The FDA defines food traceability as “the ability to follow the movement of a food product and its ingredients through all steps in the supply chain, both backward and forward.” The process helps ensure that foods, beverages, and supplements are kept up to strict quality standards to protect the consumers’ health and safety. These types of protections not only prevent expensive lawsuits but lead to improved brand image and trust. Further, it helps producers manage recalls should the situation arise. Having clear visibility into where certain ingredients came from and when will help in identifying sources of contamination and removing them from your supply chain.
While there are enormous benefits to traceability, it does cause its share of headaches for producers in the food & beverage industry. For starters, there needs to be a system in place to easily and reliably document all aspects of production, ingredients, finished goods and more. If you don’t have automations and razor-tight integrations in place, this often means heaps of manual data entry and duplication of efforts.
When it comes to traceability, there are technically two different aspects: tracing and tracking. Tracing covers the history of all batches, goods, and ingredients throughout the entire supply chain. It can be thought of as both an upstream and downstream effort. Tracking is a downstream process, in which individual products or batches can be tracked from manufacturing all the way down to consumption.
Challenges in Food Traceability
Currently, there are several challenges that food & beverage manufacturers are facing when it comes to traceability.
Regulations
For starters, there is an ever increasing number of regulations to abide by both at the state and federal level, as well as international regulations for businesses operating globally. These regulations include allergen notifications, the use of pesticides, trace elements, certifications and more. Keeping track of all these requirements, updating them in a timely manner, and making any needed adjustments to the supply chain all create a difficult regulatory environment.
Consumer Demand
Further, consumer demands are requiring more and more complex products, which require more complex tracing procedures. For example the recent surge in demand for gluten-free options creates more burden on the manufacturer to have utmost visibility into their supply chain. Being able to trace every single ingredient back to its most basic source is essential to remaining compliant.
Analytics & Reporting
Some traceability systems are lacking on the analytical side of things, and provide poor visibility into key supply chain data.This can lead to improper materials management, product expiration, and inefficient operations.
Data Entry
The amount of documentation and data-entry required is cumbersome if you don’t have a proper traceability system in place. Spreadsheets or subpar traceability systems result in fat fingering data and slow backwards/forwards traceability putting your business at further risk.
Company Buy-In
Getting supply-chain wide adoption of your system is another hurdle. Implementing a traceability system in the office is simple enough, but if you own your own factories or farms the situation becomes more complex. In an industry that’s known for thin margins, getting workers in factories and farms across the country or globe to adopt the new practice can be difficult. Systems need to be cloud-based and allow for mobile access to help ensure that workers can utilize the system from places other than the company HQ.
When it comes to remaining compliant, you don’t want to cut corners on the systems you utilize. Saving a few bucks by managing off of spreadsheets pales in comparison to the cost of a recall. According to the FDA, there were 427 recalls in 2021 alone. Even worse, Food Safety Magazine reports that “The average cost of a recall to a food company is $10M in direct costs, in addition to brand damage and lost sales.” Granted, those numbers are skewed by recalls affecting corporate giants, but are eye opening nonetheless. Having an effective traceability system in place pays for itself in the long run.
What to Look For in Traceability Software
When vetting a food traceability system, there are a few key features to look for. For starters, you’ll want an effective inventory management system. Having lot tracking in place allows you to keep an eye on products and ingredients all over the supply chain. From raw ingredients in your factories, to finished goods on store shelves, you’ll know exactly where every product is and where it came from.
Proper inventory management software will also help you forecast demand and plan for new runs in your factories. This can mean less inventory on hand, decreased storage costs, and less waste.
Your system should also be optimized for “disaster preparation and response” should the worst occur. Finding out that your product was linked to an e. coli outbreak or other disastrous situations requires a swift and total response. If such an event were to occur, and you didn’t have proper tracking in place, you might be forced to discard your entire stock of product. However, if you can quickly identify which lot(s) were involved, you can mitigate the problem with much less waste and cost. For instance, you might be able to determine that the contamination happened from one single supplier, from a factory that had improper sanitation protocols, or through improper storage in your warehouse. Having this information allows you to only discard the contaminated product while simultaneously removing the problem’s source from your supply chain.
Thorough documentation is another key capability of traceability systems. There’s a ton of information to be stored regarding ingredients, key contacts, factory information, variants, delivery dates, expiry dates, shelf life, lot and batch numbers, and customer information to name a few. Having all of these details recorded and organized will be essential to tracking and tracing. Due to the amount of information required, it makes the most sense if your traceability system is a native part of your ERP or CRM, like in the case of NetSuite, so that you’re not maintaining two separate databases.
NetSuite: A Leading Traceability System & A Whole Lot More
As stated above, the most effective food traceability software will be either native to or integrated with your CRM/ERP system. With the amount of data required to accurately track every single ingredient and involved party, it’s too much manual labor to maintain separate systems. NetSuite is the world’s leading cloud-based ERP system, and it can serve as a world class traceability system as well. Apart from providing advanced accounting and finance, CRM, marketing, HR and more, NetSuite allows for inventory management, lot tracking, supply chain management, custom reports, and everything else needed for tracing. It’s cloud-based and mobile friendly, meaning it can be deployed and accessed anywhere on the globe whether that’s the back office or factory floor.
There’s a reason why so many food & beverage companies are making the switch to NetSuite. Being able to run nearly every aspect of their complex businesses on a single cloud system streamlines operations, decreases overhead costs, and saves time. When it comes to protecting your business from costly recalls, damaged brand reputations, and regulatory fines, there’s no room for cutting corners. By adopting NetSuite, you’ll be setting your business up for success and compliance for years to come.