Analyst Insight: Food supply chain visibility and traceability have never been more important to social, ethical, and corporate sustainability initiatives.   

FSMA 204 (Food Safety Modernization Act)

As of January 2023, the FDA Food Safety Modernization Act (FSMA) Section 204 requires entities in the food supply chain (farm production, food processing, packaging, distribution, retail) to capture and supply key data elements to aid in the detection and prevention of food-borne health issues and potential food recalls. Companies that grow, ship, pack, process, manufacture or sell any of the products on the Food Traceability List (FTL) are mandated by the FDA to provide the chain of custody of their products. 

Although the FSMA Rule is already in effect as of January 2023, the FDA will grant companies a period of two years to comply, enabling the FDA to focus on preventing food safety problems, rather than reacting after they occur. The ability to respond quickly is an important goal of the FDA, and companies must respond with traceability records within 24 hours of a request.  Food importers are also liable to comply with the FDA requirements. It is imperative for companies to start preparing now since vetting and implementing a food traceability solution takes time and careful consideration.   

Transportation, distribution, manufacturing and retail entities all now face the same scrutiny and challenges with FSMA compliance, as well as minimizing stockouts, meeting customer demands and reducing labor-intensive processes.  The FDA has not mandated a specific technology to track or communicate data and tracking events. However, at a minimum:

• Businesses must maintain records for at least 2 years.
• Records must be in a sortable electronic format.
• Businesses must provide the records within 24 hours of the FDA requests.
• Records must be legible and in either electronic or paper format. 

Key Requirements for Supply Chain Entities 

CPG and Manufacturing Companies:  

• Need for trust in commodity supply chains and improved connectivity with upstream suppliers.
• Monitoring use of food additives, chemical products, use of recycled products, re-batching and batch mixing.
• Manual trace and reconciliation, product fraud, inaccurate labeling, lack of data standardization.

Wholesaler / Retailer:

• New channels of customer engagement are now forcing retailers to improve transparency into product origin, building loyalty, and contributing to a stronger business relationship.
• Inherent lack of trust between consumers and manufacturers compounded by cryptic communication heightens the need for transparency and visibility.
• Capture expiry information, inbound shipment data and regulatory compliance information.

Transport and Storage “First Receiver”: 

• First receiver is defined as “the first person (other than a farm) who purchases and takes physical possession of a listed food.”  

• They must provide origin, destination, warehouse temperature, humidity, temperature, transport, GPS location. 

Challenge and Impact for Food Supply Chain Providers

Multi-party relationships and inter-dependencies increase risk and complexity, while most data needed to provide true resiliency exists outside the four walls of a food industry entity. Data inaccuracy among suppliers, lack of interoperability between platforms, and ineffective solutions for handling large amounts of disparate and potentially inconsistent data are the primary contributors that inhibit visibility and transparency, limiting the ability to capture key events within the food supply chain.   

Key Challenges Supply Chain Providers Will Face 

• Financial impact: Time-consuming, labor-intensive processes to track data and capture critical tracking events (CTE) with multiple sources of truth, increasing operating costs and loss of sales.
• Social and ethical impact: Limited traceability from “farm-to-fork” can cause negative brand loyalty and financial performance, which highlights sustainability and responsible production practices. 
• Business continuation impact: Non-compliance places consumer safety at risk, and can result in sanctions imposed by the FDA, suspension of license to operate and negative press, all of which impact the brand. 

Limitations of Prevailing Solutions

Traceability within modern ERP applications will not fully accomplish the mission of complying with FSMA 204 critical tracking events (CTE) and key data elements (KDE). Facilitated collaboration among distributors, retailers and restaurants is required.  

Traditional architectures are designed to support a hub-and-spoke model, doing little to help with the burdens of multiple data sources, latency, trust and resource-intensive manual processes.  The true solution will enable multiple trading partners to collaborate on a single platform where data is shared, structured and actionable.   

Moving forward with Compliance 

Multi-Enterprise Business Networks:  Ecosystem platforms enabling companies and their suppliers to be onboarded into a common data model, negating the traditional hub-n-spoke. This “hub-to-hub B2B” ecosystem grants parties visibility into and control over mission-critical data which will synchronize CTE’s and KDE’s across trading partners. 

Custom End-to-End Food Traceability Application: Cloud-based software platforms capable of capturing product attributes allow companies to differentiate their products from other food retailers.  Platform-based applications enable consistent communication to the FDA and visibility to consumers.  

IoT and Machine Learning — Artificial Intelligence Solutions:  Smart sensors can capture data points from temperature and humidity to tamper-proof electronic seals at POS.  These data points, along with chain of custody data, are captured in real time, consumed in the cloud, and communicated via control towers. 

Blockchain for Agriculture:  Leverage a traceability application where partners are secured through a verified blockchain network, enabling trust, transparency, and accountability.  Products are authenticated, and product catalogs created that include full chain of custody on ethically sourced and trusted products. 

Collaboration Platform with the FDA: Companies need to establish a collaborative platform with the FDA for faster bi-directional communication. Electronic spreadsheets and digital records via email or web portals could be a means to supply the data, however the FDA has not completed its analysis, and pundits are skeptical. 

Conclusion

The lack of traceability serves as the impetus for the FDA to mandate food safety within the Food Safety Modernization Act. The CDC estimates 48 million people get sick, 128,000 are hospitalized, and 3,000 die from foodborne diseases each year in the United States.  FSMA provides the FDA with the power to build a collaborative environment for companies and government agencies, both domestic and foreign. Irrespective of the technical solution, the statute explicitly recognizes that all food safety agencies and companies need to work together in an integrated way to achieve social, sustainable and public health goals.  FSMA is just the first strong step in the FDA’s journey to improve the precision of food product flow, response time and safety for consumers.