By Eric Kroll, principal of Baker Tilly’s Food, Beverage, and Agribusiness practice.
Important information:
- The Food Safety Modernization Act (FSMA) has greatly increased operational requirements in the food industry, requiring companies to track products throughout the supply chain.
- Advanced technologies such as AI, IoT sensors and blockchain are being used to improve food processing, improve safety and supply chain efficiency.
- Although compliance requires investment, it helps both producers (through improved performance and risk management) and consumers (through improved food safety).
Each year one in six Americans (48 million people) get sick from foodborne illness, according to US Centers for Disease Control. In 2023, the The US Food and Drug Administration (FDA) has reported 232 recallswith listeria and salmonella infections among the biggest offenders. Fortunately, the recent emphasis on compliance and technology has made it easier to identify and recall unsafe products, facilitating companies’ ability to respond to safety incidents while strengthening consumer confidence.
FDA defines traceability as the ability to track the movement of the food product and its ingredients through all steps of the supply chain. This includes documenting and coordinating the chain of production, processing and distribution of food products and ingredients. Trace back to the opposite side of the supply chain, starting on the grocery store shelf and working backwards to find the ingredients at their original source of production. Forward traceability begins where ingredients are first grown or produced, working its way through the supply chain until the final product reaches retailers for purchase by consumers.
Impact of Modern Food Safety Law
Traceability has taken on a more prominent role in manufacturing than ever Food Safety and Modern Practices Act (FSMA). One of the most important laws that influence and change safety and transparency, FSMA, was passed in December 2010 and signed into law on January 4, 2011. But it took another four years for the FDA finalize what the FSMA rules will look like in effect. . This act provides FDA with new and updated regulations and powers to protect consumers and promote public health and works to 75% of the US food supply.
Section 204 of FSMA includes a Food Traceability Listwhere the FDA requires companies to keep additional records on selected foods. The new requirements identified in the final rule will allow for the rapid identification and rapid removal of potentially contaminated food from the market, causing less food-borne illness and/or death.
Perhaps the biggest impact on supply chains is the need for traceability related to supplier verification. Food and beverage companies must have product tracking systems at every stage of the supply chain, from raw products to finished products. This includes documentation of the source material, production method and distribution channel. FSMA requires companies to have preventive controls, including the development of risk-based risk assessment plans and import controls to ensure that importers meet the standards of US security. All of these measures have increased costs in the food and beverage industry, as compliance with these standards requires investment in new technologies and training.
AI, machine learning, Internet of Things, and blockchain
As traceability requirements have grown, so have the technologies used to comply with regulations. AI and machine learning (ML) algorithms can now be used to analyze large amounts of data collected from various supply points. This technology can help predict potential risks and disruptions before they occur and suggest preventative measures, allowing companies to effectively manage food safety risks. AI and ML can also improve demand forecasting, ensuring that traceable stock is available where it is needed while optimizing the flow of goods.
Another recent development in tracking technology is the use of Internet of Things (IoT) sensors to monitor and record environmental conditions such as temperature, humidity, and light exposure. throughout the supply chain. These “smart sensors” provide real-time data that can be accessed remotely, ensuring that perishable goods are stored and transported under optimal conditions, reducing wastage and waste, while maintain product quality.
Blockchain has also been increasingly adopted to improve transparency and efficiency in the food supply. Blockchain technology creates a digital ledger that records every activity and movement of food products through the supply chain. In addition to keeping an immutable record, blockchain provides real-time traceability from farm to fork, allowing companies to track products at every stage of the process, and, if necessary , to speed up the memory process.
The cost of non-compliance
If companies violate FSMA, they receive a warning letter and have 15 days to comply, and the FDA can re-inspect the plants to ensure compliance. Violation may be considered a felony, and the FDA may issue a food recall. In extreme cases, the FDA may conduct an audit, arrest the responsible parties, and suspend the facility’s registration, leading to temporary or permanent closure. On the bright side, we have seen an increase in consultants specializing in this area of compliance providing solutions to complex accounting regulations.
Win-win: how traceability benefits producers and consumers
Although strict record keeping may take time and additional resources, compliance regulations provide many benefits to producers. The Food Traceability Final Rule provides a national compliance plan, and FDA even provides downloadable, electronic, printable spreadsheets. template.
A strong tracking system helps manufacturers improve their supply chain operations because it allows companies to track the movement of ingredients and products through all stages of production, including where the ingredients are sourced. This, in turn, helps manufacturers identify and manage risk associated with food products and can help them lower the impact of recalls and liability costs. Companies can also expect to see an increase in the trust of their customers as they implement the compliance procedures required by law.
Most importantly, the latest process benefits consumers because new technology quickly identifies contaminated food, removes it from distribution, and isolates contamination. These improvements are very important from a public safety perspective; we can expect that traceability and technology will greatly help to reduce the number of people affected by foodborne diseases every year.
Eric Kroll is a principal with Baker Tilly and the leader of the company’s Food, Beverage, and Agribusiness operations. He has over 20 years of experience serving public and private companies across the food and beverage supply chain and provides assurance and consulting services to clients at various levels of operations and finances.
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