Executive Briefings

As Trade Regulations Grow, Greater Visibility Needed Into Food & Beverage Value Chain

Analyst Insight: The Food Safety Modernization Act passed, finally, in December 2010, and has far-reaching implications for manufacturers and importers. Such legislation increases the need for visibility, including requirements for more reporting and far more information about each phase of the supply chain, than ever before.

­-Ann Grackin, chief executive officer of ChainLink Research

Under the Food Safety Modernization Act, food processors will have to evaluate hazards in their operations, implement measures to prevent contamination, and have plans to take needed corrective actions.  The Food and Drug Administration will have enforcement powers to see that those plans are adequate, including mandatory recall authority when needed to swiftly remove contaminated food from the market. In addition, the FDA will have for the first time a mandate for risk-based inspection of food-processing facilities.

Importers must verify the safety of food from their suppliers. The law empowers the FDA to block foods from facilities or countries that refuse FDA inspection. This is significant in that an estimated 15 percent of the U.S. food supply is imported, including 60 percent of fresh fruits and vegetables and 80 percent of seafood.

Supply chain visibility and trace and track have been the holy grail of global supply chain managers for a decade. Some progress has been made, but much of the information is too high level, disjointed across multiple partners, and arrives just too late to use for agile supply chain purposes. And regulations like the Food Safety Modernization Act have increased the urgency as well as legal consequence of not having great supply chain visibility at the product level, at each phase in the chain, at your finger tips.

Here are our recommendations:

• Evaluate the requirements for your products and business.  Often companies need to rethink their supply chain strategies.  In fact, great visibility will create a positive cycle of evaluation. Are we managing the process, information and the physical world in the best way?

• Create an industry-specific strategy for your enterprise. Get your trading partners involved since they need to be a source of information. In fact, joint efforts yield best - and the only - results.

• Technology strategy. There are numerous SaaS offerings - by industry - that are probably your best bet to create an end-to-end framework for information, allowing you to see trading partner issues and collaboratively plan solutions.

• Revise your Auto/ID strategy.  Bar-coding has been around for decades yet it's still not fully deployed, amazingly. That is a start, but not enough.  Real-time conditional monitoring, tracing, and pedigree reporting are all enabled by RFID.

The Outlook

In the area of food and beverage, as well as in other verticals, 2011 will surely see an increase in the usage of SaaS, RFID and other visibility solutions, but it will still take time. Mandates have not been the catalyst for much growth. But outsourcing, in general, continues to drive supply chain professionals to strive for increased visibility.

Interesting solutions in collaboration, beyond tracking and planning, will help to assure a visibly and positive world in our future.

Analyst Insight: The Food Safety Modernization Act passed, finally, in December 2010, and has far-reaching implications for manufacturers and importers. Such legislation increases the need for visibility, including requirements for more reporting and far more information about each phase of the supply chain, than ever before.

­-Ann Grackin, chief executive officer of ChainLink Research

Under the Food Safety Modernization Act, food processors will have to evaluate hazards in their operations, implement measures to prevent contamination, and have plans to take needed corrective actions.  The Food and Drug Administration will have enforcement powers to see that those plans are adequate, including mandatory recall authority when needed to swiftly remove contaminated food from the market. In addition, the FDA will have for the first time a mandate for risk-based inspection of food-processing facilities.

Importers must verify the safety of food from their suppliers. The law empowers the FDA to block foods from facilities or countries that refuse FDA inspection. This is significant in that an estimated 15 percent of the U.S. food supply is imported, including 60 percent of fresh fruits and vegetables and 80 percent of seafood.

Supply chain visibility and trace and track have been the holy grail of global supply chain managers for a decade. Some progress has been made, but much of the information is too high level, disjointed across multiple partners, and arrives just too late to use for agile supply chain purposes. And regulations like the Food Safety Modernization Act have increased the urgency as well as legal consequence of not having great supply chain visibility at the product level, at each phase in the chain, at your finger tips.

Here are our recommendations:

• Evaluate the requirements for your products and business.  Often companies need to rethink their supply chain strategies.  In fact, great visibility will create a positive cycle of evaluation. Are we managing the process, information and the physical world in the best way?

• Create an industry-specific strategy for your enterprise. Get your trading partners involved since they need to be a source of information. In fact, joint efforts yield best - and the only - results.

• Technology strategy. There are numerous SaaS offerings - by industry - that are probably your best bet to create an end-to-end framework for information, allowing you to see trading partner issues and collaboratively plan solutions.

• Revise your Auto/ID strategy.  Bar-coding has been around for decades yet it's still not fully deployed, amazingly. That is a start, but not enough.  Real-time conditional monitoring, tracing, and pedigree reporting are all enabled by RFID.

The Outlook

In the area of food and beverage, as well as in other verticals, 2011 will surely see an increase in the usage of SaaS, RFID and other visibility solutions, but it will still take time. Mandates have not been the catalyst for much growth. But outsourcing, in general, continues to drive supply chain professionals to strive for increased visibility.

Interesting solutions in collaboration, beyond tracking and planning, will help to assure a visibly and positive world in our future.