Tune Up Traceability with Enterprise Resource Planning

The enactment of the Food Safety Modernization Act has generated a lot of concern among midsize and regional food processors. The federal government is clearly placing much greater emphasis on prevention, accountability, and responsibility at each step of the food supply chain.

Furthermore, the FDA’s expanded powers will bring more frequent inspections and require companies to develop, adhere to, and monitor processes for preventing food contamination.

This is good for consumers and the industry. Yet the FSMA also creates a significant set of new challenges for small and midsize processors. Many local and regional players may not be able to muster the controls, procedures, monitoring systems, and paperwork necessary to create a chain of control for every product and ingredient.

As the different components of the FSMA are implemented over the next few months and years, what will the new law mean for smaller processors? Will it lead to a consolidation of producers and even greater market dominance by the biggest players? Or is this an opportunity for forward-looking small and midsize processors to develop sustainable competitive advantage?

The answer is both. The FSMA is changing the dynamics of the food and beverage industry—and creating challenges and opportunities for forward-looking processors.

Industry in the Spotlight

Globalization and industry consolidation have added complexity to the food safety problem. Each link in the supply chain contributes to the delivery and consumption of food products around the world.

The unprecedented growth of food imports has exacerbated the problem. Some of the fastest-growing imports are coming from middle-income and developing countries such as Mexico, Chile, China, and India. For example, in 2008, the value of food imports from China reached $5.2 billion, making China the third largest source of food imports. While this number continues to grow, China and the other countries listed don’t have the extensive food safety standards and practices of more-developed nations.

A growing number of consumers are questioning the safety of the foods they consume. From “farm to fork,” consumers want to know more about their food—where it came from, what it contains, and whether it is safe.

For the most part, it was this mounting consumer awareness and pressure that forced Congress and the president to pass the FSMA, the first significant revision to food safety laws in more than 70 years.

Manual Records Be Gone

For food manufacturers with multiple steps in their production processes—and a manual system to track it all—finding receipts, purchase orders, bills of lading, and other paperwork becomes a daunting process. Producing the necessary information within the four-hour window mandated by the FDA is nearly impossible for these companies.

Manual record-keeping methods are also notoriously error-prone. It’s very easy to transpose or skip digits. Lot No. 145 could mistakenly be written down as No. 154, making it practically impossible to trace contaminated product in the food chain.

The impact of poor, incomplete, or manual records was underscored when Inspector General Daniel R. Levinson of the Office of Inspector General (OIG), U.S. Department of Health and Human Services, disclosed some bleak findings on protection of the U.S. food supply. A study conducted by OIG revealed the following:

• Only five of 40 products purchased could be traced through each stage of the food supply chain back to the farm or border where they entered the country.
• Thirty-one of the 40 products purchased could not be traced through each stage of the food supply chain; OIG was able to identify only the facilities that likely handled the products.
• For the remaining four of the 40 products, OIG could not identify the facilities that handled these products.

Why couldn’t the majority of products be traced? The lot-specific information necessary for end-to-end traceability simply did not exist, either on paper or electronically.