Today’s Technology Can Cure Traceability Headaches
By Matt Brown
Traceability is a multi-faceted, general business requirement that hits the legal, food safety, liability and brand marketing sides of any food business. It can be a particular challenge for small and medium-size producers, but solutions are available. Trying to manage with spreadsheets can quickly become cumbersome to maintain and ineffective when trying to access needed information quickly. Just as most people today look to modern, intuitive tools like smartphones, tablets and GPS to get things done, these more modern tools can help solve challenges like traceability in the food supply.
A diverse set of factors is making this “octopus with roving tentacles” even more critical for food businesses of any size. Changing federal and state laws, better-educated consumers and their buying preferences, and the global marketplace of ingredients and suppliers are all requiring food and beverage producers to stay on top of production.
Achieving traceability requires coordination among all aspects of a business, from suppliers to the production floor, and can be especially challenging for smaller food or beverage businesses. More frequent audits, with teams of auditors seeking accurate and up-to-date records, make getting the data quickly and easily critical to keeping normal business operations running efficiently.
Those who produce organic products or use many ingredients from countries outside the U.S. are probably already familiar with some of the “bonus” requirements, such as lot codes being required on all customer invoices. As a business grows, keeping up with all these tasks adds time quickly for existing staff. Companies may even need to hire specialized staff members who deal only with food safety requirements, compliance and reporting. It is exactly these kinds of tasks that technology handles almost effortlessly with modern food manufacturing software and ERP systems.
One compelling reason companies turn to technology as a solution is that adding staff is expensive, and most people don’t enjoy paperwork for paperwork’s sake. Well-implemented technology can save time, hassle and free up labor time and costs for more important aspects of a business, such as growing sales and getting products critical exposure with customers and consumers. Having the staff and resources to continue growing a food business is, of course, critical to achieving long-term success.
Particularly for small- and medium-size businesses, it’s worth considering that whatever current tools in use now might quickly become obsolete as sales grow. Making the culture change now to new technology when a team is small and flexible can pay off handsomely down the road as everyone from smaller retailers to national “big box” grocers is under increased scrutiny and pressure to ensure safety in our food supply.
How Software Can Help
Computers do some things really well and don’t complain about the tedium of it. Mathematics, for example. Storing and quickly sorting lots of repetitive data and doing it 24/7 are also good examples of the work that technology handles tirelessly. Software also provides some protection from the vagaries of business, such as a key staff member leaving or being on vacation during a surprise audit.
Many companies learn too late that they should have standardized their business processes and information before taking on a new large customer or entering discussions with an investor, merging with another firm or selling the business to a larger entity. These kinds of situations, while all good ones, often make everyone involved painfully aware that the current data practices are out of date and not scalable. Lenders, accountants, bankers and large customers like to work with businesses that have their data and risk factors under control, and using a real software system helps telegraph stability to those types of firms.
Enter the Enterprise Resource Planning (ERP) System
Due to the limited scope and low-scalability of traditional software like spreadsheets and small business accounting programs, a sector of technology, ERPs have evolved to solve some of the very specific needs of food and beverage manufacturing. ERPs are built to handle the complexity of real process manufacturing, where different lots of ingredients are taken from multiple sources, processed, and new inventory is produced from the results. A good, modern ERP will manage and help control inventory, track lot numbers from supplier to customer and provide accurate product costs. Ideally, it will do this with a minimum of disruption to the business and be easy for all staff to understand and use. It should also be cost-effective and quick to implement.
With an ERP to automate routine operations, businesses can focus on the No. 1 factor that drives success, more sales. That means more customers, more retail exposure, more brand awareness and more fans of the company. The more everyone remains mired in production and operational details, the less time is available to drive the business forward.
The New Reality
What’s in store for food and beverage business owners? It’s safe to say a number of trends will continue:
- More inspectors during an audit. This might be better news than it sounds, as an audit could go smoother and more quickly than in past years. Having data accessible and in some sort of digital system helps encourage a quick and painless audit as it’s easier to prove that business practices are sound, especially when compared to other tools like spreadsheets that are easily manipulated to change data.
- More extensive drill-down into data. Inspectors have a lot of factors they need to worry about, especially since many ingredients are arriving from outside the U.S., where inspections might not be as rigorous. Expect to see audits and requests for information that ask for details and plenty of them. It helps to keep in mind that audits and inspections are designed to keep customers safe and healthy and this is good for a business and its customers, too.
- Technology will become central to any manufacturing business. With mobile devices and newer cloud-based platforms, technology can be brought to more places and more situations than ever. There is no foreseeable reason this will slow down, and the trend is that technology continues to permeate all aspects of business from the production floor to the tools available at home at night.
The ERP Experience
There’s a reason some food companies—even some that have grown to more than $10 million in sales—still rely on spreadsheets. After all, spreadsheets are a very low-cost tool, but what’s not usually factored into the mix are the hidden costs of the time spent setting them up, sharing them with others and entering data daily. Not to mention any time spent making sure a formula didn’t change or an older file version wasn’t swapped for the current one.
We’ve seen companies reduce their production times by 15 to 20 percent for each batch of product, simply by implementing an ERP system to help track their inventory and lot codes. It doesn’t seem like spreadsheets take a lot of time, but stopping to add up the time spent on them now may reveal how dramatic it can be. About 15 to 17 percent of the time saved comes from time spent entering and validating data in spreadsheets, and maintaining and sharing that data with others. The remaining 3 to 5 percent typically comes from reducing the time spent manually tracking and assigning lot codes to new purchases when placed into service.
Running a food or beverage business shouldn’t be an impossible task, but each stage of a business will certainly have different challenges. Implementing the right technology early on, while a business’s culture is still young and flexible, helps everyone stay focused on growing the company and achieving long-term success.
Matt Brown is founder and CEO of Wherefour, Inc.