The ability to more efficiently manage the storage and retrieval of information is morphing from competitive edge to a business requirement. Whether it's the drama of December's BSE tracking and tracing crisis or label mix up requiring a product recall, food manufacturers are under the gun to access and apply the data they have been generating.
Compliance with the Bioterrorism Act of 2002 is the most pressing example of the needs of this information age. The one-up, one-down traceability requirements of the act's Section 306 puts the onus on process managers to quickly account for the raw materials they receive, the processes applied to them and the finished goods' next destination. Records of activities within the four walls of the plant extend to the maintenance of the equipment itself. "Most manufacturers have these records," allows John Blanchard, an analyst with ARC Advisory Group. "The issue is whether or not they have them in a form that is easily retrievable and in the form the FDA wants."
Electronic records and automation software are never mentioned explicitly in the act, but the implications are clear: unless food companies have captured the essential aspects of their business in an easily managed and integrated system, they will be hard pressed to comply with the FDA's mandate to produce traceability documentation within 4 hours during normal business hours (8 hours weekends and evenings). "Most companies can find those records, but it might take them two weeks," suggests Blanchard. That won't pass muster when Section 306 enforcement begins, and for companies with 500 or more employees, enforcement could begin this summer. By mid-2005, all manufacturers will face dire consequences if they can't satisfy the letter and spirit of the law.
"The thoroughness of the tracking and tracing system directly impacts how much product must be recalled," Blanchard says. "The poorer the records, the broader the recall." For example, ConAgra might have been able to limit the 2002 recall of 18.6 million pounds of beef suspected of possible E. coli contamination to 354,000 pounds, but the lack of detail in its data forced a much broader recall. The damage was not simply financial: brand image also was negatively impacted, and ConAgra ultimately exited the beef-slaughter business. The case illustrates why systems integration and data management may be more important than new product development in today's environment.
Regulators aren't the only ones demanding more sophisticated data management. Pressure also is coming from customers, and their expectations can be more stringent. Supply chain management impacts day to day operations and is not isolated to emergency situations. Manufacturers are scrambling to ensure that plant-floor systems are integrated with company-wide automation packages, including MES and ERP systems. "The more stringent pressures are coming from processors' own customers," believes Scot McLeod, a vice president with Ross Systems Inc.
The rush to comply with Wal-Mart's insistence on RFID tags on pallets and cases is a case in point. The retailer is inching away from its original implementation goals, giving manufacturers some breathing room. In the meantime, other customers such as Albertson's, Target and the U.S. Department of Defense have endorsed RFID, and technology heavyweights IBM, Microsoft, Oracle and Sun Microsystems are offering systems to gather and store RFID data. Rather than six-figure investments to code and tag shipments to Wal-Mart, food manufacturers are calculating the eight-figure investments necessary for software and services to make the technology useful for their own tracking and tracing objectives.
Age of integrationIn the not-too-distant past, the software packages presented in Food Engineering's Manufacturing Software Guide were viewed as serving distinct constituencies. Batch controls, HMI and predictive/adaptive controls were the domain of plant operations professionals, enterprise asset control and supply chain/logistics software served management's needs, and laboratory information management systems were of interest only to R&D people. The new paradigm is more holistic because managers have come to appreciate the upside from upgrades in another operational area on their sphere of influence.
Enterprise resource planning (ERP) illustrates the change. When Food Engineering presented its first plant automation conference four years ago, ERP was a borderline curse word; food engineers almost spat when they uttered the initials SAP. ERP was the great automation-budget sucking sound of the Y2K era, and little or no benefit was seen for manufacturing operations.
Those days are past, assures Ross's McLeod, at least for some processors. "If a company doesn't recognize it needs to do more in terms of system automation, it's almost like having a religious discussion with them: they view software expenditures as a cost that doesn't add value," he says. "Almost every one of our customers' initial need was traceability. When they realize ERP also provides operational improvements that increase profits and protect the brand and improve bottom-line results, automation becomes an easy sell."
He cites the example of Heartland Pork. The hog breeder initially deployed ERP to address lot-tracing needs, then realized improved throughput because it could identify which hogs reached market weight faster than the norm. That led to adjustments in procedures for the rest of the stock. "Trying to manage all the data in Excel is impossible," says McLeod. "The trick is to pull all the data into your system of record," like Ross's iRenaissance ERP package.
Another useful trick is pulling the data out, and more processors are practicing by staging mock recalls and food safety audits. Companies serving the retail market might perform a mock recall once a year, while those serving the foodservice segment execute the drill quarterly. Ingredient companies are under the gun from customers concerned about protecting the reputation of their own brands and might be required to stage a mock recall monthly. In time, the same disciplined approach to tracing and tracking will be imposed on all processing levels, McLeod predicts.
Recalling a recent conversation with a supermarket chain's quality assurance executive, McLeod said, "She had been in many plants that had never done a mock recall before, but that will change. It won't be long before her company refuses to do business with those processors because of the risk to the supermarket's image."
The complexity of tying together multiple databases has made millionaires of many systems integrators. An alternative answer to the tracing and tracking mandate is a relational database. One example is eCompliance, a Web-based solution from Invensys' Wonderware division. The system is undergoing beta testing at a North American dairy, according to Yves Dufor, general manager of the Montreal-based Wonderware Strategic Integration Group.
With food companies required to maintain one or two years worth of detail on every ingredient in every batch of food produced, multi-site processors in particular need to migrate electronic records to this type of database approach, Dufor says. "It is possible to keep these records on paper and in Excel spreadsheets and still meet the act's requirements," he concedes. "The challenge is providing a large amount of specific, detailed information within several hours after an investigation begins."
Lifecycle managementBesides better oversight and security in managing supply chain efficiency, manufacturers want better success rates for the new products they bring to market. A number of product lifecycle management tools to improve the odds are available, and companies are assessing the alternatives.
The U.S. operations of Cadbury Schweppes plc, the world's 27th largest food company, are being reorganized under the Americas Beverages umbrella. The Snapple division already has been folded into Mott's Inc., which includes brands such as Yoo-Hoo and Hawaiian Punch. The Dr Pepper/7Up division soon will follow.
Approximately 50 projects are in Mott's new-product pipeline at any given time, and that number will swell when carbonated beverages are part of the mix, predicts Rosemary Grabowski, vice president of value development for Stamford, Conn.-based Mott's. Seven out of 10 manufacturers have deployed Stage-Gate methodology to help them focus on the projects most likely to succeed, Mott's among them. Unfortunately, Stage-Gate methodology often lacks the flexibility to adapt to specific projects. As a result, Stage-Gate blueprints often get tossed aside.
"Companies put the three-ring Stage-Gate binder on the shelf and disregard it in the due-diligence process because of the pain the process causes in the organization," says Andy Michuda, president and CEO of Sopheon plc. Software that provides structure without rigidity is one way to ensure best practices are applied when deciding when to advance or pull the plug on a project.
For example, Sopheon's Accolade presents the development team with nine key criteria when conducting risk evaluation of a project. A series of considerations regarding strategic fit, market attractiveness and technical feasibility are presented in a process that can distinguish between new product successes and failures with 84 percent accuracy, Michuda claims.
Mott's hasn't applied the forecasting module of Accolade, but the portfolio management component has been a useful tool, Grabowski reports. "It's enabled us to make better resource allocation decisions on projects and has improved our time-to-market by 13-14 percent in the last year," she says. "The better we became at applying this database tool, the more obvious the shortcomings of cobbling together a Stage-Gate methodology using Microsoft Suite tools became."
Grabowski's soft-drink counterparts are more familiar with Optiva, a similar PLM program from Formation Inc. Whether the Americas Beverages unit opts to integrate Accolade and Optiva or choose one over the other remains to be seen, but each application has its own particular strengths.
In the case of Optiva, ingredient management is the focus, not surprising since Formation's founders were chemists. "We are the R&D tool for many food companies, and managing the label is the current crux of the problem for many of them," according to Formation's Rory Granros. "Integrated R&D and Stage-Gate systems work best for some firms' product development efforts, or the systems can coexist separately."
After a new product is out of the gate, its formulation does not necessarily remain static, Granros points out. Reconciling those changes with recipe management systems and costing programs at the ERP level needs to occur as the food chemists tweak the formula, he says, "not at the end of the week or the end of the month." Automating that process is where Optiva earns its stripes.
Product formulation is a far cry from a mad-cow recall, but the tracking and tracing aspects are the same. Storage and retrieval of data are front and center in today's food industry, and software investments will reflect the need for integrated systems to extract it quickly and efficiently.