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From: Food Quality & Safety magazine, February/March 2009

A Traceability Reality Check

Contrary to popular belief, traceability is profitable

by Thomas R. Cutler

The food safety industry has long viewed traceability as a strategy that enhances business and pays for itself in the process. While these are worthwhile objectives, rarely has traceability been linked to profitability.

Preventing recalls is best, but when a recall becomes necessary, minimizing the damage is critical. “Advanced recall trace-back and track-forward technologies allow for a recall alert to be initiated within minutes, reducing potentially bad news to one news cycle and saving food companies millions of dollars in long-term brand rehabilitation costs,” says Gary Nowacki, CEO of TraceGains.

In avoiding a recall, the best technology solutions will continuously monitor the enterprise, co-packers, contract manufacturers, and upstream suppliers for compliance with business rules and regulation mandates. Real-time alerting and risk assessment will add an extra safety net and layer of brand protection. Some systems provide continuous compliance and risk assessment dashboards, bringing exception-based management capabilities to the entire organization.

Show Me the Money

The essence of a traceability system is tracking each individual incoming raw product, ingredient, additive, or dry or wet good from the plant’s receiving dock across the fabrication floor and through various product transformations to the final, finished goods.

Correlating and analyzing data sets both within and outside the company make it possible to connect upstream inputs, suppliers, and raw materials to downstream outcomes such as product quality or customer satisfaction. Food organizations can coach or replace poorly performing suppliers and counteract profit-draining events within the organization. For example, tracing and tracking technology can generate alerts from the in-line supervisor to the CEO, allowing the company to take the corrective actions necessary to protect or gain value from their supply chain.

William R. Pape, co-founder of TraceGains, says, “A food company with an advanced traceability system means real-time alerts can be generated when something is wrong in the supply chain and that near real-time views of the operation make better operational decisions possible.” He adds that in-house traceability systems cannot complete these tasks because a food company must automatically collect the relevant information from each process step, maintain identity across product transformations, and reroute these data into an event-oriented data mart, possibly adding some electronically collected new data. This event-oriented data mart then contains the pedigree of each carton leaving the plant as well as a repository of product attributes and key events during the life cycle of each production unit.

A pedigree data mart can also provide a comparison between key packing and processing steps and the percentage of product with grade premium. In addition, companies can leverage tracing and tracking to meet government or commercial compliance requirements and to give food executives a more complete instrument panel with which to make operational decisions. For example, when food executives learn that a business rule has been violated, they can issue an alert. This is how an effective traceability system—originally purchased only to answer regulatory and commercial compliance questions about each shipped carton—can directly impact quality, efficiency, and profitability.

IT Requirements

One major myth is the belief that a company needs to scrap existing software systems or mount a huge information technology project to achieve these goals. In fact, most food companies already have most of the information needed to create a powerful set of instruments and build an alert system. The challenge is that the data sit in different databases and cannot be easily combined. While some food companies use software like Microsoft Excel to create these integrated data views, assembling this is labor-intensive, and it is usually available only to a handful of employees.

Building a secure, focused event data mart requires tying together these different databases within a company’s operation. Existing enterprise resource planning (ERP) systems have been fine-tuned to handle a range of management tasks, and they do them well. ERP systems are not built to provide ingredient-level traceability across transformations, however, and cannot handle any event or attribute metadata. Advanced trace and track capabilities must be added separately to build an event-oriented product pedigree data mart that stores the key associations and provides the alerts that lead to newfound value in productivity.

To yield a profit, decision support systems must include:

  • A food company’s existing databases and major operating applications;
  • Third-party data systems that are then combined with a food company’s data; and
  • Consolidated data dashboards that are set up to solve specific operational problems and issue the operational alerts.

When all three of these decision support components are present, the supply chain is properly linked, sources are known, and decision-making is improved. The result? An increase in profits.

Cutler is president and CEO of TR Cutler Inc. Reach him at trcutler@trcutlerinc.com.

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