What’s Keeping Food Companies From Improving Traceability in the Supply Chain?

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Food product traceability continues to be challenge for companies, especially in the event of a food recall. An in-depth, multi-year research project led by Notre Dame Assistant Professor Kaitlin Wowak, who has a Ph.D. in supply chain management, aimed to gain insight on what exactly is hindering food product traceability.

One would assume food companies know where their products are coming from and where they are being distributed, Wowak said. However, the complexities of companies’ supply chains make that process harder than it sounds.

“It’s a lot more complex when you are dealing with really long, interconnected supply chains,” she said.

A new report connected to the project recently published in the Journal of Business Logistics. The paper, “Tracing Bad Products in Supply Chains: The Roles of Temporality, Supply Chain Permeation, and Product Information Ambiguity,” identified the top three things hindering food product traceability. As the title of the report suggest, these three things are:

  1. Temporality: time pressures that strain a firm’s ability to track products. Perishability and problem discovery lag, which is the time it takes a company to actually discover an issue with a food product and how long it takes it to respond, are specific temporality elements impacting traceability.
  2. Supply chain permeation: how the product flows through the supply chain. As a product is distributed through multiple supply chain products, it becomes more challenging to track and recall.
  3. Product information ambiguity: a company’s ability to trace a product is product information ambiguity, or product characteristics that “create vagueness or uncertainty about what to trace.” This happens during product blending when a raw material is used to create a semi-finished or finished food product, when “product comingling” takes place, which is when different products from various locations are packaged together, or when production information has changed for some reason, say when the product changes possession or crosses borders.

These are challenges Wowak and others involved in the project heard repeatedly during interviews with food manufacturers, farmers, government agencies, logistics providers, retailers and subject matter experts over the years. Capturing these voices and hearing perspectives from various players in the food industry was “quite the endeavor,” Wowak admitted. However, the research provided a “farm-to-fork” perspective on the issues food companies face when recalling a product and tracing its origins through the supply chain, she said.

Complexities, Costs and the Need for Improvement

The U.S. Department of Agriculture, one government agency that tracks recalls in the United States, reported 150 food recalls took place in 2015 — more than any other year in the past decade. In all, more than 21 million pounds of food were recalled last year for reasons including salmonella contamination, food containing undeclared allergens like peanuts or products having some sort of processing defect.

Recalls can be massive efforts for a food company, and consumer health may be threatened by products involved in these events. Adults, children and even animals are impacted by problematic food products, Wowack said. Recalls are a serious issue for food companies, which makes product traceability critical for the industry.

“The implications are really large and companies need to understand how to do better job of recalling products,” Wowak said.

One way to improve traceability is to dig deeper into your supply chain. Many companies meet the minimum standards, tracing products one step up or one step down in their supply chains, Wowak said. However, if a company were to reach two-tiers down in the supply chain to trace products, for instance, that provides more information on a product, may identify a problem and help a company avoid a recall all together.

If you have that traceability further in the supply chain, you may avoid a product recall,” she said.

Having higher levels of traceability also helps companies avoid the costs associated with a recall. Every step of a recall costs a company money, from diagnosing the problem, to fixing it and then ramping up supply of the product again, the research paper stated. As one food manufacturer said in the report, “Recalls are costly in terms of executing the recall and in terms of lost sales. You also have the physical costs associated with a recall, such as unplanned employee cost, truck costs and everyone needs to stop what they are doing and totally focus on the recall.”

Wowak said another expert she interviewed during her research told her perhaps only half of the products included in a full recall actually need to be withdrawn from the market. However, due to a lack of visibility in the supply chain, the company recalls 50% more products than is often necessary just to be safe. This leads to wasted product and profit.

Food traceability is only expected to become more difficult as supply chains grow more complex and stretch across various borders, the report said. However, as companies understand the specific supply chain characteristics hindering their ability to better trace products, perhaps they can build a better understanding on how exactly they can improve traceability efforts.

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