The evolution of the consumers’ now more ethical behaviour, represents a challenge for manufacturing companies
During the last years, consumers have become increasingly interested in fair trade. This trend is settling in spite of scepticism from some that the recession and consumer appetites for cost cutting would dampen its appeal. The reason behind this rise is the growing interest amongst consumers in knowing where their food comes from and that it is ethically produced. Research conducted last year by IGD, a UK-based dedicated team of experts, corroborates this. Their survey of 1,000 consumers found that 54% wanted to know about pay and worker conditions for people producing grocery items in poorer countries, 52% wanted to have information about conditions under which producers were operating, and 19% said they believed this information should be made widely available for public scrutiny.
However, as those working in the food and beverage industry understand only too well, what may be desired is not always practical and feasible to achieve. How can manufacturers be sure their raw ingredients are fair trade or ethically and sustainably produced?
The problem of determining the origin of goods
Earlier this year, BBC’s Panorama programme about the palm oil industry highlighted perfectly how difficult a problem major food producers currently face. Palm oil is the cheapest vegetable oil available and a secret ingredient in branded items. Innocuously labelled as “vegetable oil”, it is found within everything from KitKats to Dove soap to sliced white bread. What is potentially contentious about palm oil is the source, and the difficulty for the manufacturer of precisely tracing its origins. The vast majority of palm oil is supplied from Indonesia, where, alongside the many legitimate plantations,there is a growing underground operation focused on expanding production into protected rainforest reserves. Apart from damaging many centuries old primary forest, this activity has contributed to the orangutan becoming critically endangered through loss of habitat. Some 50,000 orangutans have now died because of deforestation due to palm oil. Equally problematic, some plantations have been developed on protected peat soil reserves, which, when disturbed through illegal cultivation, cause the release of thousands of tons of carbon dioxide into the atmosphere, further contributing to the greenhouse effect.
Manufacturers at the coal-face understand the complexities of this issue only too well. They have to source raw ingredients like palm oil in bulk, from intermediaries who blend in-coming shipments from producers worldwide before supplying it onto their customers without a trace left of the source. This practice makes it very difficult to identify exactly where the palm oil came from. Is it from a legal and sustainably managed plantation, or was it grown in a protected forest?
Track and trace solutions help to ensure “ethically sourced” products
Yet technology exists to make this relatively straightforward to achieve, for instance, by integrating a wide range of data capture technologies including voice, image-based, barcodes, RFID, print and apply, plus smart cards. By combining the optimum range of technologies, manufacturers can ensure full product traceability at each stage within the supply chain, improved quality assurance and compliance with industry standards, as well as increased productivity and operational accuracy.
An investment like this would prove highly beneficial as research shows the extent of public appetites for information and the potential this offers for competitive advantage. UK retailers like Sainsbury’s or Marks and Spencer are able to cleverly differentiate their offerings as “ethically sourced” compared to the competition and in doing so, also improve their supply chain performance.
Supply chain partners should work together
In a recent study conducted by Zetes’ UK subsidiary amongst its customers, 89% said the solutions they had implemented significantly improved traceability, accuracy and productivity, amongst other benefits. Specifically, traceability provided information which can be used to improve supply chain processes, decrease costs and improve quality. It also helped to improve inventory management, reducing wastage from poor shelf life management, reducing shrinkage and controlling out of stock situations.;
The key question for customers considering how to address traceability, is deciding what to track, the individual goods or the packaging? And agreement is required amongst supply chain partners over the sharing and storage of information to allow it to be captured and tracked at appropriate level. What is tracked most typically is the movement of pallets when they enter the warehouse and problems occur when goods are broken down into smaller units than pallets. Ultimately, the level of monitoring undertaken depends on the type of goods and the organisation’s risk profile.
Every solution developed needs to form an integrated part of a larger data chain which can be enabled at a future point to show who moved which goods, from which location, when this occurred and where they went. Then, in addition to having an audit trail, going forward, customers will be able to more accurately forecast demand and ensure they minimize out of stock situations, especially when promotions are involved.
“Farm to Fork” traceability also to fight against food fraud
Another growing application for traceability amongst food producers is in the fight against food fraud, such as vodka being diluted with industrial methanol or poultry unfit for human consumption being repackaged and sold to unsuspecting consumers. Although these acts resulted in criminal prosecutions, the vast majority of cases are simply where non-authentic foods are marketed as being the ‘real thing’, which is damaging for other manufacturers within the sector. As the desire amongst consumers to eat authentic speciality foods rises, smaller scale producers and farmers need to take steps to protect both their own brand image and the greater well-being of their industry.
Although a lot of hype still exists about "farm-to-fork" traceability, it is an achievable goal, but first you need to agree shared objectives with key stakeholders, simplify procedures and minimise the steps involved, with the right data captured in the right format and at the right time. Across EMEA, Zetes has helped companies within the food and drink sector improve traceability in their supply chains, for example Premier Foods (bakery), Seachill (fish processing), Azucarera (sugar refinery) and Campofrio (meat processing).