The food and beverage landscape is rapidly evolving, driven by shifting consumer preferences, emerging market opportunities, and changing trends. Food and beverage manufacturers in the U.S. and worldwide face a host of pressures that demand a fresh approach to stay competitive.
New product development (NPD) and reformulation are pivotal in keeping these companies at the forefront of the food industry; however, the journey from concept to consumer is complex, marked by a failure rate ranging from 30% to 40%, according to a 2022 report published in the Journal of Marketing and Consumer Behaviour in Emerging Markets. (doi: 10.7172/2449-6634.jmcbem.2022.1.4) To launch to market quickly, companies must rapidly translate consumer insights into innovative products, source safe ingredients, and navigate the commercialization process while avoiding compliance issues that erode consumer trust.
Embedding compliance insights throughout the product development process can not only enhance innovation but also increases speed, collaboration, data utilization, productivity, and resilience. Additionally, taking a proactive approach to compliance can lead to stable and future-proof products that are capable of meeting ever-evolving regulations and customer requirements.
Navigating Product Development Challenges
Guarding against safety and compliance risks is critical for food and beverage brands, and the stakes are high; compliance issues can erode consumer trust and result in substantial costs, both as an immediate financial impact and for a brand’s reputation. The average cost of a product recall, including notification, product retrieval, storage, replacement, and destruction, can reach up to $10 million, while larger recalls can exceed $100 million.
The complexities of the global market have further amplified these risks. As supply chains expand and become more interconnected across borders, the integrity and transparency of these networks are tested. Natural disasters, geopolitical events, cyberattacks, and other disruptions are increasingly commonplace, with 56% of companies worldwide suffering some form of supply chain disruption each year, according to a 2022 report published in the Annals of Operations Research (doi: 0.1007/s10479-020-03912-1). Risks now cascade worldwide through supply networks, emphasizing the need for agility and resilience in product development, procurement, and compliance.
In this pressurized environment, the U.S. food and beverage industry is experiencing a surge in workload. This increase is straining processes and tools that were once effective. To adapt to this new landscape, innovative solutions are required to handle the heightened volume and complexity while providing superior quality, efficiency, and insights.
The Power of Regulatory Insight
Regulatory insight is the key to navigating this challenging terrain. In the current product development model, organizational silos often hinder efficient innovation. Compliance is viewed as an obstacle rather than an enabler, while manual processes slow down data sharing and impede productivity. Outdated systems are ill equipped to handle the ever-increasing complexity of requirements.
In addition, legacy workflows can also struggle to support the industry’s evolving needs. Rigid hand-off sequences between functions create bottlenecks that prolong development cycles, increase risk exposure, delay product launches, and affect revenue generation. Meanwhile, the late-stage discovery of compliance issues frequently leads to expensive modifications that eat into profit margins.
To address these challenges, the food and beverage industry is turning to an approach called compliant design, which involves proactively embedding compliance checks and data-driven insights into the product development process—from the concept stage onward. Compliant design not only accelerates innovation but also reduces risk and improves opportunities for collaboration, leading to more stable and future-proof products.
By understanding today’s key regulations and anticipating those of tomorrow, brands can begin to think in the longer term, avoiding decisions that could lead to product reformulation shortly after launch. Improved tools and enhanced compliance visibility empower teams to make decisions that satisfy initial requirements, while also ensuring the ease of future compliance and increased sales through additional claims that enhance market opportunities.
For example, when choosing flavorings or colorings, manufacturers can simulate product scenarios to ensure that compliance is met in multiple markets. This strategy guarantees informed choices that maximize resources and opportunities. Plus, it prevents costly late-stage redesigns that occur when compliance issues are discovered at the last minute, and fosters faster, more resilient innovation cycles that are driven by real-time data.
Shift Left to Achieve Efficiency
Inspired by the world of software development, shifting left moves testing and QC processes to a point earlier in the development cycle so that manufacturers can tackle unforeseen issues before it is too late or added costs occur.
Considering compliance during design stages also offers several organizational advantages, including reduced time to market through faster, informed decision-making that reduces costly holdups that can occur when regulatory input is provided later in the process. Additionally, by empowering non-regulatory stakeholders to access compliance insights independently, organizations can reduce issues with prototypes while minimizing back-and-forth communication during the process.
A shift-left approach also enables product developers to take multiple market formulations into consideration by including potential additional markets’ regulatory requirements from the outset. This subsequently improves second-round innovation speed by ensuring the early selection of appropriate ingredients and suppliers. The early identification of potential ingredient risks can help mitigate issues involving safety, quality, or scarcity caused by factors such as supplier quality, geopolitical conditions, or climate. Insights into changes in consumer trends and the regulatory landscape can also help prevent unnecessary reformulations.
Compliance in design helps to break down organizational silos between teams such as R&D and regulatory affairs, promoting greater organizational efficiency. This, in turn, reduces churn and disconnect across these teams, minimizing iterations and latency throughout the process. By integrating compliance intelligence into product design and fostering cross-functional transparency, R&D teams can make supported decisions early on, creating innovative prototypes that are highly compliant from the outset.
This approach provides the various business functions with improved visibility into all processes and constraints, promoting cross-departmental understanding and connection. It also reframes the regulatory team as an essential collaborator rather than a roadblock, shifting the focus toward creating more value-added opportunities that drive innovation and transformation for the business, while reducing the time spent on monotonous validation exercises, such as searching for regulations, inputting data, and manually assessing compliance requirements. By capturing organizational knowledge within a centralized hub integrated with product lifecycle management (PLM) and enterprise resource planning (ERP) tools, decision makers can leverage organizational standards and historical insights to drive continuous improvement, resulting in higher quality products.
Centralized, up-to-date regulatory and product data repositories also reduce the time spent scanning fragmented information sources. Proactive alerts on regulatory and supply chain issues enable a “manage by exception” approach to risk mitigation, replacing the effort required for manual issue monitoring. R&D teams can dedicate more time to “Big I” innovation, as opposed to reworking products to meet compliance requirements. Regulatory teams spend less time trying to connect the dots; instead, they create the space to pursue important objectives, including policy feedback, advocacy, and stakeholder education.
An essential success factor for compliant design is having these capabilities thoughtfully integrated into the process. Integrating compliant design solutions into current PLM and ERP systems fuels transformation without disruption, enhancing existing development and NPD processes and leading to high-value realization for the effort. Integration for ease of adoption is crucial, as it minimizes the need for retraining and keeps change management minimal. Organizational buy-in is the natural result, as teams watch the technology take on many more tasks and improve outcomes.
Harmonize AI and Human Expertise
Compliant design harnesses machine learning and artificial intelligence (AI) alongside human expertise to unlock the true value of compliance data. AI can not only accelerate assessment and identify risks but can also alert teams to issues that might be difficult to identify manually. Advanced algorithms, often trained on your specific historical data and best practices, can generate profound and actionable insights throughout the product development lifecycle.
Machine learning technology supports proactive risk mitigation by detecting patterns and trends that can predict regulatory or supply chain issues. This data is then validated by human experts for accuracy and contextual meaning, facilitating proactive engagement with regulatory bodies for official guidance on their interpretation.
AI has the ability to generate trend insights in relation to specific ingredients, applications, and consumer sentiment, helping manufacturers to better understand their market and leverage this understanding to gain competitiveness. This technology can also simulate and scenario test virtual formulations, accelerating development and supporting successful launches. By adopting an expertise-augmented approach, organizations can achieve better insight quality and forecasting than either human experts or AI can achieve in isolation.
Organizational Evolution through Compliant Design
With the evolution of the food and beverage industry progressing at an unprecedented pace, embracing innovative approaches to product development is key for both competitive advantage and consumer trust. Compliant design is transformative, modernizing product development lifecycles by providing relevant insights to the right people at each stage, identifying issues faster, and supporting more effective and decision making. Compliant design not only accelerates innovation but also establishes product stability and compliance in a changing regulatory landscape.
By shifting left and breaking down silos, manufacturers can streamline processes while leveraging the combined power of AI and human expertise, achieving greater efficiency and value. The future of the industry belongs to those who can adapt, innovate, and respond swiftly to the complex challenges it presents.
Frierson is vice president of digital solutions at FoodChain ID, a Fairfield, Iowa-based firm that provides expertise and technology-driven services to support the food industry. Reach him at [email protected].