Track and trace from farm to fork
How Enterprise Resource Planning might save the day in a food recall.
Recalls continue to represent a major challenge across each and every sector in the process manufacturing market—from the food and beverage industry, to pharmaceutical, chemical, and biotechnology.
Recalls are big, bad news, and the costs can be high. A recent PriceWaterhouseCoopers (PwC) report stated that hundreds of large-scale product recalls have occurred, each typically costing between $10 million and $30 million. The PwC report states that "recall management should be a continuous process that goes substantially beyond an annual mock recall traceability test. It should be embedded within each business function, not a one-time exercise carried out when a crisis occurs."
Recalled products typically need to be repaired, replaced, or destroyed. Then there's the cost of identifying, tracking, and executing the recall, as well as handling the damage to brand reputation and regular operations. There is a growing industry trend towards taking action and complying with regulations.
Many manufacturers obtain insurance against possible recall losses, but as PwC urges, it's paramount they put in place more effective processes and systems for product traceability to limit the size and scope of recalls.
The traceability test
Many of the high-profile scandals we read about could have been prevented with a proper solution in place for data capture and quality management. Recall readiness has today become a test of a manufacturer's Enterprise Resource Planning (ERP) system and of its ability to implement an effective traceability chain.
While there are a lot of ERP solutions supposedly geared toward the process manufacturing space, many do not take into consideration the real complexities faced by the industry. It's vital, therefore, to use an ERP system specifically tailored for this space, offering integrated traceability—from the raw material supply chain through to the finished product. Being prepared for a recall is about having a traceability chain that allows a manufacturer to visualize and access data on everything from batch, serial number, and expiry dates, to quality assurance of incoming materials and finished goods. This way, with sufficient data, it's possible to isolate which products, components, subcomponents, or batches are involved in a recall.
ERP systems should be a natural foundation for storing and accessing this breadth of data because their functionality spans the entire value chain across its multiple processes for procurement, manufacturing, quality, and supply chain management. In other words, the ideal ERP system governs the entire journey of your materials—where they came from and what has been done with them.
To data-and beyond
But building an effective traceability chain is also a matter of effective data capture. That's why it's important to utilize partners for more advanced data capture and analysis. Without the support of robust barcode or RFID scanning tools, capturing this volume of data at each level of transaction can be a costly and complex affair.
Equally complicated and costly is the task of accessing or consolidating data from fragmented applications or isolated spreadsheets. That's why, as one consolidated solution, the ERP system should offer integrated quality management, quality assurance, and formula/recipe management—three of the key domains involved in assessing the root cause of a recall. And, as the industry moves towards more proactive tracking and quality measures, the ERP system should provide the data needed for compliance with key process manufacturing regulations.
ERP-A safe pair of hands
There are many compelling arguments for implementing an effective traceability chain—not least the ability to isolate problems before they snowball, protecting your operations and ultimately your brand integrity.
A recent Nielsen survey stated that 42% of North American consumers are willing to pay more for products and services from companies committed to positive social and environmental practices. Consumers want to know where their food came from, how it was produced, and be able to check a product's journey-from farm to fork.
Rapid, efficient traceability also makes a supplier more desirable to OEMs and provides insight into even the smallest changes in product quality and yield, enabling manufacturers to monitor and fine-tune operations.
But implementing traceability needs to be done in an efficient way that feeds data into an integrated suite of applications that consolidates access to information. A broad and deep ERP suite is the optimal framework for holding, accessing, and using traceability information. Coupled with efficient data collection, it's the strongest foundation for operation improvement and making sure that today's issue does not make tomorrow's headlines.
Jakob Björklund is global director for process industries at IFS.
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Annual Salary Survey
Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.
There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.
But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.
Read more: 2015 Salary Survey