Food being the perishable item, the supply chain management in food retail business is the most vulnerable to risk factors. Let’s explore how technology can help the food retailers in significantly improving their supply chain across different levels
Recent incidents in Europe have once again brought into light, the complex and global nature of the food supply chain. Retailers being at the customer frontline are obviously susceptible to taking a hit on their brand reputation due to oversight at upper echelons of the supply chain.
It will be time till European retailers start betting on horses again. The manner in which horsemeat has trotted into the dinner tables of European households has left governments, retailers and consumers fuming. The predicament here is not that horsemeat is being sold in retail outlets, something which our Indian readers would find it hard to believe. The problem is that other meat products on retail shelves had traces of horsemeat in them. In some cases, it was to the extent of 30 percent. Oh, then it is just a food labelling problem, you may think. They could just change the labels to indicate that instead of 100 percent of any other meat, the product has “x” percentage of horsemeat. Technically yes, but in the context of food safety this incident poses a very serious problem. The original product had been adulterated with a cheaper horsemeat whose source of origin has not been accounted for. There are cases when the horses are injected with substances prohibited for human consumption and if these pose a grave risk if it enters the human food chain. And that is just two of the many problems that European retailers are grappling with today.
The larger context of the issue here is that the food retail supply chain, be it vegetables or meat products, is very vulnerable and susceptible to risk factors beyond the retailer’s visibility. The supply chain often runs four or five levels deep back from the retailers. For countries where these products are not produced, it is possible that the different supply chain levels are accomplished in different countries. The origins of these products are in farms and rearing sites that are fragmented into organised and unorganised segments. From there, the products are handled by multiple intermediates during aggregation, transportation, processing and storage, resulting in a complex web of producers and intermediaries.
The products mostly enter into the retailer’s control at collection centres directly from farmers or product aggregators. Stock from the collection centres can be further aggregated at city processing or distribution
centres. Products also come into the retailer’s inventory at the city processing centres directly from the suppliers. Retailers will have stringent quality standards and product attributes which are enforced at the collection centres or at the supplier locations. This ensures that the retailer is able to fulfill the promise of freshness and quality to its customers. Suppliers, aggregators and producers are also well aware of the product standards that have to be complied with in order to work with a particular retailer.
It is indeed a complex proposition to manage the inflow of a wide variety of food products into the retail supply chain. These products come from a number of sources and suppliers. Considering these factors, maintaining specifications, tracking and traceability of food products is of the highest priorities for a retailer who stocks food products. This could be a manageable scenario for food products which can be retailed with minimum or negligible processing or value addition, such as in the case of fruits and vegetables. For those food products that are processed, ingredients from multiple sources are used. The individual ingredients in processed food would often lose their traceability with each step of processing. Retailers use effective batch and lot control mechanisms to maintain a record of the stock that is being used in the processing.It is highly necessary for retailers to audit their entire food value chain covering activities such as procurement, transportation, storage, processing and sales. Managing returns of food products will also need to be audited, which covers supplier and customer returns, if that is a practice followed by retailers. Processes that are followed for discarding damaged or expired food products should also receive adequate attention during the audit process. Through this audit process, retailers can immediately identify gaps or points of vulnerability within their food supply chain. The audit process will also highlight opportunities for retailers to identify areas of data capture, product labelling and process improvements.
The business case and implementation of technology and information systems in the retail food chain should be looked at from multiple facets. Practicality and feasibility is one of the key elements that should be considered. The extent and level of technology feasibility at the point of origin will always be one of the important factors in emerging countries such as India. This is due to the unorganised entities that exist at the point of origin. Other considerations are the availability of modern supply chain infrastructure
that is employed during storage, handling and transportation. Skill level of the human resources is also a consideration. The methods and investments used to bring about a reliable and accurate traceability within the retail chain will also depend on the availability of integrated solutions tailored for the local market and conditions.
When it comes to the actual implementation of technology, there are a plethora of options at each point of automation
. There are hardware devices to capture information at the points of procurement, transportation, storage, shelving and sale. The tags used to store the information can range from barcodes to RFID tags. Even the barcodes have different standards and usages based on the information that is required to be tagged. The processes driven by these devices and tags need to be woven together by software applications which apply various rules specific to the nature of the product, locations, storage mechanism and various other parameters.
There will also be other applications in the integrated solution that track the movement of the products within the supply chain. These applications will also perform the task of generating alerts when there is a breach of ambience that has been stipulated for the specific food product or storage locations. Extensions to these applications can also be made available to logistics partners and suppliers. In the event of any mishap, contamination or hazard identification, the applications can rapidly provide a product supply chain snapshot which helps take appropriate decisions on product recalls and quarantine.
One of the largest organised initiatives that have launched in the world is the Produce Traceability Initiative
(PTI) which aims at developing standardised industry approach, processes and guidelines related to produce traceability. The methods advocated by PTI and practiced globally use GS1 standards. GS1 standards have various facets that can be leveraged to identify the products and the locations from which the products have originated. It also provides for methods to encode the data at all levels of procurement and processing, thereby arming retailers with processing statuses and location information of all products within the chain.
Technology is a highly reliable enabler for retailers looking at gaining control on their food and beverage value chain. The food processing and logistics segment in India is set to receive a huge boost in terms of investments both from the government and the private sector. This will result in significant improvements at all levels of the food supply chain. It is obvious that information systems will be a key catalyst to the modernisation efforts. Bon appétit!