TImes of extreme disruption, whether to an individual business, a family or, as we are currently living through, society at large, produce powerful incentives to change the status quo, creating the conditions for the mass adoption of things that seemed unlikely or impractical before the crisis. The coronavirus pandemic and associated lockdowns have caused technologies and practices like ubiquitous videoconferencing, grocery and restaurant delivery, telemedicine and first-run movie streaming to steamroll cultural misgivings, regulatory roadblocks and corporate bureaucratic inertia to become mainstream phenomena in a matter of weeks.
Indeed, as I wrote last month, the corona crisis will accelerate the uptake of previously nascent technologies or services by forcing users to immediately adopt something that solves a short-term problem that they would have eventually incorporated as part of a long-term plan. While things like FaceTime meetings and Doordash deliveries are familiar to the general public, a look at any industry shows that there are many other examples of nascent technology transforming from a handy convenience to a critical capability.
Perhaps no industry exemplifies the potential of technology to improve human well being as that of food production and distribution, where manufacturers and suppliers are struggling to meet increased demand, an unprecedented imbalance in their distribution chain and new challenges to food and worker safety. Key to addressing each of these is an unheralded and obscure software category in food quality, safety and traceability. Often categorized as manufacturing OEE (overall equipment effectiveness) and SPC (statistical process control) software, these products have taken an outsized role in maintaining and validating food safety along with ensuring a steady product flow during the corona crisis as homebound consumers have restocked pantries and refrigerators. I recently spoke with Brian Sharp, President of SafetyChain Software to understand how his customers, which span food production, distribution and retailing, are coping and the role SaaS products like his play in protecting both products and workers in the food industry.
Using data and analytics to control processes
There are ample opportunities for software-powered improvements in farming and food processing since many facilities still rely upon manual, paper-based processes with little standardization and minimal data collection. For example, a primary reason that Albertsons — one of the largest grocery retailers in the U.S. — began investigating SafetyChain and other OEE products was a need to end the “paper nightmare”of non-digitized process controls, ad hoc operating procedures and the paper chase needed to comply with FSMA (U.S. FDA Food Safety Modernization Act). Instead, it wanted a digital database that could be remotely tracked and shared among facilities and a system that could provide plant managers with real-time operational, quality and compliance data they could access at all hours, including from their phones.
A desire to replace paper with digital record keeping and data analysis is also an essential requirement for food manufacturers, including small, artisanal producers like Roots Hummus in Asheville, North Carolina. Like Albertsons, Roots needed to streamline quality assurance testing, sanitization processes and regulatory compliance for things like the GFSI (Global Food Safety Initiative) and non-GMO certifications. According to the company’s Director of Food Safety and Compliance:
The fact that our product is a high-risk food, it’s a ready right to eat food, it’s crucial that we get it right. We really did need that real-time visibility of the operations and we needed the efficiency of automation.
For both large retailers and boutique food producers, the benefits of digitizing processes, controls and measurements are similar, namely:
- Increased productivity and efficiency by having instant access to records by eliminating the paper chase, reducing redundant and inconsistent data entry and making summary reports available on-demand, including remotely.
- Better regulatory compliance and audit readiness via data and reports customized for particular standards like FSMA, GFSI and HAACP (Hazard Analysis Critical Control Point) and certification programs that are available on-demand. For example, when Roots’ food safety director prepares for a GMO-certification audit, the SafetyChain software provides all supporting documentation for each supplier.
- Profitability by reducing equipment downtime, optimizing manufacturing and logistical process flows and eliminating travel by company compliance offers.
More importantly in these times of airborne pathogens and the risk of viral spread to food workers and products, digitized information and workflows can ensure the safety of our food supply. According to Sharp, there are five primary ways that plant management software can mitigate the spread of SARS-CoV-2.
- Tighten the inspection of food suppliers via requests for viral mitigation processes and information on potential supply disruptions.
- Formalization and enforcement of increased sanitation, inspection and employee testing processes.
- Minimization of human contact through automated processes and digital information sharing by replacing paper with mobile devices.
- Enabling remote management and work-from-home by allowing access to information and reports from anywhere at any time.
- Providing instant information and analysis that allow for rapid reaction to changes in product demand or distribution. For example, one of SafetyChain’s customers, Tyson Foods, said the system provided early warning of changes in product demand as restaurants closed and consumers stocked up in grocery stores. Instant data analysis allowed its plant managers to immediately shift wholesale, restaurant production to cuts of meat and packaging sold in grocery stores, quickly replenishing stock in March that had been depleted by late February.
Market overview and outlook
Products from SafetyChain and competitors that specialize in the food industry fall under the general category of Manufacturing Execution Systems (MES), defined as those “used in manufacturing to track and document the transformation of raw materials to finished goods.” MES software can track in real time every element of a production process including raw materials, intermediate products, finished goods, personnel and equipment. The software then analyzes collected data to assist in resource scheduling, input supply procurement, equipment maintenance, production process controls and quality and efficiency improvements.
As a specialized form of ERP, MES products create a complete record of the product inputs, process flows, equipment telemetry, quality measurements, inspection and quality measurements, completed and shipped products and regulatory documentation. MES, OEE and SPC software is particularly beneficial to companies in food, beverage and pharmaceutical production and distribution given the many safety and quality regulations covering all aspects of their business.
The market for food traceability software is relatively small and evolving, with about $8.8 billion in revenue by one estimate. While these pre-corona crisis estimates had it growing at 8.5 percent annually through 2025, don’t be surprised if the recent stress on food producers, distributors and retailers to rapidly adapt to changing conditions in the market and supply chains bumps this projection by a few points.
Increased worry about food safety, by both consumers and regulators, should create strong demand for food traceability and MES products from vendors like SafetyChain, AVEVA, Epicor, Parsec, Rockwell, SAP, Aptean and others. Furthermore, Sharp says that a desire for greater granularity in tracing food products throughout the supply chain from farm to table is stoking interest in blockchain to supplement the centralized databases used by current MES products. According to IBM executives, blockchain can create more reliable supply chains by giving users through the chain data about how food was produced and handled.
Gartner predicts that 20% of the Top 10 grocers worldwide will be using blockchain by 2025 to improve food safety and traceability by creating a secure ledger documenting its production, quality and freshness. Indeed, the head of analytics for New Zealand’s NZX exchange believes that the pandemic will cause food consumers to demand greater traceability that documents how food was produced and compliance with safety regulations.
I remain skeptical that blockchain will become mainstream in the food industry due to the overhead of implementing a blockchain system from field or feedlot to shelf. However, the surest way to achieve full blockchain traceability is by starting with MES systems, particularly cloud-based products like SafetyChain’s that eliminate the overhead of system installation and management and allow food producers and distributors to focus on their products and processes, not the IT infrastructure.