Smart Steps to Peak Traceability

Although the U.S. Food and Drug Administration’s (FDA) Food Traceability Rule (FSMA 204) does not require compliance from companies making or handling items not included on the Food Traceability List (FTL) of higher risk foods, it does aim to spur end-to-end traceability throughout the food industry. And that goal, while lofty, not only makes sense when it comes to improving food safety systems to protect public health, but also is just good business, says Jason Richardson, vice president, global quality and food safety at The Coca-Cola Company.

“The supply chain partners who are on the Food Traceability List will look to those who aren’t to align with their systems,” notes Richardson. “And if you can’t align with their systems, you may find that you won’t be approved as a supplier. As we’re making gains in the age of digital transformation in the food industry, the technology is now there to make end-to-end traceability a viable outcome.”

But it’s a step-by-step proposition, Richardson says. The fundamental challenges of creating effective food traceability programs—whether the company must comply with the FTL or not—are data, processes, stakeholders, and technology, and the level of hurdles food companies face depends on their size and resources. Moving the needle on traceability will depend on whether companies are in the “design, build, or transform” stages of program development and capability. For example, he says, smaller companies are in the design phase, trying to find out what they can handle or what they can do with fewer resources to invest in traceability systems while ensuring those systems will work with supply chain partners’ systems. Medium-sized companies are in the build phase. They have established a traceability program, have more resources, and are already building and customizing systems to align with their clients upstream and downstream.

“Now, companies like Coke, we’re in the transform stage. We’ve built the systems. We have capability. And so, for us, it’s about being transformative,” Richardson says. “And when we look at something like the FDA Traceability Rule, we’re really looking at how we can bring our supply chain partners in with us to try to move [end-to-end traceability] forward.”

No matter the phase in which they are operating, food companies can take several steps to advance their traceability programs to meet the aims of helping reduce both the incidence of foodborne illness and the negative impact of product recalls on the business.

Data Challenges

Renee Perry, vice president of corporate social responsibility and environmental, social, and governance with Culinary Collaborations LLC (CCL), says that the goal is for companies to effectively address the data-related challenges of maintaining product identity, managing data across disparate systems, ensuring data accuracy, and covering the costs associated with establishing a robust traceability program. She suggests that a good first step to overcoming data challenges is adopting global data standards such as GS1 and Global Dialogue on Seafood Traceability (GDST), which can play a role in preserving product identity throughout the supply chain and harmonizing identification methods.

“These standardized protocols promote consistency and ensure seamless interoperability across diverse systems and nations,” Perry says, noting that CCL, a seafood and sushi ingredient supplier to the North American market, is an active member of GDST, which works toward establishing global seafood traceability standards.

She adds that data-related challenges also arise from the need to maintain product identity throughout the supply chain, the limitations of in-house developed systems in capturing and sharing data, the lack of digital tools for logging events such as first mile and transportation, discrepancies in identification methods used across countries, and the challenge of ensuring the accuracy and trustworthiness of data entered by each partner in the supply chain.

Also, FSMA 204 requires that two types of data are collected for recordkeeping and compliance: key data elements (KDEs) and critical tracking events (CTEs), which are data elements that many companies don’t have or haven’t considered until recently, adds Jacob Bruun-Jensen, strategy principal, consumer industry with Monitor Deloitte and coauthor of the company’s report, FSMA Section 204: Traceability and Tracking in the Food Industry. The possible number of suply chain data points for KDEs (e.g., lot codes, ingredients, locations, transactions) and CTEs (e.g., harvesting, cooling before initial packing, receiving, transformation of the food) that need to be captured is one of the biggest challenges for Deloitte clients.

“We estimated that there are about 84 to 178 data attributes or KDEs you need to collect, for example,” Bruun-Jensen explains. “If you’re just shipping it all the way through [and] you don’t really touch the products, it’s probably close to 84. If you receive and transform [product] and you create new lot codes with that data, then you have about 178 data attributes. Most of the clients we talk to today, depending on where they are in the supply chain, have less than half of the data required by the regulation.”

Beyond lacking all the data required, other challenges facing food companies include the formatting used to exchange data and the quality of the data that they do have, he adds. “As an industry, we haven’t agreed on the data format yet and [FDA] has left it up to the industry to decide what data format to use,” Bruun-Jensen says. “So, there’s some uncertainty. I may not have all the data that’s required. The data that I do have is not up-to-date or inaccurate, so the data quality is poor. I may not have all the data that was required in the right format and that my trading partners want to use, and I don’t have, in many cases, the data governance structure set up to manage this data.”

Perry suggests that there are several practical solutions to these data challenges, including collaborating with suppliers step by step to move from paper-based records to a fully digital system to establish a comprehensive electronic end-to-end traceability system. She also recommends using methods to ensure data accuracy and integrity such as digital signatures and encryption or blockchain, as well as implementing automation in data collection, analysis, and reporting to lower labor expenses and boost operational efficiency.

Another way to reduce traceability program data hurdles is to engage in precompetitive collaboration with industry peers, regulatory agencies, and tech suppliers to encourage the exchange of best practices, tools, and innovations. “Such cooperative efforts are key to forging stronger, more cost-effective traceability solutions that address industry-wide challenges,” Perry says.

Process Challenges

Deloitte has identified two primary process challenges related to FSMA 204: lot-level traceability and labeling, Bruun-Jensen notes. Process change has some “pretty significant implications,” he says. “Under this rule, you must figure out, how am I going to create the lot code and how am I going to communicate that lot code? Today, for example, most suppliers, wholesalers, and retailers that receive products use a number plate on the pallet. The wholesaler or retailer scans it upon receipt. You know approximately everything that’s on that pallet, but the problem is you either don’t know the lot codes, the pallet contains the same product but with two different lot codes, or the pallet contains some items on the FTL and some that are not.”

Transitioning to a system in which both the food company and the wholesaler/retailer can scan and track products and cases with lot codes and know what lot codes associated with FTL products have been shipped or received on what date and in what quantity will have a big impact on traditional processes. “Now, it’s completely technically possible, but we don’t do it today,” he says. “We’ve got to be able to tell the person who stands at the receiving dock that this is a product they need to scan because it’s an FTL product, while this other one they don’t have to bother about. So, that process changed, and that’s just one example. There are ways of working that we’re now going to need to change, and it’s quite a big change from how we do it today.”

Perry agrees, noting that integrating lot-level traceability requires modifications in supply chain processes to incorporate essential data, whether through GS1-128 barcodes, 2-D QR codes, or radio frequency identification (RFID) technology. This data must accompany the product’s physical movement throughout the supply chain. The challenge also extends across the supply chain, she notes.

“One of the issues we encounter is cost-effective first mile data capture, such as getting harvesters to tag each fish correctly and integrating traceability lot codes (comprising global trade item number [GTIN] and lot code) throughout the entire supply chain,” Perry says. “This necessitates examining and altering current processes during product transformation to allow for in-process labeling.”

She adds that such a method would capture KDEs, including the GTIN, production date, lot/batch number, and serialization. The question then becomes what it would take to implement these changes effectively and the cost associated with ensuring every link in the supply chain can adopt these necessary practices for end-to-end traceability.

Stakeholder Challenges

Blake Harris, technical director, Global Food Traceability Center (GFTC) at the Institute of Food Technologists (IFT), notes that there is a need for broad stakeholder engagement to create the necessary data standards and move toward interoperability and usability of data. He says that the IFT GFTC has found that of the challenges inherent in creating a workable traceability system, one key to success for companies of all sizes is to institute traceability culture and training internally, and externally, to collaborate on issues and share knowledge with all supply chain partners.

“First, get support from leadership. It’s crucial that leadership understands the implications of noncompliance with this rule and the reality of the work that needs to get done to comply with this rule. And that takes some investment, not only in funds but in creating a traceability culture and training program within the organization,” Harris says. “Second, work with your suppliers and customers and get engaged with your community and commodity groups to talk about data standards, technologies, and training approaches.”

“I agree with the IFT’s GFTC that establishing a culture of traceability and training presents an opportunity in developing traceability programs, particularly for small- and medium-sized enterprises,” adds Perry. “The challenges stem from limited resources and [the need for] a shift in mindset from the traditional ‘one-up, one-back’ traceability approach. [However], this transformation is essential for ensuring food safety, and compliance with regulatory mandates demands both time and strategic effort.”

Among the ways to overcome the stakeholder hurdles is to institute tailored training initiatives and leverage external resources, she advises.  Creating training programs that are specifically designed to meet the diverse needs and proficiency levels within the company using a combination of practical workshops, digital courses, and continuous learning about traceability can help companies significantly boost both understanding and implementation throughout the organization, Perry explains. On the practical side, using knowledge gained from external resources emphasizes the importance of conducting pilot programs across the supply chain.

One Step at a Time

While it can be overwhelming to think about tackling all these challenges at once, Coca-Cola’s Richardson suggests that food companies who are working toward designing, building, or transforming traceability systems should think locally, then globally.

“My best advice is to know your own processes and know your supply chain inside and out,” he advises. “When you know your own processes, you have better control of food safety and quality systems, production, and operations so you can trace issues internally. When you really understand how your raw materials or ingredients are moving through production, processing, and distribution systems, you can better build resilience and agility into your supply chain and ensure that your ability to trace product is solid.”ft