Steve Baxter, managing director of Ross Systems takes a look at the progress of traceability in the food supply chain nine months on from the introduction of the EU General Food Law Regulation.
It has been nine months since the introduction of the EU General Food Law Regulation (178 / 2002). Billed as one of the most comprehensive pieces of legislation to affect the supply chain, it stated that companies involved in the food supply chain must be able to identify and track every ingredient and food that they handle on demand.
The Sudan 1 food scare case in February 2005 highlighted certain weaknesses of the legislation. Although the contaminated products were identified, questions remained over the length of time it took to trace the data of the contaminated products within the supply chain. The legislation did not insist manufacturers and suppliers needed to act immediately as on demand might suggest and suppliers were not imposed a strict time frame. As a result of this ambiguity, it took the majority of suppliers weeks to track the contaminated products.
A combination of the legislation and the Sudan 1 case raises the question of what steps have been taken in 2005, if any, by suppliers in improving the ability to trace food ingredients in the supply chain and whether it will take another high profile case to invoke further changes in the industry.
Sudan 1 highlighted the ambiguity of the on demand element of the EU General Food Law Regulation. The legislation stipulated that food companies must be able to identify where they got their products from and who they sold them to. This is referred to as one up one down traceability. No pressure was enforced on the time it had to take them.
Whilst the Food Law Regulation provides a framework for companies to work with, the real changes within the industry are not being driven by legislation. Instead, suppliers and large retailers are driving this process by their own requirement to achieve higher food safety standards, plant efficiencies and maintain customer confidence. Progress is therefore uneven across the food and beverage and industry.
Barriers and complex processes
Organisations taking steps towards reducing the time it takes to trace and recall a product face a series of barriers. While most large UK organisations have traceability systems in place, there are many cases where they use non UK suppliers, often from outside the European Union.
Given the nature of the food supply chain, preventing the contamination of any food stuff is a complex task. Even on a national level, there are barriers which face UK firms in meeting the EU General Food Law Regulation. Managing processes in the supply chain is multi faceted. For example, many manufacturers will use alternative or new suppliers on an ad hoc basis in order to meet demand or when faced with shortcomings from their existing suppliers. Given this pressure, manufacturers often struggle to make all the necessary checks as to the provenance of the products from these suppliers.
Overcoming The Barriers
To deal with this challenge, internal traceability systems should be developed to fully control the food products entering and leaving the supply chain. Internal traceability of ingredients can reduce costs and limit damage through more targeted and quicker recalls. Most organisations using an integrated software system with traceability functionality are able to dramatically reduce the time it takes to carry out a mock recall from days or weeks to a matter of hours. Furthermore, if manufacturers link traceability and enterprise resource planning systems (ERP) to the process control systems on the factory floor, faulty products entering the supply chain can be stopped immediately, before they enter the manufacturing production process.
Equally important is access to live information. Customer and consumer confidence can be lost quickly if suppliers are not able to react instantly to food quality or safety issues and yet the food and beverage industry at large still lacks the ability to monitor and record information in real time. This makes it hard for manufacturers to have genuine control over their processes and effectively manage recalls. So, not only is it vital to have a traceability policy and a reliable system in place, this system should also allow manufacturers have real time information in addition to the recording of historic data.
In summary, a variety of systems exist to enable manufacturers to not only comply with legislation, but also to meet and exceed the demands of key retailers and to go even further in improving the speed and accuracy of traceability throughout the supply chain. The question however, remains as to whether it will take another case, similar to Sudan 1, to enforce stricter changes and to speed up the adoption of such systems. Experience suggests that it is likely that most manufacturers have implemented some kind of traceability processes already, if only to comply with legislation. The result of this low level of adoption is that many organisations will posses the basic processes to enable them to be legally compliant and no more.
In terms of legislative progress, the simple fact is that new legislation is more often than not, reactive in other words, national and European laws tend to be passed in response to events or driven by demand rather than in anticipation of future events or future demand. As a result, stricter regulation is unlikely to be passed unless there is consensus amongst the industry that it is required or another public crisis occurs within the supply chain.
Going forward achieving objectives
For companies who have not made significant progress, it is crucial that they work towards establishing four key objectives.
The first involves minimising product safety risks by reducing manufacturing variability. Achieving a consistent number of reliable suppliers is a key challenge for the industry given its nature, but if food manufacturers can work towards establishing a key number of consistent suppliers this will create significant progress in reducing food contamination cases.
The second involves improving traceability throughout the supply chain. This will entail linking the ERP system and establishing it as an operational system of record for the whole enterprise. Companies can take steps towards reducing recall liabilities with lot tracing. A complete ERP system that maps front and back office process can achieve this. For example, one of Ross customers traceability times was reduced from a day to fifteen minutes. This involved an ERP implementation to encompass the manufacturing and financial process, bar code data collection, and a front end customer relationship management system.
The third route must establish and implement an executive led, cross functional management programme. Businesses still lack strategic planning capabilities. Getting this right is a key priority. If a company decides to move forward, it must involve the whole board and a strategic plan must be put in place. This involves understanding key business processes, putting a project plan in place, its implementation and successful roll out.
The fourth route for suppliers must involve collaborating with customers, partners and regional agencies. Manual tracking and records still exist in the supply chain. This gives limited visibility affecting quality, inventory and cost control as well as the key elements of profitability and customer service.
Companies involved in the food supply chain will have to move towards a business model where they can produce records immediately on demand. If they do not, the company will not stay in business, irrespective of the law. Routes are being taken but it is progressive. The legislation has not led to the changes it set out to mark. Another Sudan1 type case may increase pressure but it is more important to understand individual business pressures, and work towards a watertight traceability system. Only then will we achieve a full industry standard of identifying and tracking every ingredient on demand.
Achieving progress four key objectives to establish
Steve Baxter is Managing Director of Ross Systems, an enterprise software company that provides solutions that helps food and beverage manufacturers fulfill their business growth objectives.