Managing compliance for ingredients, suppliers, label claims, and so much more can be a bottleneck to accelerating formulation and bringing new products to market quickly.
Supply Chain Disruption
The past year tested an already strained global supply chain. According to researchers at IRI, CPG sales jumped over 10% in 2020 – a stark contrast to the 2-3% average annual growth rate typical in the industry. Being stuck at home longer than expected has consumers buying more, shopping more online, and trying new products more often due to stock shortages.
This prolonged demand spike hit the supply chain as other threats grew, such as:
Extreme weather events: The 2020 Atlantic hurricane season, for example, ranked as the most active on record. While storms ravaged the East Coast, every state from the Great Plains to the West Coast experienced some drought.
Cybercrime: Experts predict cybercrime will cost $6 trillion by the end of 2021. Additionally, Symantec reported that supply chain attacks grew 78% in 2019.
Food fraud: Food fraud is typically defined as an economically motivated adulteration of food products and includes dilution, ingredient substitutions, and mislabeling. Fighting back against fraud is increasingly difficult, whether it’s the high cost of authenticity testing or investing the necessary time to keep up with evolving regulations.
These challenges have caused many R&D teams to miss product development targets and put key projects on hold. While it may seem like outside forces are beyond your team’s control, there are plenty of steps your business can take to protect your supply chain and mitigate disruption.
There are four ways companies can stay ahead of these – and other – supply chain risks:
1 - Digital Transformation
Companies now produce more complex and diverse products, with longer, more globally dispersed supply chains. Because each item or ingredient requires as many as thirty documents, on top of formulas, recipes, and other information, R&D teams need to juggle. It can be hard to keep up. Turning all this documentation into digital records is a win-win proposition that goes well beyond avoiding risk. By digitizing and centralizing your documentation, you can turn your formula management program into a data-powered strategic asset and engine for innovation. When this happens, teams can respond quickly to market, customer, and supply chain shifts while offering more value to each organization in their connected supply chain.
2 - Keep Up with Regulations
Managing regulatory compliance has always been challenging for organizations, particularly those in the food, beverage, and supplements industries. The stakes are higher today as companies balance adherence to strict — often-complex — policies and procedures. Manufacturers and brand owners who take a wait and see approach to allow the regulatory dust to settle put their customers and brands at risk. The best way to ensure teams embrace a culture of food safety is to establish clear internal standards that exceed regulatory requirements, enforce them consistently, and automate what you can. Food safety risks aren’t limited to the production floor – they can occur almost anywhere along the supply chain, from transport to storage. And the only way to monitor these links effectively is to build and maintain a secure and transparent supply chain. A crucial part of this is ensuring only qualified suppliers and ingredients participate in your supply chain, and sufficient vetting and performance management systems are in place.
3 - Detect and Eliminate Fraud
In a webinar about supply chain fraud with TraceGains CEO Gary Nowacki, Dr. Amy Kircher, Senior Advisor of the Food Protection and Defense Institute (FPDI), said, “Perpetrators of food fraud are intelligent adversaries. Some people are always searching the food system for vulnerabilities, gaining access, evading detection and working around mitigation strategies. Unfortunately, bad guys think like bad guys, and they’re watching the system and trying to determine where they can make money.”
Kircher added that companies should remain vigilant for threats within “the food defense threat triangle,” including fraud, sabotage, and terrorism. When fighting fraud, Kircher recommends companies take a closer look at several key factors. They are questions she advises companies should ask:
Are there supply-demand shifts occurring for product components?
Is restricted movement causing changes that increase vulnerability that doesn’t usually exist? Manufacturers should take a close look at logistics – both upstream and downstream as well.
Are component prices fluctuating? Or are there other changes occurring in commodity pricing, and are companies following these changes to determine if counterfeiters have entered the market? Often, these fluctuations indicate a supply chain issue.
Companies should scrutinize primary ingredient sources. Are there smaller workforces? Are production plants or harvesting operations operating below capacity? Can every ingredient be traced from its origin to its destination and vice versa?
4 - Supply Chain Transparency
More now than ever, companies need visibility into the complete history of the ingredients, items, and materials that go into their products. Consumers demand it, and FSMA regulations require it. But many companies still maintain islands of product information spread across divisions and departments, without a unified view of product formulas, specifications, and other crucial product-related information. And when it comes to suppliers and co-manufactures, there’s even more essential information missing. This lack of visibility into the product portfolio leads to higher costs, variable quality standards, and risk. The only way to achieve supply chain transparency is to connect teams and supply chain partners over a shared platform with collaboration capabilities, leaving behind static tools like shared drives, emails, disparate databases, and of course, paper. Every stakeholder has access to detailed information on each material’s origin and status in a transparent supply chain. Transparency underpins consumer trust — a vital element when the safety of supply chains is under scrutiny.
With so many vital operations revolving around them, product formulas are often a company’s most valuable asset. With TraceGains Formula Management, businesses can safeguard this investment by digitizing their formulation program and connecting departments and suppliers over a secure networked platform. With network connectivity, teams have instant access to more than two million supplier-provided documents to accelerate formula and recipe development and increase experimentation opportunities. Rapid digital prototyping with real ingredient and supplier data helps teams achieve ideal product criteria faster.
According to Gary Nowacki, “Having alternate sourcing options will always prove helpful. I doubt any manufacturer or brand owner who broadens options for alternate suppliers is going to regret it. Sooner or later, having options is useful whether there’s a new epidemic, a new trade war, regional conflict, failed harvests, or other issues. I could see many companies permanently rethinking supply chain and sourcing risk and taking appropriate steps to reduce pain going forward.”
And don’t worry about risk. We help there, too. TraceGains automatically highlights risk by supplier, item, ingredient, and geography, identifying your formulation components with the most critical threats in real-time. If you need to replace a supplier, we’ve got you covered with multiple options for most searches. So, you never have to settle. And with instant access to real ingredient and supplier data, you can get back to prototyping to keep your formulation program on track.
Join TraceGains CEO Gary Nowacki and RTI Advisors innovation expert Susan Mayer on January 14, 2021, for a webinar to discuss formulation challenges facing R&D teams and how to solve them. Register now here.