The complexity of supply chains (e.g. produced and processed in LATAM and consumed in the US), aggravated by varying local regulations and guidelines, complicates the task of ensuring food safety and requires significant capital investments. While traditionally, food safety has been a metric for quality organizations, it is fast proving to be a key competitive differentiator in the market as well. With changing regulatory regimes and increasing consumer awareness (e.g. GM labeling and country of origin labeling), tracking the journey of food’s raw materials and ingredients along the supply chain has become an important business prerequisite. The challenge organizations face is to cross-leverage the investments in food safety to other operational processes of their business. This thought paper focuses on the collaborative aspects of food safety initiatives that can be leveraged using Product Lifecycle Management (PLM) capabilities
PLM Metrics and Food Safety
Food companies face continuous pressure from their stakeholder ecosystem. Consumers demand a larger range of products at similar or lesser costs. Retailers are continually asking for more at a lesser price and better margins. Suppliers demand higher demand visibility without guaranteeing price consistency. Additionally, the regulatory environment is becoming stringent by the day due to health and environmental concerns globally. The cumulative impact of the stakeholder ecosystem demands that food manufacturing companies are agile and proactive to changes in their supply chain, which can impact their Cost of Goods Sold (COGS). Business metrics like least cost of formulation and maximizing yields around tight ingredient ecosystem continue to drive the business focus of food manufacturers as they look to drive higher margins from the current supply chain.
The ability of a manufacturer to manage operational constraints, yet continuously deliver safe food at optimal costs, becomes a competitive edge. The inbuilt capability of a robust PLM system to manage food safety aspects through a combination of process and technology interventions provides the ideal way to drive further operational efficiencies.
The key capabilities of a PLM system that makes food safety management an integrated outcome are:
The old adage of the more the merrier cannot be more true than in this scenario. Information traceability to raw material origin, quality, cost and composition guides the extent of end product safety and profitability. It also means that one has the flexibility to change the product composition to adhere to food nutrition requirements while ensuring that the product remains within the price threshold to drive down formulation cost.
It is humanly impossible to collect and analyze data that goes as an input to determine whether the food manufactured is safe for consumption and whether it is also being manufactured cost-effectively. Automation of data collection from processes and standard critical hazard points provides executives with the right set of information to take timely decisions across the supply chain.
Be it product recalls or batch failures, food manufacturers need to minimize the financial losses that can be caused due to such incidents. The collaborative aspects of PLM (workflow based approval cycles) are key to minimize losses in the event of recalls and to respond quickly with corrective steps. Collaboration ensures that the time to recall is minimized and manufacturers have documented mechanisms to deal with such scenario
Building Common Capabilities – Investing in PLM
As mentioned at the beginning of this paper, food manufacturers often hesitate to invest in technology solutions that can deliver food safety capabilities. Manual means are preferred over a more efficient system driven approach. This is not because food safety is of any less importance to the business, but more so as it is hard to drive a strong internal financial business case for food safety. Experts equate investments in food safety initiatives to investments in life cover—high premium with low returns. This makes it difficult for plant managers to obtain necessary budget approvals from senior management. It is, therefore, important to cross-leverage technology embedded in processes across Food Safety Management and Product Lifecycle Management to reach the desired goals. Product formulations are typically managed within a company’s PLM system. The core recipe (reference data) is constantly managed through closed loop integration between R&D and the product management teams. Any changes in the primary recipe (which results in changes to the BoM) flows into enterprise processes such as sourcing, production, material management, etc. This ensures that the right sets of ingredients are sourced and processed