Food and Beverage
Traceability
Understanding food and beverage
manufacturing compliance
and traceability
Food and Beverage Traceability
Contents
Surviving a total recall—your biggest
threat to food and beverage profitability 3
The importance of traceability 4
How technology can improve
your traceability 5
What to do in the event of a food recall 6
Compliance is crucial 8
How Sage X3 will help you 11
Food and Beverage Traceability 2
Surviving a total recall—
your biggest threat
to food and beverage
profitability
Understanding food and beverage manufacturing Necessary regulatory pressure
compliance and traceability Food and beverage businesses have high regulatory
According to global law firm Clyde & Co, there’s an pressure because of the repercussions food
increasing number of food product alerts. Looking at contamination can bring from customers and
EU data, it discovered food alerts had risen from the media. Public authority punishments are also
10 in 1995, to 519 serious alerts in 2013. harsh, and include seizures, product recall or
destruction, fines, and even criminal charges.
There’s a rising trend in recalls and an increasingly
high level of government interest. Clyde & Co has Consumers might be the biggest factor driving this
attributed this to a range of factors, including an change. For example, many millennials want the
improved ability to detect food contamination and businesses they buy food and drink from to be
persistent issues with undeclared allergens in food. socially responsible and ethical. Thus, they’re asking
more questions about where products are produced,
There are good reasons for recalls and how.
Food safety is at the heart of every successful food
and beverage manufacturer. These businesses are
responsible for producing safe food and drink that
contain the ingredients and nutrition they promise.
It’s of particular importance to production,
because consumers must trust that the products
they’ve bought are totally safe.
Giving consumers accurate information allows
them to make informed choices about what
they consume. No surprise then that throughout
the world there are regulatory bodies and
food standards that ensure food and beverage
businesses do right by consumers.
Food and Beverage Traceability 3
The importance
of traceability
It is one of the biggest nightmares Traceability allows businesses to verify the history
for a business in this industry to and location of a product through documented,
recorded verification, and it helps manufacturers
have products contaminated by an significantly improve their operations. Leaders with
unknown source. In 2013, there was a traceability are four times more likely than followers
massive incident in Europe in which to monitor for regulatory compliance, which gives
them an ability as process manufacturers to
foods advertised as beef were found recall products.
to contain undeclared or improperly
declared horse meat—as much as With the vital information traceability provides,
food and beverage manufacturers can also:
100% in some cases. The issue came to • Promote efficiency and improve
light when it was reported that horse decision making.
DNA was discovered in frozen beef • Manage materials and logistics smarter.
burgers sold in some British and Irish • Arrange better supplier terms.
supermarkets. • Achieve optimal demand planning.
This event highlights the importance of traceability • Ensure fresh product, while keeping costs low.
for food and beverage manufacturers, which
need the ability to trace products as they pass
through the often long and complex supply chain.
Modern Enterprise Resource Planning (ERP) gives
it full transparency—crucial for documenting and
reporting on compliance.
No Traceability
59%
Traceability
37%
33%
31%
29%
25%
17%
6%
Demand planning and Planned warehouse Process for a mock or Monitoring of regulatory
forecasting orders can be combined real recall compliance
Source: “Use real-time product traceability to eliminate waste and delight customers,” Aberdeen Group, August 2017;
% of respondents n = 85
Food and Beverage Traceability 4
How technology can
improve your traceability
There are new and emerging Traceability equals visibility
technologies that allow your food To achieve full visibility of traceability in the supply
chain, IoT, big data analytics and the cloud must be
and beverage businesses to log in integrated into your ERP systems. They should be
transactional and product data. designed with the food and beverage manufacturer
The insights that come out of this in mind—broad enough to log transactions across
the supply chain, yet deep enough to offer you
data are at the core of traceability. industry-specific functionality. These include
Here are three ways to achieve traceability logging of source materials, results analysis, a way
as a business objective: to conduct preventative actions, and adherence to
strict regulations.
1. The Internet of Things
Through the Internet of Things (IoT), devices can
be connected anywhere, at any time. Using labeling
technology such as radio-frequency identification
(RFID) and quick response (QR) codes allow data
to be collected that tracks your product’s full
journey through the supply chain. Anything can
be recorded—from the temperature during
transport to the source of ingredients.
2. Big data analytics
Using big data analytics, your food and beverage
businesses can see where a problem has
occurred and stop it from continuing through
the supply chain. With unplanned events and
potential crises such as contaminated products
in the supply chain, you can respond quickly,
having identified, tracked and traced everything.
3. The cloud
Your food and beverage businesses can now
take advantage of cloud solutions, with software
managing aspects such as system infrastructure,
operating system, database and applications.
This allows you to spend less time and energy
on repetitive admin-heavy tasks and focus more
on important operations.
Food and Beverage Traceability 5
What to do in the
event of a food recall
Legislation has given government agencies more Having up-to-the-minute data to answer these
power to intervene with a food and beverage questions, you can quickly identify exactly where the
manufacturer’s operation. Demanding consumers problem lies, and address the issue with confidence,
can react quickly and publicly if they are unsatisfied provide market reassurance and mitigate recall cost.
through communications technology. As a result,
product recalls have become more commonplace To gain data access in real time, you must store
in the food and beverage industry. data centrally, allowing data to be tracked from the
furthest reaches of the supply chain, through the
Here are five supply chain tips for dealing with a production process, and from customers.
product recall:
Sometimes, food and beverage businesses
1. Stay on top of changing regulations don’t have lot codes that are specific enough.
Product safety regulations are complex, vary among Rather than break up production into discrete lot
different countries, and change frequently—almost codes so the scope of recalls is limited, they run the
always becoming stricter. This means that when your same lot code for many production runs.
food and beverage business expands into different
countries, compliance burdens will grow, as well as Regulators will expect you to connect ingredients
the likelihood and complexity of product recall. and customers through complex, multi-production
processes. The result of not having these processes
Modern ERP with a central regulatory repository in place can be a massive recall that could bankrupt
must support food and beverage businesses to a company.
comply with existing regulations and to implement
new ones. This will provide a solid frame of reference 3. Be totally transparent
to keep you on the right side of the law, wherever Information travels fast. Consumers can access
you operate. potential food and beverage product problems as
quickly as anybody publishes it. A badly handled
2. Maintain strong, up-to-the-minute supply product recall can damage the reputation of your
chain visibility business—sometimes irreparably—so you need to
When a product is identified as defective, whether control the narrative.
by consumers or higher up in the supply chain,
it’s essential that you identify the potential extent The safest and best strategy is for your food
of the contamination, asking these questions: and beverage business to communicate with
authenticity that you’re in control of the situation,
• Which product batches were faulty? and that you have the right solutions in place.
• What raw materials were involved? So as not to lose consumer trust, never make
statements that you don’t know for certain to
• Which other batches shared the same be completely true, especially when the pressure is
raw material, or passed through the same on during a product recall.
production facilities?
• Is this problem new, or has it been happening It’s here where having strong visibility of your
for some time? supply chain is crucial, because it allows you to be
authentic about the potential extent of problems
and quickly pinpoint the cause, essential to
protecting your reputation.
Food and Beverage Traceability 6
To gain data access in real time, you must store
data centrally, allowing data to be tracked from the
furthest reaches of the supply chain, through the
production process, and from customers.
4. Reduce the risk and impact of a product recall 5. Have an emergency-ready crisis
Prevention is better than cure, and while it’s management plan
impossible to eliminate the chance of a food and Time is of the essence with a food and beverage
beverage recall entirely, there are steps to reduce product safety issue. It’s also advisable, and very
its likelihood and mitigate consequences: possibly legally necessary, to have a pre-determined
crisis management plan in place to ensure you are
• Streamline and thin product lines and permanently crisis ready.
packing options.
• Be ultra-precise and narrow with the lot An effective food and beverage crisis management
coding system. plan might include some or all of these points:
• Hold on to samples from product batches • Determine the severity of the risk.
to quickly test for defects. • Identify the extent of contamination,
• Reduce batch quantities to make it easier to and isolate affected batches.
isolate faulty products. • Notify distributors and retailers as quickly
• Maintain strong communication with everyone as possible.
in your supply chain. • Put tried-and-tested product recall procedures
• Continually analyze and improve supply chain into action.
processes to minimize risk. • Report the product issue to the relevant authority.
• Monitor customer feedback, including social • Publish transparent information on the recall
media, to identify defects immediately. to customers.
• Maintain a dedicated crisis management team.
Food and Beverage Traceability 7
Compliance is crucial
In the US and EU, reviews of certain aspects of To avoid a compliance nightmare your food
consumer product recall systems have taken place. and beverage businesses can:
For example, in the UK, the Food Standards Agency • Build compliance and traceability into
is engaged in a major review of food withdrawal your processes.
and recall processes, while in the US, there’s been • Implement a central repository of relevant
concerns about manufacturers not giving timely compliance laws and regulations to stay
notice to the authorities upon discovering possible current with regulatory changes, accessible to
product defects. This has resulted in multi-million- employers, regulators and partners.
dollar fines.
• Digitize document management processes to
The compliance bar’s been raised in many countries. keep up with regulations, which provide timely,
In the US, there’s the Food Safety Modernization unified information to decision makers.
Act (FSMA), which has significantly lifted the levels • Implement enterprise systems that build
of compliance, performance, and quality that the foundation for process control and
businesses need to achieve. automation, and ensure they’re integrated
and interoperable to avoid data silos.
• Keep software tools up to date, so they can
handle regulation reporting requirements and
ensure compliance.
Having one version of the truth is crucial. This will make sure your whole business works to current
requirements with tightly integrated and interoperable systems. This is where ERP comes in.
Food and Beverage Traceability 8
Keep software tools up to date, so they can
handle regulation reporting requirements and
ensure compliance.
Critical food and beverage manufacturing capabilities through ERP
ERP provides essential capabilities that allow leading food and beverage manufacturers to deal with a
challenging regulatory outlook, as the chart below from Aberdeen Group illustrates.
In addition to centralized repository and automatic notifications, ERP will also support standardized
processes, manufacturing alignment with product design, and full visibility into quality data.
Leaders
Followers
94%
75%
69% 69% 65%
64% 61%
58%
50%
44%
39%
14%
Standardized Manufacturing Full visibility into Traceability of Centralized Automatic
procedures operations are quality data components and repository of notifications
across the integrated and items throughout compliance laws, based on
organization coordinated with the purchasing, regulations, and business events
product design manufacturing, amendments and date
and sales with controls to
processes respond
Source: “How ERP addresses the critical needs of food and beverage companies,” Aberdeen Group, November 2017
Food and Beverage Traceability 9
Quality ERP acts as your assistant The issue with legacy ERP
ERP maintains the same composition and flavor ERP has a problem. According to the 2016 Report
of products. on ERP Systems and Enterprise Software, Panorama
Your businesses should minimize, and ideally Consulting Solutions said only 12% of corporate
eliminate, any unknown variables that might affect executives were “very satisfied” with their current
compliance. Standardization breeds consistency ERP solution, and that 59% of global companies
across the organization, leading to automation were “burdened” by them.
opportunities when processes are documented
and standardized. ERP is designed to move them away from working
with Excel and spreadsheets for basic finance and
ERP integrates manufacturing operations accounting. It’s also meant to provide a centralized
with product design. system that controls all relevant business processes,
This can cut costly processes that require providing actionable data and insight.
customized equipment and controls to manufacture
the product and maintain consistent quality levels. Different sectors, same problems
Innovation can be fostered from both sides of your Unfortunately, enterprises in a wide range of
product development process, from design to industries have had the same challenges with ERP,
manufacturing, and back again. and there are numerous implementation horror
stories. With the enterprise software market complex
ERP equals quality management. and expensive, lawsuits and litigation over failed
Having full visibility into all data can provide an early rollouts are a genuine risk.
warning to potential deviations or out-of-tolerance
conditions at the equipment or product level, Businesses in general have found they’re not
potentially avoiding a quality problem. Having visibility achieving value from their ERP solutions.
in real-time requires system integration between all Understanding the full benefits of having a more
your enterprise applications. modern solution, they seek a partner who helps
them with business innovation, as well as industry
ERP offers full visibility into quality data. best practice and technology, to help them scale.
When records are maintained manually, it becomes
very difficult to manage recalls properly. ERP systems Even if businesses are happy with the ERP solution
need to keep records in a central database that they have, many are looking at new solutions that
allows easy updating and automated data collection. provide upgraded functionality, are easier to use,
Dynamic documentation would update records and provide support for emerging technologies.
automatically in the event of a change in supplier
or ingredient, for example.
More reasons to update or replace ERP Why aren’t existing ERP solutions working?
Want to take advantage of new functionality Obsolete technology foundation or infrastructure of ERP system
43% 43%
New version offers enhanced ease of use
Lack of features
43%
41%
New version is more flexible
41%
Cost of maintenance and support
Performance of old version is inadequate 27%
27%
Inability to tailor ERP solution to integrate changes to the business
Vendor no longer supports old version
22%
22%
Old version is incompatible with emerging technologies Lack of qualified resources to maintain and support current system
12% 12%
0 25 50 0 25 50
Source: “The Cost of Doing Nothing: Why you can’t afford to sit on an ERP software decision,” Aberdeen Group, March 2017; % of Respondents, n=231
Food and Beverage Traceability 10
How Sage X3 will help you
Sage X3 offers you a comprehensive, real-time With Sage X3, your food and beverage business
solution that delivers accurate, up-to-date data will have a faster, simpler and flexible way to keep
that identifies and mitigates the consequences of the costs and reputational damage of recalls to
product recalls and other supply chain issues. a minimum.
With our solution, your food and beverage Why Sage, why now?
businesses can: Sage is the global leader in business
management with:
• Rapidly implement and comply with new
regulatory requirements and stay on the right • Over 3 million customers, active in
side of them with all teams. 25 countries.
• Run insightful reports that can be used within • More than 38 years of financial software
the business—and for suppliers, customers experience.
and regulators—from a single source of • Dedicated success coaches and online
centralized data that includes information from customer community .
the entire distribution chain.
• A global partner network that offers
• Identify the root cause of product defects and world-class support.
the extent of supply chain contamination as
quickly as possible.
• Communicate effectively with stakeholders,
customers, and the rest of the supply chain
during product recalls.
• Systematically conduct additional efforts to
prevent product recalls and mitigate their
consequences.
• Maintain and execute crisis management plans.
Food and Beverage Traceability 11
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of The Sage Group plc or its licensors. All other trademarks are the
property of their respective owners.
Food and Beverage Traceability 12
