Traceability revolution a golden opportunity
incredible pressure on food manufacturers, especially private-label
processors. But one industry expert believes that the industry must
view this revolution as a golden opportunity to build client trust
and increase profits. Anthony Fletcher reports.
The drive towards ensuring complete supply chain traceability is inexorable. Retail giants are rolling out RFID (radio frequency identification) mandates to all their suppliers, and the biggest of them all, Wal-Mart, is currently working out traceability standards for all fresh products.
As far as these retail giants are concerned, their primary motivation is building customer loyalty and trust. In driving through these traceability measures down the supply chain, they are putting into place guarantees that if there is ever a recall, then any problem could be contained quickly without losing credibility.
And the best way of ensuring this is to ensure that suppliers have full control. This is why retailers are leaning heavily on manufacturers to install technology that will guarantee complete traceability.
According to Scot McLeod, vice president of marketing at software provider Ross Systems, this pressure on suppliers has always been there. The key is that it is now increasing.
"What we are seeing now, and what we are likely to see in the future, is greater emphasis on safety," he told FoodProductionDaily.com. "In the past, retailers have perceived customers as being primarily concerned about price, quality and customer service, but I think now you could add to that brand protection." Private label manufacturers are most directly in the firing line of this drive towards brand protection.
"If you are a private-label processor, then the increase in pressure on you in terms of guaranteeing food safety is almost like being under a magnifying glass,"he said.
"It's a bigger issue because you are producing products with someone else's label on them, and this company will be keenly sensitive to all risks. If they come and do a mock recall and are unsatisfied with the results, then this could have serious repercussions."
There are of course legislative pressures on food manufacturers to ensure traceability. But McLeod believes that most of the pressure for change comes from industry and not regulatory bodies.
"Most people I talk to are aware of the regulations and are watching them closely, but they are more concerned with dropping the ball with big businesses," he said.
"A regulatory violation starts with a warning, but businesses are not required to give a warning. They are just as likely to take their custom elsewhere if standards are not up to scratch."
All this is enough to give a plant manager a major headache. But McLeod believes that this industry trend towards greater accountability throughout the supply chain is an opportunity for suppliers to really differentiate themselves in the marketplace.
He is confident that if firms embrace the need for greater traceability properly, then they will find that the process is not just another financial burden like a new form of insurance, but something that will appeal to retailers.
"So many good things can come from this," he said. "With a proper system of record in place, companies have more visibility of their operations. This means that traceability is not just another cost, but something that can improve the firm's profitability."
McLeod gives the example of Berner Foods, a private-label dairy processor that is now using Ross Systems' iRenaissance traceability software. Before this was installed, a complete trace could take up to a day. Now the same operation can be achieved in less than an hour.
Berner now has the ability to trace products and supplies and perform mock recalls to ensure compliance with federal food safety guidelines. The lot traceability, recipe management and quality control applications in iRenaissance provide the data and functionality to maintain and inspect food records, including the source and movement of all raw materials, the process by which product was produced and destinations where all product was shipped.
As a result, the technology has lead to greater operational efficiency. Berner claims that with the system it currently has in place, stockouts have been eliminated as inventory can be strictly followed. The company has not lost a single client since it adopted the software.
This testimonial is backed up by a recent survey from market analyst Aberdeen group, which found that traceability compliance represents just a small percentage of the total benefits for manufacturers.
Other benefits include improved information on inventory status, better tracking and management of assets, improved responsiveness and customer service and improved tracking of shipping containers.
The central point the Aberdeen report makes is that manufacturers will not realise these improvements until they incorporate traceability into every aspect of their operations.
"Customer awareness about food safety has been much heightened, and retailers have responded to this," said McLeod. "This concern has flowed all the way down the supply chain."
Ross Systems, a software unit of chinadotcom corporation, delivers software solutions designed to help manufacturers increase operational efficiencies, improved profitability and streamline regulatory compliance.
