Increasing consumer confidence in food safety is a collaborative effort among businesses, trade associations, industry groups, and regulatory agencies. Driven by impending government regulations and increased consumer pressure for accurate and complete product information, food supply chain stakeholders are seeing past their differences and building consensus toward improved traceability using consistent, interoperable processes based on global standards.
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Explore This IssueJune/July 2015
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Driving Traceability’s Evolution
Traceability is the ability to verify the identity, history, or location of an item by means of documented information as it moves through supply chain. Ever since the Bioterrorism Act of 2002, all trading partners have been asked to step up their ability to trace products “one up” and “one back” in the supply chain, and traceability will also be a key factor in the FDA’s implementation of the Food Safety Modernization Act later this year and into 2016.
These regulatory forces ensure the safety of our food supply and are influenced by important cultural trends the country has experienced over the last few decades. Consumers are more vigilant about food than ever before and are demanding more transparency on nutritionals, allergens, and information about local sourcing and sustainability processes. Also with major food recalls still fresh in their minds—such as cantaloupe, peanut butter, and spinach recalls of the early 2000s—Americans are asking more questions about the food supply chain. Overall, the consumer’s thirst for knowledge is pushing the food industry to shift from simply responding to food safety events to preventing them before they start.
While traceability is being prioritized, there is more that can be done to streamline traceability. Today, only five out of 40 food products purchased for a traceability study conducted by U.S. Department of Health and Human Services could actually have all of their individual ingredients traced back through supply chain to their origins. Several disconnects might be at play—ingredients from different farms are mixed into one case, or some businesses may not maintain specific lot information.
Regardless of the situation, findings like these expose a clear opportunity to improve traceability, as well as the collaboration that facilitates it.
What is Whole-Chain Traceability?
To better track and trace food, the industry needs better collaboration and a more holistic or “whole-chain” approach to the food supply chain. Whole-chain traceability is achieved when a company’s internal data and processes used within its own operations to track a product are integrated into a larger system of external data exchange and business processes that take place between trading partners.
Enabling whole-chain traceability involves linking internal proprietary traceability systems with external systems through the use of one global language of business—the GS1 System of Standards—across the entire supply chain. GS1 Standards enable trading partners in the global supply chain to talk to one another through the identification encoded in the various types of barcodes. By using the same standards to identify and capture data about products, companies can share specific product information more efficiently and accurately, which ultimately benefits both businesses and consumers.
GS1 Standards enable companies to globally identify products in the supply chain in order to optimize visibility and efficiencies, as well as overcome limitations of proprietary solutions and systems. Using GS1 identification numbers, including Global Trade Item Number, companies can identify products and dynamic information (expiration date, lot number) to facilitate the communication of product-specific data when a barcode is scanned.
Main Benefits of Better Traceability
More widespread, whole-chain traceability will have a positive impact on the food supply chain in numerous ways, but there are four main benefits that can mean good news for suppliers, distributors, retailers, and food service operations alike.
1. Being able to precisely locate potentially harmful products through supply chain visibility. Perhaps the most critical piece of traceability is supply chain visibility. By breaking down the barriers that come with using proprietary systems, food industry trading partners benefit from the common language of standards by gaining unprecedented visibility into their supply chains. Companies can achieve internal process improvements, but the most important element of supply chain visibility is the ability to accurately and quickly pinpoint a potentially harmful product.
Implementing supply chain visibility shows a strong commitment to traceability and that a company is taking a proactive approach instead of simply reacting to a specific event. Recalls or withdrawals are caused by various reasons—undeclared allergens, foodborne illness, cross-contamination, or particles from equipment ending up in the final product. With enhanced traceability procedures, businesses can prepare for emergencies and avoid the damage a widespread recall can inflict for months or even years afterward. Even if a company has never been linked to a food safety emergency before, standards-based traceability practices provide customers reassurance and contribute to an optimal crisis management plan.
2. Ensuring trustworthy product information and data quality. When the GS1 US Retail Grocery Initiative launched in mid-2014, a major discussion point among retailers, suppliers, and other industry stakeholders was the need for improved product information and images online. By bringing together industry leaders from grocery, fresh foods, and consumer packaged goods, the Retail Grocery Initiative identifies specific industry challenges and develops potential solutions to continue the progress toward more efficiencies, enhanced risk management, and business growth.
Right now, the state of product data is inconsistent and the need to provide trustworthy information to consumers scanning a product barcode or searching for a product online is one of the top challenges the industry will tackle in 2015.
The diversity of requests for sharing product information and images with trading partners, consumers, and regulators has created a challenging landscape where a large number of suppliers are also aiming to meet various demands in other industry verticals (such as food service). With online grocery shopping on the rise, the urgency is only intensifying. Looking at the entire retail industry, grocery leads in sales via mobile devices, according to PricewaterhouseCoopers. Its data shows mobile accounted for 37 percent of grocery e-commerce sales last October and outpaced such industries as furniture, health and beauty, apparel, and electronics. The online grocery market is expected to grow at a rate of 21 percent annually through 2018, according to BI Intelligence.
3. Reducing food waste. More than 50 million Americans struggle to put food on the table, according to the Institute for America’s Health. Yet, as a country, we also throw out roughly 35 million tons of food, according to the Environmental Protection Agency. In the face of these imbalanced statistics, there is tremendous pressure placed on the food industry, especially fresh foods where products are more prone to spoilage, to reduce waste. The traceability processes based on GS1 Standards can provide a solid operational foundation to facilitate less food waste.
Adopting standards-based traceability procedures—or expanding upon the ones already in place—will lead to more precise inventory planning and category management. GS1 Standards encompass many different types of barcodes that are used based on industry needs. Specific barcodes such as the GS1-128 for cases and the GS1 DataBar for individual items allow for dynamic information (such as batch/lot numbers and “use by” dates) along with the globally unique product identification.
A standards-based approach facilitates a more effective “first in, first out” inventory management philosophy. Retailers can more efficiently manage automatic price markdowns as expiration dates grow near, and prevent expired food from being sold at the point-of-sale. In the event of a recall, instead of wiping out the entire product from retail shelves, standards-based traceability procedures allow for a more specific isolation of the affected product, better identifying the product not affected and available for consumption.
4. Enhancing operational efficiencies. While whole-chain traceability is about better collaboration with external trading partners, the internal gains are abundant as well. By leveraging standards and achieving supply chain visibility, companies benefit from enhanced operational efficiencies, such as better inventory management, more accurate ordering, and improved product availability. Shipping and receiving accuracy may also be another area optimized by implementing standards-based traceability programs.
There is also a current need to reduce supply chain inefficiencies by decreasing total delivered costs (TDCs) in order to remain competitive and successful. TDCs are important in optimizing supply chain planning and decreasing them can maximize a company’s profitability. The industry is currently collaborating on the best approach for utilizing new technologies and revamping specific business practices to improve operational efficiencies by identifying gaps and opportunities where leveraging GS1 Standards can lead to a positive impact on TDCs.
While most companies have some level of traceability in place, some industry sub-sectors are further along in implementing traceability processes than others. Through industry collaboration and education, companies using proprietary or outdated paper-based systems will see the benefits of improved traceability—rather than leave themselves vulnerable to human error and the potential for dangerous and costly mistakes. Ultimately, adopting standardized traceability processes means a more sustainable business outlook, and a way to continue moving forward.
Fernandez is the vice president of retail grocery and food service for GS1 US. She can be reached at email@example.com.