Traceability could be the recipe for trust
By Ahmed ElAmin
To regain credibility with consumers over food safety, processors need to turn to full traceability throughout the supply chain, according to a study by IBM.
A survey of US and UK consumers by the company revealed eroding consumer confidence in brands, IBM stated.
Product contaminations, recalls and confusion over marketing claims have eroded trust in consumer product (CP) manufacturers, their traditional source of information, IBM stated.
About three out of every five consumers in the US and UK report increased knowledge about the contents of the food they buy - as well as a desire for even more information about product sources and contents, IBM stated.
"To rebuild consumer confidence and re-establish brand relevance, CP companies should encourage transparency by delivering credible information about innovative products," IBM stated. "We believe this is best accomplished through full value traceability."
High-profile recalls of pet food, chocolate, lettuce, spinach, peanut butter, melons, beef, and baby food, along with conflicting reports about the credibility of product health and wellness claims have created confusion and suspicion in today's consumers, IBM stated.
In addition, the use of outsourcing has resulted in more complex supply chains, which increases the problems of being transparent with consumers, IBM stated.
"CP companies have partially responded to these issues by investing in lot tracking processes and systems, which allow them to track batches of products through the supply chain," IBM stated. "However, these systems are usually limited in scope, lacking in precision and deliver sharply reduced visibility as products move downstream in the supply chain. As well, they focus on isolating affected products after a contamination occurs."
Adding to the complicated mix is the emergence of what IBM tags as the "omni consumer", a new generation that is both enlightened and empowered - and has a new set of motivations that influence its purchasing decisions
This "omni consumer" is influenced by factors relating not only to the product, but also to its broader impact on society, such as environmental damage. To guide their purchasing decisions, these consumers leverage trusted sources of information about the product.
In the past such sources traditionally included CP companies, but no longer.
The omni consumer wants products that deliver more, such as functional foods that provide incremental health and wellness benefits, IBM stated. They also care more about the impact of these products on individuals, society and the environment.
The omni consumer is informed, aware and concerned about products, has the power and capability to tune messages in or out, purchases a wider range of products through an ever growing, changing number of channels, and finally, doesn't fit in neat boxes or descriptions.
They have a hunger for information - not just from the labelling on the box -- but through numerous channels and from a variety of sources, including Web sites, blogs and online chat rooms.
Their concerns range from a product's health benefit, to whether the packaging recyclable, and to questions about fair pay for employees.
"This consumer is less concerned with brand name alone - if quality, functionality and responsibility levels are comparable - and is becoming more concerned about the accountability of each segment of the supply chain, including manufacturers -- CP companies -- retailers and suppliers," IBM stated.
The increasing convergence of food and pharmaceuticals, and the explosive
growth of these products, creates a separate information challenge, for companies.
"CP companies should proactively address the informational requirements of these new products, or face the prospect of regulation similar to that of the pharmaceutical industry," IBM warned.
Another complication is the greater use of outsourcing along the logistics chain.
A recent survey of CP companies revealed that 50 per cent had extensively
outsourced transportation - and 44 per cent had extensively outsourced warehousing and distribution centers, IBM stated.
"The burden on these companies to affirm product safety has also increased - as shifts to global sourcing have strained the ability of regulators to monitor and sample the quality and safety of shipments," IBM stated.
For international shipments the complications arise from the CP company's inability to secure containers to protect against theft and guarantee content integrity and product authenticity.
They also have a limited ability to monitor and affect conditions during shipment and storage - or to have knowledge of the contents of individual containers.
Because of multiple hand-offs between suppliers, logistics service providers, contract manufacturers, distributors and the end customer, product authenticity is also brought into question.
Inconsistent, inaccurate and missing shipment documentation can cause delays at ports and borders.
CP companies also have potential tracking and tracing issues that can affect a final product. They often have difficulty locating products and isolating risk in the event of contaminations.
Ineffective supplier management can result in difficulty in identifying the suppliers of raw materials.
At every point such issues can affect food safety, lead to diversions of the shipment and counterfeiting, IBM stated, while noting that foodborne diseases still cause more than 76 million illnesses each year in the US.
"The challenge for CP companies is to move from a defensive posture and discrete solution to an opportunistic posture and an integrated solution," IBM stated.
One way in which CP companies can achieve greater transparency in its supply chain is to follow the example of the US pharmaceutical industry.
Traceability concerns have generated individual, state-led pushes for legislation to track drugs from their source through to the retail outlet.
The semi-automated lot traceability systems in place at many CP companies are unlikely to provide the necessary "chain of custody" documentation if functional foods come under similar regulatory requirements, IBM noted.
Traceability is not just a supply chain or compliance issue - but a marketing issue as well, IBM concludes.
"Consumer product marketing increasingly requires a high degree of trust, especially regarding functionality and responsibility claims," the report stated. "CP companies can substantiate these claims and empower their brands in these large and rapidly growing segments by effectively communicating information about ingredient source, functionality, sustainability and supply chain conditions."
IBM is a provider of supply chain technology, including devices and software related to radio frequency identification.