Executive Briefings

Food & Beverage Traceability Impacts Brand, Consumer Safety

Analyst Insight: Food and beverage manufacturers have the distinct advantage (or detriment, depending on how you view it) of often having direct access to the customer. In today's more open, collaborative, social world this can reap major benefits of understanding one's customer base and responding to its needs. On the flip side, food and beverage manufacturers are susceptible to a major downfall simply from minor issues across its supply chain. Open or not, it's the new reality. - Simon Ellis, practice director, Supply Chain Strategies, IDC Manufacturing Insights

IDC Manufacturing Insights places food and beverage manufacturers into its Brand-Oriented Value Chain (BOVC) - those companies that serve consumer markets (also including footwear/apparel, healthcare/beauty). BOVC manufacturers, and specifically those in the food & beverage category, grapple with many of the same concerns as other manufacturers - supply chain visibility, demand planning, and product quality. However, they also have to deal with unique issues, such as an increasingly global supplier network, brand and image retention, and compliance challenges. Food and beverage manufacturers have the unique position of having their supply chain reach from the design and creation phase of a product all the way through to delivery of said product - potentially direct to the consumer. Even if the company doesn't deliver direct to the customer the chances are great that in today's socially connected world that the brand and its related products need to be carefully monitored because consumers today demand transparency - a two-way street, if you will.

This brings us to the subject of traceability in food & beverage - probably one of the most important business processes for a food and beverage manufacturer. A product recall of any size can cause huge implications throughout the supply chain and on the overall brand of the company. For companies in the BOVC the generally accepted definition of traceability is:

The process and/or systems that provide the ability to identify all relevant data (and their relationship) for the materials used during production and distribution of finished products.

Not an easy task - especially since it involves many facets, including people, processes, systems and technology.

Currently, there are no universal standards for what organizations have to do in terms of traceability - particularly in regards to consumer safety or transparency. The government is involved at some level - the FDA, for example, will intervene when it comes to removing contaminated food product from our general food supply. However, they too have to rely on internal controls set up (or in some cases, not) by the manufacturers themselves. This could result in massive product recalls and dollars lost due to a lack of internal controls.

One step forward in this area was the signing of the FDA Food Safety Modernization Act by President Obama back in January 2011. The potential for this law is to modernize the current food safety system to better respond to outbreaks and prevent food-borne illnesses in the first place. Since its signing there has been some progress, including:

• A consumer-friendly search engine to look for food product recalls (April 2011) (Source: fda.gov)

• The FDA and the United States Department of Agriculture entered into an agreement to establish a competitive grant program for food safety training (July 2011) (Source: fda.gov)

                                         The Outlook

The transparency in today's marketplace that the consumer now demands is not going away. Traceability in food & beverage helps to allow for this transparency and will be key to ensuring both consumer safety and brand protection. Legislation, and whether it moves forward or not in 2012, will be a primary driver of whether or not food and beverage manufacturers make changes internally as well.


Keywords: Food and Beverage; Legal, Govt. & Regulatory Issues, Supply Chain Security & Risk Mgmt, Business Strategy Alignment, Quality & Metrics, Supply Chain Analysis & Consulting, Global Supply Chain Management; Supply Chain Visibility, Technology; The United States, Brand-Oriented Value Chain, Product Recall, FDA Food Safety Modernization Act, Universal Standards, Department of Agriculture, fda.gov

IDC Manufacturing Insights places food and beverage manufacturers into its Brand-Oriented Value Chain (BOVC) - those companies that serve consumer markets (also including footwear/apparel, healthcare/beauty). BOVC manufacturers, and specifically those in the food & beverage category, grapple with many of the same concerns as other manufacturers - supply chain visibility, demand planning, and product quality. However, they also have to deal with unique issues, such as an increasingly global supplier network, brand and image retention, and compliance challenges. Food and beverage manufacturers have the unique position of having their supply chain reach from the design and creation phase of a product all the way through to delivery of said product - potentially direct to the consumer. Even if the company doesn't deliver direct to the customer the chances are great that in today's socially connected world that the brand and its related products need to be carefully monitored because consumers today demand transparency - a two-way street, if you will.

This brings us to the subject of traceability in food & beverage - probably one of the most important business processes for a food and beverage manufacturer. A product recall of any size can cause huge implications throughout the supply chain and on the overall brand of the company. For companies in the BOVC the generally accepted definition of traceability is:

The process and/or systems that provide the ability to identify all relevant data (and their relationship) for the materials used during production and distribution of finished products.

Not an easy task - especially since it involves many facets, including people, processes, systems and technology.

Currently, there are no universal standards for what organizations have to do in terms of traceability - particularly in regards to consumer safety or transparency. The government is involved at some level - the FDA, for example, will intervene when it comes to removing contaminated food product from our general food supply. However, they too have to rely on internal controls set up (or in some cases, not) by the manufacturers themselves. This could result in massive product recalls and dollars lost due to a lack of internal controls.

One step forward in this area was the signing of the FDA Food Safety Modernization Act by President Obama back in January 2011. The potential for this law is to modernize the current food safety system to better respond to outbreaks and prevent food-borne illnesses in the first place. Since its signing there has been some progress, including:

• A consumer-friendly search engine to look for food product recalls (April 2011) (Source: fda.gov)

• The FDA and the United States Department of Agriculture entered into an agreement to establish a competitive grant program for food safety training (July 2011) (Source: fda.gov)

                                         The Outlook

The transparency in today's marketplace that the consumer now demands is not going away. Traceability in food & beverage helps to allow for this transparency and will be key to ensuring both consumer safety and brand protection. Legislation, and whether it moves forward or not in 2012, will be a primary driver of whether or not food and beverage manufacturers make changes internally as well.


Keywords: Food and Beverage; Legal, Govt. & Regulatory Issues, Supply Chain Security & Risk Mgmt, Business Strategy Alignment, Quality & Metrics, Supply Chain Analysis & Consulting, Global Supply Chain Management; Supply Chain Visibility, Technology; The United States, Brand-Oriented Value Chain, Product Recall, FDA Food Safety Modernization Act, Universal Standards, Department of Agriculture, fda.gov