Today’s global food processing industry is estimated to surpass $2 trillion in annual sales, some one-quarter of which directly involves international import or export sourcing. Poorly constructed logistic processes for foodstuff shipments, however, can expose food processors to a host of problems, including spoilage, failed regulatory inspections, and litigation over foodborne illnesses.
Explore this issueFebruary/March 2009
Food processors purchasing from overseas suppliers must ensure not only that those responsible for shipping the goods are intimately familiar with the regulations of every country through which freight will pass, but also that they understand the associated service parameters and costs. Designing a logistics system for food processors to meet these parameters requires a quantum leap from past shipping practices. The inescapable conclusion is that traditional supply methods are no longer adequate for the industry to meet competitive needs and regulatory requirements. Electronic tracking technology and the use of logistics experts are two necessary solutions.
China offers a case study of the complex global issues involved in today’s food products supply chain. While the European Union, Canada, and Mexico still top the list of food exporters to the United States, China’s share is growing rapidly. In the past decade, the value of Chinese food imports has more than tripled to over $2 billion, according to U.S. Department of Agriculture statistics.
Added to the typical complexity of inspecting these imported products, the Food and Drug Administration is charged under federal bioterrorism laws to oversee a “track and trace” standard that requires almost every business in the U.S. food supply chain to keep detailed records on receipt and shipment of goods—where they come from, who they’ve been sent to, lot numbers, and more—and to be able to supply that information four to eight hours after it is requested.
Perhaps surprisingly, the most common issues behind systemic supply chain problems do not involve failure to follow routine regulations, but rather arise from a lack of historical information on natural disasters, customs issues, and other unforeseen delays.
Anticipation is crucial for an effectively constructed food supply chain. Food processors that source globally can only be effective if they know exactly how and why a supply chain can go wrong, as well as how to build chains that stand a better chance of weathering typical problems. Supply may seem to be functioning correctly, but a minor problem at one end can snowball out of control, resulting in immense delays for the end processor. A delayed shipment or one that is mishandled with regard to temperature and humidity can render foodstuffs useless. Additionally, many jurisdictions have their own inspection and licensing requirements. These present some of the greatest challenges for both food processors and third-party logistics partners.
Information technology plays a central role in today’s evolving food production infrastructure. Computerized trace-back systems must provide an integrated information exchange platform that can be used across the supply chain, enabling companies to retrieve information at any stage once a product has been shipped to the food processor. It is essential that computerized trace-back systems provide an integrated information exchange platform that can be used across the supply chain, enabling information to be retrieved at any stage once a product has been shipped to the food processor. In addition, the system must be designed to be flexible, taking into account the highly varied documentation and quality standard requirements of multiple national food safety agencies. This will enable one central system to be adapted to many export markets.
Until recently, the technology needed to produce such tracking records had been incomplete at best. Common electronic information systems used to track products have included bar coding and radio frequency identification (RFID). These systems employ identification tags that are printed or attached to the product packaging to differentiate each product batch. In some instances, these unique identifications are used within the supply chain to document the composition of various ingredients and their processing history. Such information can then be updated and passed along the supply chain and to retailers to ensure proper compliance with regulatory requirements. But these physical tools do not, in and of themselves, facilitate state-of-the-art supply chain management, because they do not generate the kind of historical tracking data that can ensure that problems happen only once.