Traceability = Profitability for Companies in the Food Industry

Companies in the food industry have three primary objectives for purchasing and implementing a traceability solution: to reduce the cost of precision, better supply management with information, and to ensure food safety and quality control (QC). Notice that compliance is not listed here although it is a component of traceability. This article is not de-emphasizing the important of compliance. Rather it is emphasizing that an important attribute of a successful traceability solution in the food industry is the ability to increase profit margins.

1. Traceability software reduces the cost of precision

Ever since 1974 when the first ever bar coded product, a 10-pack of Wrigley’s Juicyfruit gum, was scanned at the checkout counter, bar codes have become ubiquitous. Almost every product available has packaging with printed bar codes. This is especially true in the food industry where the majority of packaged goods display a bar code. Additionally, fresh foods and produce such as lettuce, apples, oranges and even meat are labeled with barcodes. Bar codes speed up the checkout process at the grocery store and improve inventory management. When integrated into systems that code, track, and manage wholesale and retail transactions, companies are able to monitor supply flow, capture customer buying patterns and connect customers to food sources.

New technologies are spurring the development of even more precise systems. With the right traceability software, bar codes can be attached to individual items. An apple, a box, and a pallet could all be linked by the same bar code to a single lot. Similarly a package of meat could be linked to a packing house. Other bar code application identifiers and numbers could be used as well, including price, weight, sell date and more. Having an electronic lot number for products facilitates trace-back in the case of a recall. Moreover, customers who purchase specific foods from recalled lots can be accurately and quickly identified using data from grocery club cards. Thus, allocated overhead costs of supply chain management and QC are faster and easier to manage.

2. Traceability improves supply management

In year 2000 alone, U.S. companies spent a total of $1.6 trillion on supply management initiatives. In an industry where margins are thin, reducing these costs often marks the difference between successful and failed firms. In the food industry, supply management is an increasingly important area of competition.

Collecting information about products, production, delivery, point of sale is a primary element in supply management strategy. Essentially, the meta-data, or information, surrounding and following a product, from start to finish, is the foundation of supply management. A traceability system is instrumental in achieving efficiency in the production, assembly, warehousing, and distribution of products.

3. Food Safety and QC

Food traceability software is essential for food safety and quality control (QC). This is because traceability software allows businesses to isolate the source of the problem. The more precise the tracing system, the faster a business can isolate and resolve food quality issues. This is one of the primary incentives for businesses to invest in traceability software. The business can avoid potential bad publicity, litigation, and expensive recalls by minimizing the production of unsafe food.

Traceability software is a pivotal tool in lowering the cost of distribution, reducing the number and extensibility of recalls, expanding sales and reducing the depreciation of fresh food inventory. In every case, the benefit of traceability software is clear: larger net revenues.


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