The Food Industry is Facing More Than a Supply Chain Crisis. It’s Facing a Safety Crisis. That’s Why Track and Trace Tech Investments are Urgently Needed.
*This post was contributed by Shawn K. Stevens, food industry attorney and a founding member of Food Industry Counsel, LLC, one of the few law firms in the world that represents food industry clients exclusively.
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As the year 2020 has taught the food industry and consumers alike, the global food supply chain can be disrupted at any time by any number of different incidents leading to a range of unforeseeable consequences. Some are more subtle, caused by an isolated shipping accident or a natural disaster affecting only a limited geographical area. Others can be far more visible and widespread, affecting global supply chains that serve all countries.
COVID-19 is a prime example. As the novel virus spread throughout the world, causing borders to close, workers to quarantine and food facilities to shutter, industries and consumers equally faced chaos and confusion. Consumers hoarded product, and manufacturers could not keep up with demand. Both perishable and non-perishable goods became scarce, and consumers, the media and world leaders became fearful that supply could not meet demand. For a period, the global food supply chain fractured, and there was no preplanned response. Had the global food supply chain predicted and planned for such a crisis, the most recent crisis would likely have been averted or substantially tamed.
A carefully thought out food supply chain strategy is critical for success, regardless of whether the supply chain is being strained by a subtle or far-reaching crisis. Even during routine day-to-day operations, seamlessness requires planning. In turn, seamlessness leads to efficiencies and cost savings. Cost savings benefit consumers, industries and economies.
Supply Versus Demand: A Timeless (and Time Sensitive) Issue
Whether driven by an unexpected emergency or by natural market pressures and demands, shortages of certain commodities and food products can and do occur. Globally, consumer confidence is driven in large part by both the quality and safety of desired foods as well as their availability. Lack of quality, safety and/or availability will adversely impact consumers’ perceptions and loyalty to struggling brands. If a brand owner cannot satisfy demand in the absence of a crisis, no loyalty will be found in the midst of a crisis. Those who can satisfy demand during crises will increase and strengthen existing consumer loyalty – and gain increased market share.
For this reason, it is important that all food companies (including retailers, distributors and manufacturers) deeply invest in – and then further develop – robust supply chain protections. All food companies should build actual and contingent supply chains that focus on diversification, resiliency and reliability. If supply chain pressures (from whatever source) occur, those companies that have developed contingency plans and have diversified will be able to quickly and efficiently shift their purchase needs to their alternative suppliers, thus maintaining a constant and reliable supply. Those companies will also be better positioned to deprive their competitors the ability to absorb, for themselves, any limited or remaining supply.
“We Want More… of Everything!”
In addition to expecting unwavering availability of the basic commodities, consumers are increasingly demanding more product choices, additional variations, faster availability and lower prices. Such simultaneous demands are placing additional stressors on manufacturers, which are increasingly feeling pressure to maximize production levels and push manufacturing systems to their limits. In many cases, food processors and manufacturers are being pushed to the point of failure, thus compromising food quality and food safety, often with serious or even catastrophic consequences.
While demanding more options, consumers globally are also demanding more transparency. Consumers increasingly want to know where their food was grown, harvested, processed, distributed and sold before it reaches their tables or homes. In turn, this growing chorus of consumer desires will likely lead to a profound and revolutionary effect on the food industry. While consumers overwhelmingly desire transparency, and the food industry increasingly wants to deliver transparency, the continued strain on the supply chain and perceived lack of systems to achieve this goal make it seem elusive. This is why segments in the industry are working diligently to develop digital supply chain solutions to provide improved holistic traceability, heightened food quality assurance and greater food safety accountability.
Want to Build Trust? Verify That the Data (and Food) Can Be Trusted
Additional transparency in the food supply chain will likely garner additional consumer trust and impact on consumer buying behavior. At its most basic level, this is because consumers want to know where their food comes from. According to Zebra’s Food Safety Supply Chain Vision Study, the top two most important factors to consumers are:
- understanding how their food is manufactured, prepared and handled (70%); and
- understanding the location(s) from which their food is sourced (69%).
According to the same study, two-thirds of consumers also want access to accurate, up-to-date information about where their food is sourced or manufactured. With recalls and outbreaks continuously in the news, a majority of consumers (51%) cite fear of foodborne illness and disease as the reason to learn more about where their food comes from. Others are curious about the source, quality and safety certifications because of their organic preferences or concerns about genetically modified organisms (GMO). All of these are legitimate and expected desires.
Yet, many organizations remain unable to provide transparency to consumers, thus diminishing overall market confidence. Indeed, 83% of consumers reported that the industry has an important role to play in food safety. But only 22% of consumers say they have complete confidence in the safety of their food based on all of the information currently available to them. At the same time, while 69% of food and beverage industry decision makers say the industry is prepared to manage food traceability and transparency, only 35% of consumers agree that the industry is prepared.
Consumers Aren’t the Only Ones to Whom the Food Industry is Accountable
In addition to satisfying consumers, regulatory bodies worldwide continute to demand more robust traceability capabilities from the food industry. By way of example, the U.S. Food and Drug Administration (FDA) recently released a new proposed rule, “Requirements for Additional Traceability Records for Certain Foods,” that would require certain food companies to follow heightened traceability requirements. This proposed rule was announced as part of the FDA’s New Era of a Smarter Food Safety Blueprint. The purpose of the rule is to enable the FDA to better track and solve emerging foodborne illness outbreaks and other food safety issues. The new requirements mandate that certain food companies establish and maintain records containing Key Data Elements (KDEs) associated with different Critical Tracking Events (CTEs). While the rule does not specifically require digital systems or solutions, it implicitly suggests that digital supply chain solutions may ultimately become the best and only solution. Moreover, such solutions have become increasingly critical given that companies are continuously challenged during recalls to identify, contain and dispose of all affected product.
Enhanced traceability also has increased importance now that additional regulatory scrutiny is being brought to bear on companies worldwide for allergen control purposes. Globally, allergen control continues to create one of the largest challenges for the food supply chain. Whether the Food Allergen Labeling and Consumer Protection Act in the U.S., Natasha’s Law in Europe, or countless other laws adopted globally, food companies will increasingly be expected, from farm-to-fork, to better control for the existence (or nonexistence) of allergens in their products. Working to satisfy such requirements and expectations through enhanced traceability and transparency will ensure less regulatory scrutiny and greatly enhance consumer confidence.
In turn, increased and enhanced transparency will also lead to more efficient operations, better risk mitigation, increased brand loyalty and trust and, ultimately, a positive impact on the bottom line – whether measured by the return on investment (ROI), gained value, market share or business growth. Indeed, when issues arise, those issues can be traced immediately to the source. Once identified, they can be corrected expeditiously, and recurrence can be prevented.
Final (Food for) Thought
Consumers will grow more confident in those brands that can quickly acknowledge and resolve a problem. Consumers will also become more confident in those brands that can quickly and confidently say, because of their digital traceability capabilities, that they are not a part of the problem. Ultimately, true visibility offers quantifiable benefits in many categories. In addition to increased efficiencies and the ability to anticipate, predict or prevent a problem, better transparency will have a positive impact on consumer confidence, loyalty and trust.
The creation of a successful supply chain program requires a commitment from company leadership. If company leaders are compassionate toward food traceability (which they should be, because consumers are), then they should make a commitment to investing in enhanced traceability capabilities, and then communicate that compassion and commitment within the organization (to middle management and employees) and externally (to customers, consumers and even regulators). Doing so will create a culture of traceability that will quickly be embraced by the consuming public.
Next Steps: Moving Toward a Track and Trace Culture (and Safer, More Agile Supply Chain)
First steps in this journey include identifying those technologies and supply chain solutions which exist and can be quickly developed, refined or employed to enhance overall traceability. The key drivers for such technology investments include gaining a competitive advantage, producing safer food and streamlining overall operations. Indeed, Zebra’s Food Safety Supply Chain Vision Study revealed that 90% of industry decision makers believe investments in technology geared toward improving safety and traceability would provide their businesses with a competitive advantage. Most (51%) also believe that technology-led food tracking and transparency are capable of keeping consumers informed, which will instill trust and brand loyalty and enable operational efficiencies for businesses throughout the food supply chain. Food and beverage industry decision makers also say that the top challenges they currently face include:
- Foodborne illness from contamination (70%)
- Food waste throughout the distribution network (65%)
- Ensuring the continued supply of quality ingredients (62%)
Notably, 93% of industry decision makers say they’re planning to increase investments in food monitoring tools within the next year.
Once equipped with the right technology, all food companies can then progress to adopting more predictive models for their supply chain operations. Industry decision makers are expecting to operate more predictively from a reported 13% today to 21% in 2025, which is a 62% increase over the next five years. Interestingly, 31% of industry decision makers currently use radio frequency identification (RFID) tags to improve traceability, but 41% of industry decision makers believe that they improve traceability. Thus, in the short-term, we expect companies that are not yet using RFID tags to invest in this and similar traceability technologies. If they follow through, the majority of food companies would actually be employing such track and trace technologies, rather than merely contemplating the benefits of making such a move.
In addition to RFID tags and readers, other emerging technologies that are likely to gain traction in the coming years include temperature-sensitive labels, blockchain, artificial intelligence (AI), Internet of Things (IoT)-based sensors, real-time location trackers and predictive analytics. While some current overall challenges include a lack of global uniformity of digital systems and system integration, there are already solutions being developed and implemented to resolve these challenges.
Traceability and transparency are the future of the food supply. Companies that are unable to demonstrate robust and effective traceability and transparency capabilities will likely become less and less desirable in this rapidly evolving market. All companies should begin working now to:
- develop a food safety supply chain strategy.
- identify how to comply with emerging FDA and other global legal and regulatory traceability requirements.
- identify monitoring or other gaps in their food supply chains.
- improve their food supply chain visibility and transparency.
- modernize and digitize their supply chains.
Doing so now will increase visibility and operational efficiency, better manage supply availability and inventory, and, if advertised to customers, improve customer confidence and loyalty.
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Editor’s Note:
Download Zebra’s full Food Safety Supply Chain Vision Study report now to learn more about the food industry’s current and planned usage of track and trace technologies as well as the motivations for making such investments.
Curious how Zebra’s technology solutions can help you increase supply chain visibility and improve compliance with food quality monitoring and safety measures? Contact us here or visit our website.
About the Author:
Shawn Stevens is the founding member of Food Industry Counsel. Shawn is a nationally recognized food industry lawyer working throughout the U.S. and abroad with food industry clients – including the world’s largest growers, processors, restaurant chains, distributors and grocers – helping them protect their brand by complying with FDA and USDA food safety regulations, reducing food safety risk, managing recalls and defending high-profile food safety cases.
