In this episode, Maggie Slowik, Global Industry Director for Manufacturing at IFS, walks us through how food safety and consumer trust are related. We talk about what trends she’s seeing as well as what’s at stake if a manufacturer doesn’t have good end-to-end quality management practices in place. We then spend some time talking about how food safety and traceability can lend themselves as opportunities for competitive differentiation. We dig into the current consumer mindset while also talking about the best practices of several food companies that have married transparency with consumer trust.
We end the episode with a discussion about technology’s role in all of this and how IFS can help processors remain compliant with regulatory requirements while also building that customer trust.
Transcript
Food Processing: This question may seem obvious, but why is food safety so important? And quick follow up to that, what constitutes good practice?
Maggie Slowik: Hi, Erin, and thank you so much for having me back on your podcast today. Can I answer in a very blunt way to you just to set the scene on this topic? Food safety is absolutely critical because it's essentially the license to operate for any food and beverage manufacturer. The industry as we know it is very heavily regulated around the world. And what this means is that food safety is driven by the establishment of well-documented procedures, including who exactly touched each material or critical process. But regardless of size or product, all food producers have a responsibility to manage the safety of their products and the wellbeing of the consumers on top, of course, of meeting the standards of the retailers that they work with. Because at the end of the day, it's about securing the shelf space and retail, right? So as far as regulations are concerned in the US for instance, we know that the FDA's Food Safety and Modernization Act lays down general principles, requirements, and procedures that really underpin decision making in matters of food as well as feed safety.
And interestingly enough, I think that the act, which was signed into law about 10 plus years ago, is transforming the nation's food safety system by shifting the focus from what I would call responding to foodborne illness, to preventing it. And this predictive and preventive approach is really crucial nowadays, and I'll come to that later because the industry is really challenged by a lot of factors at the moment. And of course, I could go on about other regulations as well. In Europe for instance, you have the General Food Law Regulation, which provides an overarching framework for the development of food and feed legislation, both at union as well as national levels. But the point I think about regulation is that they differ based on the region and locality you operate in, and of course, the sub-industry that you're focused on as a manufacturer.
And all of that makes the issue of compliance really complex, especially given how large food manufacturing supply chains tend to be. And on the topic of regulations, you can also seek out certain certifications. There is, for instance, ISO 22000, which is an internationally recognized food safety management standard and quality certification that applies to any organization that participates in food production directly or indirectly. And the other thing to keep in mind is that these regulations are constantly changing. So it's a monumental task for food and beverage manufacturer to stay on top of these regulations, to stay updated, because at the end of the day, it also comes down to customer trust. And I will go onto that in just a little bit. Coming onto the second part of your question, Erin, what constitutes good practice? Well, of course, you need to maintain certain quality standards in the way you handle and process food in your factory as they are dictated by the various regulations and legal frameworks.
But at the end of the day, what matters is that you have that end-to-end traceability and not just within your factory, but also across your entire value chain. So in the case of a foodborne illness outbreak or contamination event, manufacturers must have efficient upstream and downstream tracking capabilities to rapidly find the source, the exact source of the product and where the contamination may have occurred. And this enables faster removal of the effective product from the marketplace and it reduces incidences of foodborne illnesses. That is the aim. But the more ideal scenario is to of course, prevent such contaminations before they even occur, and you will hear me saying this throughout this podcast, it really comes down to trust. And that is a key in a market that is incredibly competitive, where margins are razor thin. And now, look at the situation that we're facing, increased supply chain complexity as well as inflation. And that's just going to get worse.
FP: What new trends are you seeing?
MS: For starters, I will say that this is an incredibly dynamic industry. There are so many external influences, whether it's regulations, consumer preferences, or other factors. The industry has to constantly adapt and reinvent itself. But if I were to highlight some recent trends that are impacting food safety, I would start with definitely consumer preference and demand. And the thing to highlight here is that consumers are changing their preferences quickly and constantly. It's never staying the same. Think about alternative forms of protein, moving away from meat, less sugar or changing to organic, plant based and sustainable ingredients. I mean, we know all of these things as we're going through our grocery stores. You constantly see new products popping up, and these are all the things that consumers are demanding. And not only does it put tremendous pressure on manufacturers to keep on innovating, but also, we need to consider that when new food trends rise, new sets of food safety regulations and guidelines must also be released to ensure safety. And then, manufacturers will have to think about putting the right quality processes in place.
What also plays into that is the increase in healthier options, especially with the COVID-19 pandemic, consumers have become even more conscious of their lifestyle choices. We're going to see more of a proliferation in terms of demanding for new and healthier products down the line. And that's, as I mentioned, is posing certain challenges in terms of meeting, testing and quality requirements. And another trend that is on the rise is sustainability. The industry is responding to its environmental responsibility across the value chain, spanning across production, agriculture, the use of more natural and sustainable resources, all the way to more efficient ways of manufacturing and transport. And then, down to consumer levels including composting, packaging, recycling, and many other practices. And I'll talk about the consumer owners in all of this later on.
I would also, and I think this is really fascinating because it's an area that's grown incredibly fast. I would highlight social media as is yet another trend, because in the age of Twitter and Instagram, information travels incredibly fast and the activity of social personalities reaches customers within just a few clicks. Food businesses often use this avenue for marketing, but at the same time, consumers and influencers can use these types of platforms to patronize brands and products once they've had a bad experience. Just a single bad experience will influence and people becoming more vocal on these platforms. And another trend just thinking about this, but more from a technology angle is the increase in automation of production, especially in light of a winding labor force that's really happening across the entire world at the moment.
And one example of automation is installing, for instance, AI enables sensors that detect food defects based on pre-uploaded information. And this innovation is often used to speed up quality inspection during the receiving of raw materials, but can also be applied to other use cases as well. So I guess, I would say that overall, the automation of processes have been proven to reduce the likelihood of errors, which can be a common case in the human workforce as we know. And we're also at a point today, where automation technologies and sensors have become much more affordable than they used to be. So, I personally expect an uptake in more of these types of technologies.
FP: And what's at stake, if this isn't done well?
MS: If a manufacturer does not have good end-to-end quality management practices in place, we are looking at potential cases of all sorts of things. I'm just going to list a few of those. Food poisoning, food spoilage, food contamination, allergic reactions, worse even, prosecution for contravention of food safety legislation and potentially, the closure of manufacturing facilities. However, the cost associated with poor food safety can be a mix of financial, social, and also the worst of all, a reputational nature, but could be a combination of all of the above. And if I were to list some financial costs, I mean, they're more obvious candidates. We're talking about factory downtime associated with investigations, decontamination, the cleaning and the replacement of equipment. That is an underestimated cost sometimes for manufacturers. And then, there's also the administrative costs associated with processing recalls and investigations, informing the media in case it comes to a recall, damage compensation to retailers as well as to end consumers.
And then, of course, stock recovery. And this is really a mix of both financial as well as social costs. But I think the worst of all of these scenarios is reputational cost, in case it ever comes to recall or some sort of media scandal. And we all can think of at least one or two sort of recall incidents that have made big headlines and that's not good really, it puts off consumers and certainly doesn't make retailers happy by any means. The bottom line is much of the food industry really rests on trust. And so, a sense of safety and security has to be present if a consumer is willing to trial any manufacturer's product. And as I said before, food and beverage companies do want to get that shelf space in grocery stores. So retailers actually have a lot of power in that market space as well. It's not just down to consumers.
FP: Let's go to the other end of the spectrum now. What opportunities are there?
MS: Earlier on, I talked about the importance of traceability. And it's not just a matter of compliance with regulations, but I think also an opportunity for competitive differentiation might sound farfetched, but actually it's not. Because having access to granular real time data of any details, from sourcing to delivery in an extended way potentially, multi-site, multi-company and multi-regional. Manufacturers can demonstrate that they are viable and a trustworthy supplier and a trustworthy brand to the respective customer ecosystem. And that is what builds up to a more mature way of sort of food safety assurance and traceability. So it's all about capitalizing on this data and visibility and using it to build trust in the marketplace. And let's remind ourselves why by this matters in terms of competitive differentiation.
Consumers today, are way more knowledgeable and demanding about the foods that they purchase, and they have literally become information obsessed and they demand closer connection to the food brands that they purchase. So what they want is more in-depth product information beyond what is already provided on the physical label. And there's actually a research out there that shows that consumers are even willing to switch to another brand, if they cannot get this kind of transparency with the product that they're already familiar with. So there's a lot of value in disclosing this data to consumers. And I will give you an example. One of our customers at IFS Gaia Herbs, a leading US based herbal supplement brand, focused on organic farming from soil to shelf. And Gaia Herbs has a traceability program called 'Meet Your Herb.'
So a consumer can go online and they can enter the ID number located on the back of any Gaia Herb product to view all of the traceable aspects of each herbal component of the product. And they can also explore each individual herb to learn more about the uses and the history and the function. So it's a little bit like taking a virtual walk on the Gaia Herbs farms, it's really cool. So at the end of the day, consumers are increasingly buying into this type of information, which is all enabled by good traceability, of course.
FP: What is the role of technology here? To what extent can companies take advantage of digital technology?
MS: I think technology will play a great role in this shift to help businesses get a better handle on efficiency, quality, and traceability. And we have already seen progress being made, but I think as technology is advancing in terms of functionality coming down, in terms of pricing, companies adopting more and more of this technology, I think we're going to see some paradigm shift happening here. Even though I will also say that there are still a lot of manual processes in place, including spreadsheets. There's really no way around not investing in digital technology, because it allows you to log and process massive amounts of transactions and product information, and it gives you that end-to-end traceability of the product's journey. And it all comes down to being able to access accurate real time information so you can act on it immediately if you needed to. That's incredibly powerful.
So remember, the trend is towards preventing problems as opposed to reacting to them. And this is where the value of real time data comes into. And also, in the past years, if you look at digital transformation and companies investing in IoT technologies, that has really helped to revolutionize food supply chains with sensors collecting a lot of data and not only report on conditions, but also to enable decision making within organizations. And let's just talk about a couple of examples here with what I'm talking about. In terms of IoT data collection, it could be anything from the temperature of the transportation truck to the source of ingredients. All of it can now be recorded using IoT enable devices. And also, product quality can be monitored as soon as the item leaves the field or the factory or the warehouse. Giving companies, again, real time automated and intelligent insight.
While it's great to have all of this information, at the end of the day, companies need a modern and flexible business software solution that is able to unify the data and the processes from different sources into one single database, giving users a single source of truth. Nothing could be more frustrating than having data in siloed places, knowing full well it's there, but not being able to access it because it could be, again, spread across in different formats and so, on and so forth. So you really want to have that single source of truth. And if your ERP can accomplish this, acting on the large volumes of data and providing actionable insights to your key stakeholders, then it is acting as a very strategic decision making tool. And that is exactly what companies should be aiming for when they're making technology investments and trying to really ensure that they're good at traceability and quality performance.
FP: How exactly does IFS support its food and beverage customers to help them be compliant with key regulatory requirements and also, build that customer trust?
MS: Sure. So first of all, we offer what I would call a comprehensive and industry specific solution that supports all phases of the product cycle. So it could be from new product development to marketing and sales procurement, manufacturing, and of course, delivery to the customer. And one of our best kept secrets is the fact that we combine ERP with asset management and service capabilities, and this is all in one single database. And that makes us incredibly unique in the market as well. And what underpins all of these processes in quality management, we support customers with a range of things such as audits, non-conformance reporting, in-Process controls, and all of the quality instructions really are part of the shop orders. And at the end of the day, we also support international standards, including the FDA. And on top of this, we do offer end-to-end traceability capabilities to our customers, which allows them to not only maintain good quality standards across the entire value chain, but also trace their products both up as well as downstream. And that ability is incredibly powerful.
But the main benefit that I would highlight here is the fact that we are a single system that really has everything, and it comes with open ABI, allowing our customers to easily integrate with other systems if they wish to, for instance, [inaudible 00:19:35] systems. So it's incredibly flexible as well as modular, in that sense. And recently we have also built on our MES capabilities allowing us to integrate with machines on the shop floor to collect time data that is critical to quality control. So we're making continuous investments to ensure that food and beverage customers who are a very part of our manufacturing customer base are able to meet the challenges not only of today, but also of tomorrow.
FP: Before we jump off, can you tell me or talk to me about how food safety relates to driving sustainability?
MS: Let me just go back to what I mentioned earlier, and that is that the industry is facing pressures across a range of stakeholders, whether it's customers, investors, employees, and regulators, and they are demanding more sustainable products and certainly production and processes. What is the operational implication of this? What companies must be able to explain and account for the journey that products and their associated raw materials have traveled through. So achieving this requires not only access to complete and good data, but also the effective management thereof. In that sense, traceability is not only an enabler of quality, but also of sustainability, if that makes sense. So those companies that have a mature approach to traceability should be able to provide a complete product history download to both, customers as well as regulators and use this data to support with ESG reporting activities and goals overall.
But sustainability does not stop with the food manufacturer per se. There is a lot that the industry can do to influence consumer behavior, especially when it comes to waste. And this is a very fascinating topic, I think. We all are familiar with the data labels printed on the food that we buy. So often, we're seeing a use by or an expires on type of message in the back of the product. And of course, these messages are meant to provide useful information and advice about when a product is at its best. But, you could also argue that not only do these labels fail to communicate meaningful communication to consumers, but they're also worse, even encourage consumers to throw out what might be still perfectly good food. And I don't know about you, but I often, at least in the past, have tended to throw away food just by looking at the label without actually checking the condition of the food. And it's just something that we need to raise more awareness around and consumer education.
So the reality is that the date on these labels rarely indicates the actual food safety of a food product, rather, that tend to reflect estimates on when it will be at its peak quality or taste its best. And this means that large volumes of safe food are being needlessly thrown away each year. And in this context, I want to talk about another customer of ours, and they're called Yeo Valley. And Yeo valley is a UK based manufacturer of all sorts of organic dairy products, and they have decided to move from using use by to best before dates. And what this means is that their products are at the best before the state, but they can still be eaten and still taste good after the state.
So the company puts the owners back to consumers, encouraging them to make what I would call common sense decisions by storing products in the right way. Making sure that they are always under the right temperature and ensuring that they smell them before they eat them. And that is sort of discouraging, the sort of way society that we live in. And I think we need to see more of this type of consumer education going forward. And again, there's a lot that the industry that the food and beverage industry can influence. And actually just as I'm saying this, I just remembered that in the UK there's a big retailer brand here called Sainsbury's.
And back in August, they have begun removing best before dates from over 100 of their fresh lines, including items like pears, onions, tomatoes, and citrus fruit. And I know this might seem strange to some of us, but consumers can use common sense and certainly contribute towards the decrease of waste and really achieve a lot of impact from that perspective. So I think we are sort of heading into a very interesting direction and it just highlights the fact that not all owners on the industry, but also on consumers and customers, but they require a certain level of encouragement, nudging, whatever you might call it. And it must be in that sense, sort of collaborative effort.
FP: Maggie, yet again, you've delivered such great information for our audience to consider. Thank you for joining me on this episode of the Food For Thought Podcast.
MS: Thank you, Erin.
