Our debut virtual user conference, TGCon Live 2020, featured a keynote presentation by TraceGains CEO Gary Nowacki, with unprecedented participation. Nearly 1,300 business leaders, industry and regulatory experts, partners, and professionals from the food, supplements, and CPG industries took part online.
Attendees awarded Gary’s keynote, “Things Have Changed: Major Announcement,” the highest-rated session of the three-day conference. As a result, we’re offering Gary’s presentation here, edited for clarity and length.
Customer Growth Surges
We’ve had many new customers come on board over the last year: large companies, small companies, innovative challengers just ramping up, and dietary supplement companies. We’ve also expanded our reach in retail and other areas. This also expands TraceGains Network, which makes things easier for customers and suppliers.
We’ve also enjoyed continued success among the largest food and beverage companies, with more than a third of the Top 100 companies now using TraceGains. If you’re small or medium-sized, this is another vote of confidence for the whole supply chain supply.
Many of you are manufacturers who’ve now made life easier for your suppliers, so they don’t have to do a lot of redundant work. You’ve pointed out that it would be great for your customers – retailers – to take advantage of TraceGains to make your lives easier because right now, there are many different portals you have to use. So, over the last year, we’ve continued to add retail companies to TraceGains, including one of the five largest retailers in the world.
One of the things we’re finding in retail is that it’s not just about supplier management and collecting supplier documents. But what appeals to retailers is our relatively new Specification Management product, because retailers with their own store brands have their own critical needs for managing those specifications.
“We chose TraceGains for our Specification Management solution to streamline how we author and collaborate with suppliers and specifications,” one quality assurance director told us. “In our legacy system, it took an entire day to set up a single specification. Now, we don’t have to start from scratch every time.”
Product Development Trends
I host a podcast called “CtoC,” which stands for “Conception to Consumption.” It covers the whole realm of product innovation, from ideation to getting it out to consumers and customers, for their consumption. We’ve had great guests on this podcast, and we’ve seen patterns emerge over time. One pattern we’ve noticed is how time-consuming it is to bring a new product to market.
For example, at WellPet, Greg Kean talks about how there are so many different opportunities they have, and they have to make tough choices. And when they make these choices, it can take a long time to bring a new product to market because of all the different pieces of the puzzle involved.
Barry Nalebuff, who’s the co-founder of Honest Tea, wrote a book about their story. He talks about the challenges of bringing new products to market and working with co-packers and the challenges that brought.
Nick Landry from Southeastern Mills discusses about how, in some cases, they’ve had to make 100 revisions to a formula before getting a new product into the hands of customers. You can imagine how that slows things down.
When we ask these people, across all these different businesses, what’s the range? How long does it take? They told us it can take six months to get a new product to market on the low end. But it can also take more than a year or even 15 to 18 months. There are outliers. Sometimes, if it’s just a line extension, it can go faster than six months. But six to 12, or six to 18 months, seems to be the norm.
Why does it take so long?
When you look at everything, from ideation, maybe you’ve built samples on the bench or in the test kitchen, and you’ve got an idea for a killer product, but now, you’ve got all these tasks.
There are four significant tasks, starting with the formula iteration and each of these subtasks.
Formula iteration: First, I have to find and source new ingredients and suppliers. I have to vet them to make sure they meet my quality standards, among other things. Then I’ve got to enter a lot of data into the system. I’ve got to do regulatory and safety checks early because I don’t want to spend all this time and money developing a product and find out later that it’s not right for specific markets. And then I’ve got to look at my label and packaging claims, everything from organic to gluten-free. Then I have to iterate and calculate a roll-up of all the different constituent parts of this formula, and then I can compare various iterations side-by-side.
Finalize component specifications: The next area we move to is finalizing the component specs. That starts with collecting more data because I’ve got to get all this information from suppliers or internally on technical specifications. Then I have to worry about distributing and publishing this and getting the suppliers to collaborate to make sure they can agree to the specifications. I have to make sure I approve suppliers. There are more regulatory checks, that, in turn, will authorize activation of the specifications.
Finalize the product: We start with approving the recipe. It could take a lot of sign-offs from many different departments, such as procurements, marketing, finance, and, obviously, quality and regulatory. This can be a place where things get bogged down. Then I have to enter more data. Maybe I wanted to do a final regulatory check. I have to finalize my finished goods. And then, finally, I approve this new product for production.
Production: I begin production and lot shipments, and there’s more data to record. And, potentially, because it’s a new product, I want to review the COAs coming in from suppliers against my specifications. Maybe I want to do testing results, especially in the early days of launching this new product. I’ve got to update whatever system I use on my plant floor, such as an ERP or a batch production system. Then, at least early on, I want to do continuous production checks against my specifications to ensure the safety and quality of this product are consistent. That’s probably going to result in some corrective actions, so I might have to deal with CARs. I might also want to do audits on this line.
When you look at this, you start to understand why it takes so long.
We’re the first company to approach this holistically and plug it into TraceGains Network. We’ve been working for a decade now, building our solutions piece by piece so we can holistically solve this problem and compress lead times from the six-to-18-month range, and I’m going to walk you through what we do, through each piece of this process.
Many of you are already using Market Hub, which comes with Supplier Management, so you can find the items and ingredients you need for things you haven’t had to source in the past.
Then, we get into the qualification of the suppliers. Supplier Management brings in all the documents and the standard online forms, and automatically applies algorithms to risk score the suppliers, and then track internal sign-offs and approvals, so your team can instantly see ingredients not yet approved.
Standard online forms come into play once it’s time to start recording the data. The standard online forms automatically populate your database and each field is automatically plucked off those forms and put into your database.
Next we get into the regulatory checks, where Smart Alerts can help because it’s a global regulatory system that lets you look at all the different issues.
Then we can build label claims, and with TraceGains, you can start to build a recipe. Let’s say we’re making a roasted garlic tomato sauce that includes several different ingredients, such as tomato puree, onion, etc., and TraceGains will automatically do the math and calculations on how these things work. Do we have all the data and documents for a kosher claim, for example, or a non-GMO claim? The recipe is now in TraceGains, and we’re automatically checking these things to make sure the label claims are met.
We then get into calculations, comparisons, and revisions. Now I can have my recipes and formulas in TraceGains. We know the quantities and things like overages and lost percentages on each ingredient as we manufacture this product. I can automatically calculate the nutrition issues, so I understand how many calories or how much fat or sodium is in each ingredient. And I have that ingredient as a mathematical expression, the percentage of my recipe, so I can automatically extrapolate out, calculate, and roll up all the nutritional values.
As I’m going through all my different iterations, I can make side-by-side comparisons. So now, I can make the calculations and the comparisons and enable the revisions quickly.
Finalize Component Specifications
The second major lift is finalizing these component specifications. That starts, again, with collecting data. I’ve got the data off the standard online forms. It’s in my system. Now it’s up to me to just pluck it off and decide what belongs on the master specification.
Now, I’ve got to distribute and publish, so I’ve got a checklist and a workflow for just the people who need to see different specifications and who just want to see other sections of those specifications. Maybe somebody in receiving just wants to see pallet information, for example.
Then I get into supplier collaboration, and there’s a dashboard where they can see these facts. They have permission to markup individual sections. They can make the edits and then submit it, along with any comments on any issues.
Now, I’ve got to approve the supplier so I can look at the specification and get in sync with them and all my internal people because I have all of the data on screens that I can circulate to the right people.
Then I do regulatory checks. Here’s the advantage of having one holistic, integrated system. I’ve got all of my different ingredients. I’ve got all of my various documents. I can confirm I have all the necessary forms to support my label claims. I’m bringing it all together instead of having these documents sitting in a shared drive someplace.
I can then move on to the internal approval workflow to get sent out just to the right people in each department. If things get behind schedule, I can track who’s approved it, who’s signed off, and who’s still bogged down.
Finalizing the Product
Let’s start that off with the recipe approval. Now, I’ve got a workflow for that, so each department or department head, or each person who needs to get involved from quality, procurement, R&D, all these different departments, can sign off on it.
Then, we get into recording more data. Now, we’re producing a superior finished specification, where all the data has come together in TraceGains, I can load photographs. I’ve got one integrated database I can leverage through this process. And in terms of the master specification, I can automatically bring this data for each component ingredient, and it all rolls together.
Now, I do my regulatory checks and, for example, maybe I’m going to take this product – this roasted garlic tomato sauce – and I’m going to not just sell in the United States, but maybe in Europe. Then I need to consider any additional allergens that need to be checked before it gets to the European consumer.
And now, I can get into finalizing the finished goods specs, and sharing that internally, presented in an attractive PDF so it can be locked down and distributed in an accessible format.
Finally, we want to decide where we’re going to manufacture this. In this case, we’ve got three of our facilities, and we might also have co-manufacturers, so I can decide exactly where the specifications of the finished goods get distributed.
Now, we can begin production, and we get into the lot shipments. So here, again, if you’ve already got Supplier Compliance, for example, you’ve already set up all these attributes, and you’ve already set up all these business rules. You can leverage them as part of the holistic launch of this new product. You can automatically start reviewing the COAs, where we know what your specifications are. We know what you need to monitor, and when those lots come in from the suppliers, the system will automatically flag any non-compliances on a dashboard.
Then, you might want to provide test results, either internally or through a third-party lab, and you’ve got a place to capture that, again, applying the business rules and attributes you’ve already loaded into the system.
Then, I’ve got to update my ERP or batch production system, so I’ve got this complete recipe with the finished good specifications – all the components, all the specifications, all of the calculations, all of this massive amount of data in the system. I can automatically push that through an API, out to my ERP system, whatever it is.
We also might have a corporate mandate to centrally warehouse all our product lifecycle management (PLM) data into an application. We can push the recipe, and all this detail into that system, so you have one version of the truth, one system of record. But what we handle is all of this iterative front-end work that these traditional PLM systems are not very good at. They’re not plugged into a network, and they don’t collect data, and they make you feed all that data manually.
Lastly, we can push it out to other plant systems, whatever you’re using on the plant floor, other than an ERP. It could be some sort of batch control system. You might be using Quality Management. That has been set up by you, in many cases, and you can leverage the data you’ve put in there, all of your food safety plans.
Corrective actions that come up can automatically be generated, followed up, and logged permanently. Hence, you have a history of ongoing issues, and you can do things like root cause analysis and adjustment.
Finally, when it comes to audits, if you have multiple internal facilities, you can audit this plant or this line for this new product. That’s how we can save you a lot of time and compress new product development.
What About Change Management?
Think about this fancy term, “digital thread.” And I’ll show you how this fancy term comes into play.
A super simple example here: We’re making three finished goods products. A couple of lasagnas and a pepperoni pizza, and they all use some different ingredients, but also some common ones. So, they all use tomato sauce, which has its sub-component ingredients.
All of a sudden, we want to change suppliers. Maybe even the country we’re buying garlic from. Maybe we decided to reduce costs, speed things up, or improve the flavor by replacing crushed garlic with garlic puree or powdered garlic.
Now I’ve got to deal with change management because this affects multiple sub-recipes and multiple finished goods recipes. What are all the things I have to run around and administer as part of this change management? Well, potentially, I’ve got to go back to the drawing board and search for new suppliers and new items and put them through the vetting and approval process. Potentially, my specs change, so I’ve got to review that, and that’s a multiple-step review across multiple departments. I’ve got to look at the regulatory impact of actually swapping one ingredient out with a new one. It also could affect my label claims. It could affect my nutrition facts panel. Then, I’ve got to do a cost analysis, and I’ve got to go through all the internal and external workflows and approvals.
Having a digital thread, one system that keeps track of change, and can manage all the different areas we’ve outlined here, can be a huge timesaver and ensure nothing falls through the cracks as part of your ongoing change management.
Formula Management: 10 Years in the Making
When we look at this whole process, from the initial concept to consumption, there are a lot of different things that have to happen and various departments that are involved.
Over the last decade, we’ve built these solutions, starting 10 years ago, launching our Supplier Compliance lot-by-lot management product. We moved into Supplier Management to vet new suppliers, new ingredients, and collect all these documents.
Then we added Quality Management to monitor things on your plant floor. We developed Customer Management to give suppliers a dashboard to manage their TraceGains customers and to get all this information uploaded as efficiently as possible.
Then, as more and more suppliers joined, and they uploaded more of their items, ingredients, and catalogs, we launched Market Hub. Now, the R&D, procurement, and new product development teams have great sourcing tools at their fingertips.
Then we launched Audit Management to audit both internal and supplier facilities.
And then, at TGCon 2019, we announced Specification Management for both the raw material and finished goods levels. We’ve seen rapid adoption of this. Many of you have already purchased and are operational with Specification Management, so we know this addresses a critical pain point.
Finally, we rolled out Smart Alerts, where, on one dashboard, you can see all the problems and warnings and regulations you have to deal with.
That brings us to that one missing piece: Formula Management. It plugs into all these other products and allows you to build recipes from scratch, do all these mathematical calculations, make your label claims, bring recipes and sub-recipes for intermediate items – like tomato sauce – together, and connects to TraceGains Network. Now, we have an integrated, holistic solution for all of you who do new product development to get new products to market faster.
Now, with network product development, we facilitate unified teamwork across all your internal departments and your supply chain partners.
Formula Management allows you to quickly design the recipe, instead of doing that on paper or in Excel. It enables you to refine the recipe and have all this data centralized, stay on top of things, and share with all your stakeholders. Then it allows you to get it out to production and to manage ongoing change.
So many of you have to juggle all this today with Microsoft Office. You’re using spreadsheets, shared drives, you’ve got data all over the place; you’re using Microsoft Outlook to communicate internally. E-mails get lost. Priorities shift, suppliers get e-mails, and can take a while to respond. Now, we’ve got an integrated solution and it’s all plugged into a network, that’s why we call this, not new product development, but network product development.
TGCon Live 2020 is Available On-Demand
Don’t worry if you couldn’t join us for TGCon Live this year or if you missed a key session. The entire conference available on-demand here.