Follow Your Food To More Profit

Thanks to bio-terrorism, food-borne illnesses and genetically engineered foods, politicians are getting very interested in the safety of the food chain. And that means tougher laws on the traceability of food, from ‘field to fork’.

It’s an international issue. Food and beverage companies have always needed to know about their home country’s food-safety rules. But now events in big markets on the other side of the world can affect businesses thinking about exporting.

For example, in January, the European Union introduced a new law that covers every food business that operates in its 25 member countries. Not just EU-firms, but foreign exporters to the EU are covered too. Firms must be able to trace the movement of animals, ingredients and products at every stage of their production and distribution.

The Americans aren’t far behind. Similarly tough traceability rules will soon be in effect in the US to ensure faster, more effective tracking of food products there.

Some food and beverage companies anticipated the stricter rules. For example, Montana Wines in New Zealand (an Intentia customer) had the foresight to steer itself towards supply-chain traceability ahead of legislation in the EU and US. Traceability has become an essential element of its business processes.

Montana Wines can now trace a batch of hand-picked grapes back to a parcel of vines, from a single row, picked on a particular day at a particular time. Such capabilities are key parts of a broad quality strategy to develop product and improve service to customers. But outside the US and EU, many companies think the new traceability requirements are too difficult for them to tackle now.

Montana Wines can trace a batch of hand-picked grapes back to a parcel of vines, from a single row, picked on a particular day at a particular time.

You can understand why. Firms have to give on-demand visibility of the entire life cycle of a coffee bean, for example, from its origin in Sumatra to its final destination in a New York deli. That’s daunting for small suppliers and distributors, and for food companies that still use paper to track products. But failure to comply will quickly obstruct their ability to export to these big markets. New laws aren’t the only reason food firms should improve their traceability skills. Operations may become more efficient when management of supply is more transparent. Emerging technologies such as radio frequency identification (RFID) help traceability—and have many other uses in the supply chain. A good tracking and tracing system is a powerful marketing tool too: it strengthens a company’s ability to differentiate its products, and that strengthens brand confidence and loyalty. Look at the similar experience of product labelling. Industry attitudes have changed. Today food and beverage companies don’t focus their product labelling efforts just on following government and industry-association rules. They do it because consumers like it and are more likely to buy food and drink that’s properly labelled. Good product labeling is now seen as an investment in marketing. ‘Identity preservation’ is another selling point for many food producers and exporters. Consumers are loyal to products they are convinced are healthy, natural and of high quality. They will pay higher prices. A clean, green image can therefore have significant value, both domestically and in export markets. Traceability doesn’t just affect exporters. Importers must deal with traceability rules too. For example, many countries are currently tightening their rules on ‘country of origin’ to help protect public health. Increasingly, importers can no longer simply re-label imported products and sell them—they will first establish and document the product’s origins to protect consumers against misleading claims. This all means that food and beverage companies should start nowto develop appropriate standards and strategies for transparent production, processing, packaging, storing, distribution and marketing. With an effective supply-chain traceability system in place, a company can easily reassure consumers of the origins of its produce. It can back up performance claims, and promote longer shelf life. The company is in an excellent position to offer products at a premium and enhance the reputation of its brand. Handled correctly, traceability is an opportunity for food and beverage firms to make a real return on investment (ROI) in the short term. Traceability is like any research and development spending. To maximise ROI, you must look at the big picture. Many firms make the mistake of choosing solutions to their traceability problems from a narrow perspective: namely how well will it fulfil regulatory requirements and cut liability risks. The solution you select should offer pinpoint accuracy forrecall management, and should also create more efficient relationships between suppliers and customers.