingredient, or does it impact the quality of the product?
Answers to these questions are not always easy to discern. They require a systematic approach to data collection and the ability to easily analyze the data to understand relationships and causes of product quality problems. Properly implemented tracking and tracing solutions provide the user with the ability to analyze the data, and understand relationships, to determine the cause of quality problems.
Selecting a Solution
There are various operations in the plant that can be tracked and different components that can be traced in a manufacturing plant. At the same time, the requirements for each of the processing areas are different, and the solution that is deployed must be able to accommodate the requirements of the different manufacturing areas. For example, by minimizing the amount of data collected, companies can deploy a system that meets regulatory requirements, but gives them no additional value. Therefore, the scope and capabilities of the system is a critical decision that is made before deployment.
Tracking and tracing solutions need to be scalable so users can add functionality, and also easy to integrate with existing plant control and information systems. Also, the solutions must be able to handle both automatic and manual data collection. Many plants have processes that involve operators adding ingredients by hand. The information about the ingredients and quantity then needs to be manually entered into the system. Manual data collection also includes information on which operators were on the shift and may include the work order that is being processed.
Automatic data collection requires the tracking and tracing application to interface with a variety of automation and other computer systems. Companies frequently have different automation and information systems deployed at each of their facilities - from ISA S88 batch compliant systems to home grown systems developed by the plant staff. Much of the data resides in the process controllers and human-machine interfaces in operation at the plant. The tracking and tracing application needs to interface with these applications and collect the data.
Food manufacturers understand that the true value of tracking and tracing applications extends beyond their ability to achieve regulatory compliance and meet retailer requirements. The data derived provides information that can be used to: provide visibility into the production process; analyze operations; identify root causes of production problems; and implement changes to improve operations.