By Rob Stummer
Mass food poisonings at festive celebrations and schools, tofu being made in dirty back alley “factories”, coffee sachets being tampered with post-purchase, authorities pulling bottled water from the shelves over bacteria concerns – all scenarios involving the food and beverage products we consume on a daily basis. In the recent months, four food processing factories in Malaysia’s north were shut down due to “unhygienic conditions”. Contamination issues and product recalls happen more frequently than the average consumer is aware of, and whether by the authorities or the proactive approach of the brand manufacturer, a recall has the potential to cause lasting damage to both brand reputation and customer loyalty.
Consequently, every step of the food supply chain, from farm-to-fork is under pressure to improve its traceability. Regulators, retailers and consumers increasingly demand traceability; and by helping to prevent food scandals, brand reputations can depend on it. However, there is more to this story than meets the eye.
These issues mean that the manufacturers and distributors with the complexity of their products and the large number of ingredients and/or processes, are under pressure to identify the source of all the materials used on their production lines to ensure optimum product safety and quality.
So, do you as a consumer know where your food comes from? Most of us wouldn’t, but we should.
The race to trace
As the old saying goes, prevention is better than cure, but what are some of the proactive steps that manufacturers should take to ensure traceability in the supply chain?
Traceability, using appropriate technology and data monitoring systems plays a key role in enabling manufacturers to track the origins of all the raw materials used in their products.
This means knowing not just where the ingredients have come from, but also how they have been grown, such as whether organic methods have been used, or in the case of meat and animal products, what standards of husbandry they have been reared in.
In the pursuit of proactive preparation, it is also important to implement a traceability solution that allows manufacturers to perform regular “mock recalls”, time them and ensure they are meeting both the regulatory and supply-chain partner requirements for completion.
Track, trace, inform – protecting brand & consumer
The implementation of Tracking and Traceability Systems provides the ability to access any or all information about a product throughout its life cycle by using a system of recorded identifications. The technology gives organizations the ability to trace a problem with a finished product all the way back through the production process, through the suppliers and, in many cases, all the way back to the farms that produced their raw ingredients. By using software that isolates any quality issues, users can easily identify and quarantine all suspect material.
These systems also provide the ability to track every ingredient from receipt through finished product delivery and adapt to a company’s unique manufacturing process with “farm-to-fork” capabilities. Implementing a comprehensive manufacturing system will not only allow food and beverage processors to meet current and future traceability requirements, but also link systems and data across all of their departments from streamlining operations, maximizing productivity, and increasing their profitability.
No use without ability to recall
Traceability facilitates both real time and historic analysis of the supply chain. Whilst it’s great that the authorities up north took action against the four factories, it was a closure only.
Traceability systems would have enabled the authorities (and preferably, the brands) to ascertain exact locations of distribution and sale, to alert respective retailers to pull said products from their shelves, and advise purchasers of the recall – all facilitating enhanced protection for consumers.
Increased regulatory compliance requirements
As governments around the world attempt to increase food and product safety, they are increasing their regulatory requirements. If your business does not have an effective traceability system, you can potentially be excluded from lucrative new markets, or lose existing markets to those who can clearly show the effectiveness of their traceability system.
Although there have been regulatory compliance aspects overseas, the Malaysian Accreditation board is still on the road to advance traceability and increase their regulatory requirements. Nevertheless, as manufacturers, our responsibility is to isolate and trace back threats that could potentially turn into public health issues.
The ISO 9001:2015 Quality Management System has a clause specifically dedicated to the traceability system; any organization wanting to retain or achieve their ISO 9001 Quality accreditation will need to have an embedded traceability system.
While regulatory compliance plays a big role in why organisations are increasingly instituting traceability systems, it’s just one of the reasons. Good management practice requires protection of the brand, which includes the ability to minimize risk before and mitigate damage during a recall when time is of the essence.
The Malaysian government has recently furthered its commitment and investment to this by providing funding opportunities for farmers to enhance their technology to both test and trace livestock, thus adding additional layers of information and protection.
Things will go wrong – mitigation is key
While we all hope they won’t, things do sometimes go wrong. The way you respond when things do go wrong however, can make the difference – depending on what you produce – between potentially savings lives, and rebounding from the situation, or putting lives at risk and losing a brand or business.
Mitigating a crisis requires an advanced ERP system with an integrated Traceability system such as SYSPRO ERP, that will also allow you to take immediate steps to minimize the impact of a product recall. These steps include being able to quarantine products, as well as to trace and report on the location of affected products in the supply chain.
As Malaysia looks into the cost of switching to traceability systems, the cost of a negative scenario is far greater than implementing a solution. Product recalls are not the only factor to consider when crisis strikes such as loss of sales, reputation penalties, and, fines and litigation.
Where actions speak louder than words
Visibility through end-to-end tracking is pivotal in the traceability process, but what should you do if a food item is found to be deficient?
The first vital step is to trace and account for every suspect item throughout the value chain. SYSPRO ERP as an example is able to track several units of a stock item from the same lot or batch number. Once these have all been found, manufacturers can then implement product recalls or quarantine suspect goods.
Your ERP system should also assist with the visibility of the communications (or activities) that occur between the touch points of an organisation to facilitate proactive intervention by management, improve relationships, and eliminate duplication of effort. With early identification of a defect and the ability to quickly communicate with affected customers, you can minimise the reputational damage of a recall.
Embedding well-considered crisis plans into the overall business operations and strategy adds further value to the system. Robust ERP solutions that matches SYSPRO’s data accuracy allows stakeholders at every level to deliver prompt and reliable communication. The ability to provide details to the public as well as the authorities is paramount to negotiating a contamination or recall crisis. Training teams to interpret and escalate data findings is also a core element which reinforces the success of such systems.
Lastly, brand attitude is everything – a recall is to protect consumer safety first and foremost. That should also be the end goal of the organisation; not cost or brand damage minimisation which seems to be the most prolific approach.
*Rob Stummer is Asia Pacific chief executive officer of SYSPRO.