Every automobile sold in the U.S. bears a unique serial number that enables the car’s seller and buyer to track the vehicle’s history, authenticate ownership, and manage safety recalls. Today’s food consumers have similar interests in transparency about the products they buy and the ability of the food producer to take responsibility for the product across the entire value chain.
It’s one thing, however, to serialize on an economically feasible basis the fewer than 20 million new cars sold in the U.S. each year at an average price exceeding $30,000. It’s another thing to do so on thousands of food products, many of which sell billions of individual units or packages at a price of a few dollars or less. The good news is that modern information technologies make mass serialization of food packages not only possible at very low, cost but able to be done in ways that establish transparency across the value chain and facilitate two-way communication between brand owners and consumers.
The potential benefits of serialization are tremendous for consumers and industry alike, enabling firms to tackle a series of food safety and consumer protection challenges, such as instant track and trace, targeted product recalls, and real-time authentication, while opening up fresh opportunities for direct consumer engagement on subjects ranging from environmental sustainability and animal welfare to customer loyalty rewards and other marketing possibilities.
While the technological capability exists, dialogue is needed among food companies, technology providers, consumers, and food safety experts to devise applications tailored to particular value chain traceability and transparency needs and that thereby maximize both the consumer and commercial benefits of new information technologies.
Evolving Consumer Drivers
The search for mass serialization solutions stems from the food industry’s need to meet changing consumer expectations.
In 2016, Deloitte published a study in collaboration with the Food Marketing Institute and the Grocery Manufacturers Association revealing that the drivers of consumer choice are shifting. Historically, purchasing decisions have been made largely on the basis of traditional drivers, namely taste, price, and convenience. However, a set of evolving drivers has become increasingly influential, encompassing health and wellness, safety, social impact, experience, and transparency. Over half of the 5,000 U.S. consumers Deloitte surveyed said that they now weigh these evolving value drivers more heavily than traditional ones, a trend that spans product categories, region, age, and income and seems set to continue.
Further, research conducted by The Centre for Food Integrity in 2016 revealed the high levels of concern regarding food safety among consumers, with two in three American consumers identifying this as a key area of concern. The research also showed that only 40 percent of consumers feel they have the information they need about where food comes from, how it is produced, and its safety credentials.
In sum, consumers are demanding more information about the foods they purchase and stronger assurances that products meet today’s higher expectations for safety, wellness, and sustainability.
The food industry has long sought efficient solutions to full value chain traceability, from sources of ingredients and raw materials through finished product manufacturing and all the way to the consumer. This serves the internal needs of the company’s food safety management system with respect to such factors as supplier management, oversight of cold chain management, and the efficient conduct of rapid, targeted recalls. These needs remain unmet in many sectors of the food system, but now with heightened consumer expectations about transparency and the speed with which safety issues are addressed there must be a shift.
The food industry is also seeking ways to meet the interest of today’s consumer in much greater transparency and connectivity with those who are producing and marketing their food. Companies need to cater to the next generation of consumers—Gen Z—who are “born digital,” and to target and share information with consumers in real time in order to build consumer confidence and nurture brand loyalty.
However, in an industry known for tight margins, ensuring traceability and transparency without compromising on competitiveness is essential. Technological solutions must support mass volumes at low cost and high speed, enabling communication between actors in real time while ensuring adaptability and minimal implementation burden.
A Potential Solution
Mass algorithmic and cloud-based serialization offers a potential solution to food manufacturers. Originally developed and applied to solve the problem of pharmaceutical counterfeiting, mass algorithmic and cloud-based serialization can now be adapted to meet food industry and consumer needs. Simply put, it is a unique, package-level ID that can be scanned using mobile phones. With a simple scan, it can link both value chain participants and consumers with the brand owner and create an interactive highway of information among these stakeholders.
The technology is able to perform at high speeds even when dealing with volumes in the many billions by linking coded packages to data through algorithms rather than a central database of codes. This enables firms to scale easily, operating at volumes of billions and billions of products without slowing down the relay of information and incurring large data processing costs.
Meanwhile, high-volume manufacture of food products is maintained through the pre-serialization of packaging and labels by the packaging and label manufacturer. A unique code is integrated into the product packaging or label and then is simply activated later at the direction of the brand owner via the cloud. This means there is no additional time required during the food production phase, and serialization can thus take place without slowing down operations by a second. Even better for keeping processes simple and streamlined, the ID can simply overlay existing codes or labels displayed on the packaging to provide the added functionality.
A Multi-Purpose Vehicle
With a low-cost, cloud-based serialization solution in place for traceability and transparency, brand owners can use it in any number of ways. For example, the technology can be used to identify hold ups and inefficiencies in the supply chain by recording the time products spend in warehouse and transit. At the same time, unique product identities best position manufacturers to identify and pre-empt any potential issues in real time, for example when shipments go astray or are over-exposed to conditions such as heat that may compromise the quality or the safety of the product. When problems with a product are identified, the company can scan items to trace back to the point of failure and identify products from the exact batch to recall them, minimizing the recall. Through the same channel—the same code—consumers can authenticate the products before purchase by scanning the code using a smartphone.
All in all, the ability to trace back to source the trigger for a product recall through serialization of raw materials and ingredients can deliver benefits from public health to supplier management. When problems occur reactions will be quicker, damage minimized, and lessons learned.
Critical is the fact that a unique product ID and the availability of information in real time makes track and trace instantaneous. This minimizes the operational costs, both in terms of time and resources spent identifying the source of any particular problem and the amount of product that ultimately needs to be recalled. It also means minimal reputational cost, with the company able to respond and communicate quickly with stakeholders across the value chain.
The brand can make further use of this same technology if customers choose to register and share their personal information, perhaps incentivized with promotions. In that case, the brand would be able to derive critical consumer insight to inform their research and future product development function, incentivize consumers to repurchase the product through individually-tailored promotions, and build confidence in the quality and safety of the product through transparency regarding its ingredients and production, thus nurturing brand loyalty and trust.
Giving a product its own digital DNA opens an interactive highway containing the information and data required by the manufacturer and commercial value chain participants. It makes all relevant value chain information instantly available to brand owners and other value chain participants according to the permissions determined by the brand owner. These permissions can also be altered over time, retaining flexibility and adaptability for industry to respond to changing operational considerations and consumer preferences alike.
With a growing number of drivers, both traditional and evolving, weighing on consumer behavior, the value of being able to share relevant product informational in real time is rising. The opportunities opened up by enabling two-way communication and engagement between consumers and industry are also becoming increasingly apparent, whether as a means to meet transparency requirements, undertake consumer research, or utilize the same platform as a channel for marketing promotions. Critically, building confidence through transparency becomes much easier as brands can let consumers know directly in real time whether a product has been recalled, or just as importantly if it has not.
Full Value Chain Transparency
Low cost, cloud-based mass serialization for the food industry makes possible full value chain traceability and transparency and two-way communication between brand owners and consumers. This potentially transformative technology will best serve the food industry and its consumers if there is active dialogue among all participants in the value chain to further define consumer and industry needs and optimal applications. By engaging suppliers, manufacturers, retailers, technology providers and, importantly, the consumers whose expectations and needs drive the industry, the dream of full value chain traceability and transparency can be turned into a practical reality.
Körmendi, current CEO of Kezzler, was previously employed at Relacom (a Swedish technology services company), Tetra Pak, and Procter & Gamble Nordic. Reach him at email@example.com.