"Traceability in Food and Beverage Processing"

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"Plex Online manufacturing ERP software offers a completely integrated solution, from recipe management to production, shipment and accounting, enabling food and beverage processors and packagers to effortlessly track lot properties while optimizing and improving other business processes"
Source: Plex Systems

Resources Related to Traceability in Food and Beverage Processing:

• Traceability (Wikipedia)

Traceability in Food and Beverage Processing

Aberdeen has been covering traceability in the Food and Beverage (F&B) industry for the past three years and over that time Aberdeen has served witness to considerable gains in performansce by a number of leading organizations. However, over that same time period, the industry at large has not seen a meaningful reduction in the number or severity of product recall events. To help understand this gap, our current research will examine the traceability initiatives of F&B processors involved at multiple stages of the food supply chain; from bulk material processing to final stage packaging for consumers.

To accomplish this analysis, we will examine how F&B processors compare to Aberdeen's definition of Best-in-Class performance in the December 2008 benchmark report Compliance and Traceability in Manufacturing Operations; ending with specific recommendations for improvement at each maturity level and stage of the supply chain.

Pressures Driving Traceability Initiatives

To start the analysis it is important to understand that Food and Beverage processors, at all stages of the food supply chain, are much more focused on adhering with government regulations than other industries. These regulations include not only FDA requirements around GMPs and HACCP but also traceability requirements from the 2002 Food Safety Act. As we continue the analysis it will become clear that the role of government is becoming much more of an influencer for F&B processors than ever before, which is especially applicable to traceability given recent hi-profile recall events.

Sector Insight

Aberdeen’s Sector Insights provide strategic perspective and analysis of primary research results by industry, market segment, or geography

Sector Definition

This research will focus on two major constituencies of the food supply chain.

Consumer Facing Food and Beverage Processors - For the purposes of this study Aberdeen defines these organizations as those that package food or beverage for consumption by end consumers. In general these organizations can be either large or small but are generally owners of brand name products.

Industry Facing Food and Beverage Processors - For the purposes of this study Aberdeen defines these organizations as those that supply bulk packaged food to down stream food and beverage consumer facing firms. In general, these organizations can again be either large or small but very often don't own consumer brand name assets.

Strategic Actions for Traceability Initiatives

Not surprisingly, especially given F&B processors focus on complying with government regulations, from a strategic perspective over 50% of F&B processors are focused on building compliance and traceability into production processes. This result provides an immediate piece of evidence showing that F&B processors tightly couple the ideas of traceability and government regulations. A trend which should only increase as the tone of government continues towards that of more regulation and more transparency.

Clearly, given the above analysis regarding market pressures and strategic actions, F&B processors at every stage in the supply chain have significant concerns about traceability and are interested in tackling this issue through improving production processes. To see how F&B processors are actually improving production processes we will first need to identify which are doing this most successfully today.

Best-in-Class Traceability Performance

In Aberdeen's December 2008 benchmark report, Compliance and Traceability in Manufacturing Operations, Best-in-Class performance was established for traceability initiatives. This research benchmarked organizations, in part, on their response time for tracking and tracing recalled product across the supply chain. For this metric, Aberdeen found that it takes Best-in-Class manufactures about 2.5 hours after notification of such an event to find and hold affected product in the supply chain. For the Industry Average it takes about 14 hours and for Laggards it takes about 34 hours. The Food & Beverage industry as a whole is doing well in this metric with Consumer Facing F&B Processing companies averaging a 7 hour response time and Industry Facing F&B Processing companies averaging a 9 hour response time, both of which are significantly above the performance of the Industry Average.

Interestingly, Consumer Facing and Industry Facing F&B Processors are achieving these results in very different ways. Consumer Facing organizations have focused on adopting specific business processes and technology enablers focused on improving this traceability performance; where those Industry Facing organizations are more likely to take a brute force approach, with a lack of documented processes and an abundance of manual paperwork.

For each case, the next several sections will identify where each set of constituents in the food supply chain is doing well and where each can improve. With particular attention being paid to the weakest link in the chain, because the old adage about the "weakest link'" is especially true in food safety and overall supply chain traceability.

Business Capabilities Supporting Traceability Initiatives

Although both manufacturers serving the consumer market as well as those serving the industry are focused on traceability initiatives, there is not consistency across these different supply chain constituents. In Aberdeen's December 2008 benchmark report, Compliance and Traceability in Manufacturing Operations, a number of business capabilities were identified and shown to enable Best-in-Class performance. In general, F&B Processors that are Consumer Facing are more likely to have established mature capabilities regarding these capabilities, which are highlighted in Table 1. In fact, there are multiple cases where Consumer Facing food processors are more likely than the Best-in-Class to have implemented these capabilities while those Industry Facing organizations are less likely than the Industry Average to have these capabilities.

Table 1: Business Capabilities Supporting Traceability Initiatives

Tech Enablers

To support the above business capabilities Best-in-Class manufacturers have leveraged software in a number of different areas of their operations and, not surprisingly, the above trend continues through to technology. Consumer Facing F&B processors are more likely than the Industry Average, and in some cases are more likely than the Best-in-Class, to be using software for managing those areas of operations where Aberdeen research shows technology can enable Best-in-Class performance. Similarly, Industry Facing F&B Processors are often less likely than the Industry Average to be using technologies that have been showed to deliver tangible benefits to traceability initiatives.

Traceability Drill Down

It is also of particular interest to more fully understand what areas of operations are being included in automated traceability solutions. In fact, it was shown in previous Aberdeen research that Best-in-Class manufacturers are considerably more likely to extend automated traceability beyond just basic Lot or Work in Process (WIP) traceability. Interestingly, the F&B market as a whole has done a good job of taking this traceability broad based once the decision to automate has been made; which again means bringing traceability to often over looked areas of the business like SOPs, GMPs, HACCP, and customer complaints.

“Our key requirement for a traceability solution was around strong functionality, including the need for extensive demand and supply planning capabilities, holistic production and scheduling traceability, as well as yield management. Meat products are high value consumable products, so the more you control production, manage the yield, and reduce the risk of a recall event the better you can optimize margins which goes straight on the bottom line.”
~ Chief Information Officer
Mid-Sized Meat Packer

It is important to re-iterate that the above figure only applies to organizations that have already automated traceability, which still leaves about 75% of the F&B market using manual processes that can not nearly as easily (if at all) extend across such broad footprint of operations. As was inferred before, food supply safety is truly about raising the lowest common denominator. It will in all likelihood not be an organization with automated traceability that is the ultimate source of the next major food recall but such an event will certainly affect us all.

Required Actions

Food Safety has been top of mind for both consumers and industry executives for a number of years. Clearly traceability plays a large role in overall food safety and in general F&B processors are doing better than a lot of other industries in this regard. However, the stakes are high when it comes to food safety and there is still a lot of room for improvement, especially when it comes to those upstream in the food supply chain.

• For Industry Facing F&B processors that do not yet have a traceability initiative, begin by adopting business processes and technology enablers that will create automated traceability. Build this directly into the production process and focus on improvements that will positively impact track and trace response times.
• For Industry Facing F&B processors that have already started a traceability initiative, begin to expand the scope of these initiatives beyond just lot or WIP traceability to all aspects of manufacturing.
• For Consumer Facing F&B processors that do not yet have a traceability initiative, time is of the essence. Immediately begin focusing on "building in" traceability to your production processes and supporting this with both the necessary business capabilities and technology enablers shown to enable Best-in-Class performance such as Compliance Management, Audit Management, and Automated Traceability.
• For Consumer Facing F&B processors that already have a traceability initiative in place, you are probably not as safe as you think. It is very often either your brand reputation or financial stability on the line, even when the source of contamination is from your suppliers. Begin focusing on supplier quality, with specific focus on your supplier's maturity regarding traceability. Use your own initiatives to start applying the pressure and do not relent until successfully extend traceability across the entire food supply chain.

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