Food products are some of the most heavily-traded commodities in the world. Due to the simple fact that this industry deals with human consumption of such commodities, it is no surprise that there is a multi-faceted web of both governmental regulations and international food safety and quality standards for the food supply chain.
With the global food and beverage market expected to reach $7527.5 billion in 2023, there is a growing demand for innovation in this sector, in order to satisfy growing population and more complicated supply chains. Like many business sectors over the last two years, food manufacturing faced significant problems due to COVID-19 travel restrictions, supply chain challenges, and global lockdowns.
However, people could not simply stop consuming food just because the world shut down. The industry was forced to adapt to changes, with many companies leveraging technology to foster collaboration when travel became impossible. And while the worst of the pandemic is hopefully behind us, food manufacturers still face significant challenges. However, like all challenges, there is opportunity to further leverage technology in order to foster transparency, efficiency, and cost-saving potential while maintaining a quality supply chain. Let’s find out more about problems faced in the food industry lately.
The Role of Site Audits in Preserving Transparency
Transparency in food manufacturing is a critical and long-standing component for quality control. Companies must have complete visibility into their Tier 1, but also into their Tier 2 suppliers, depending on risk. The demand for transparency throughout the food supply chain has only been magnified in recent years, due to the fact that:
- Global population has increased
- Product supply chains have become more complex
- Product recalls and food-borne illnesses and outbreaks have become more common
- Awareness of child labor and animal welfare is at record levels
- Consumers have become more educated and discerning about what they ingest and where it comes from
Transparency is attempted through several avenues, including governmental regulations, certification to 3rd party accredited International standards (e.g. one of the GFSI standards), and performing proprietary audits to supplier-specific requirements. The international standards are created and maintained by standards authoring organizations, with input from the industry. Then, accredited certification bodies deliver the evaluation. CPGs also perform non-accredited audits, either via first party or second party audits. For example, a large enterprise could send their own people on-site to audit the suppliers. In some cases, a company would conduct a second-party audit, meaning they hire a firm to show proprietary supplier requirements.
Supplier audits are an essential tool for: ensuring compliance to specific supplier requirements and evaluating if a supplier’s Food Safety & Quality Management System is stable and robust.
Typically, three types of audits are required and conducted at regular intervals. First, the Validation and Verification Audit. Second, the supplier compliance audit, and third, the certification audit to one of the international standards.
Problem 1: COVID Challenges are Still With Us
COVID made what had always been a necessary but expensive and time-consuming process nearly impossible. Despite the need for transparency, restrictions around global travel have made audits all the more challenging.
Although the world is opening back up, COVID has permanently changed the way companies conduct business around the world. For one, there remains region-specific travel restrictions, test, and vaccine requirements, which still present a barrier to being on site. For another, the pandemic has created the opportunity and even pressure to innovate. Leaders in the food manufacturing space have turned to connecting remote teams via technology. New tools have introduced innovation in an industry that’s typically slow and hesitant to adopt new systems. Additionally, the need for new solutions will also assure companies are no longer restricted by ever-changing travel regulations.
Problem 2: Inflation is on the rise
The cost of site visits has always been a significant drain on company resources. However, now companies must face growing inflation, which is expanding due to business lockdowns and interruptions. As of summer 2021, the price of airfare is up approximately 25% over the past year. Even more alarming is the cost of car and truck rental prices, which have risen 76.25% compared with June 2019. Now, the cost of physically getting to a place is more expensive. Not to mention, restaurants and hotels are facing up to 18% inflation as of October 2021.
For an industry with historically low profit margins, the cost of transparency can seem daunting. Especially since businesses around the world are still recovering lost profits from 2020. For perspective, large CPG companies spend around $30m annually on audit-related travel.
Therefore, even though companies are able to conduct more on-site audits than they were a year ago, the cost alone may be a prohibitive factor.
Problem 3: Productivity Remains Essential to Operational Efficiency
The loss of productivity was and always will be a critical threa to the success of food manufacturing. In this industry, wasted time is wasted money.
Historically, tools and processes aimed at increasing productivity and operational efficiency can have a significant impact on revenue savings. Unfortunately, flying a team around the world multiple times a year involves a severe loss of productivity. Especially when teams must return to audit sites to verify that previous issues have been solved. Audit travel drains human resources that could otherwise be used elsewhere. Not to mention, traveling will always involve the inevitable logistical issues, time challenges, missed flights, etc.
Emphasis on Technology Accelerates
Even prior to COVID, new and emerging technology created the potential for a major paradigm shift in cost and time efficiency. More recently (June 2021), the FDA launched The FDA New Era of Smarter Food Safety Low- or No-Cost Tech-enabled Traceability Challenge, asking stakeholders, technology providers, entrepreneurs, and innovators, to develop traceability tools that can be implemented in a scalable, cost-effective way for food operations of all sizes.
COVID has also been an accelerant for innovation in remote collaboration tools. While food manufacturing has been historically slow to adapt to new technology, today’s environment requires an almost hyper-focus. Businesses quick to utilize technical innovation are proving to be more resilient to the COVID aftermath.
Leveraging Remote Collaboration in Food Manufacturing
Avatour is a remote collaboration platform that enables a business to bring real people to real places in real time with complete 360° spatial context. In other words, these inspections are still conducted on-site, as they have historically been. But with Avatour, not one person has to travel to accomplish this. The inspection is executed digitally, without compromising transparency, quality or compliance. Avatour’s 360° shared context gives confidence to viewers by providing the power to choose their own point of view.
Avatour’s low cost relative to historical audit travel expenses enables businesses to provide transparency on demand while increasing the frequency, and therefore safety, of supply chain compliance audits.
The post COVID environment continues to evolve, with no clear roadmap on what the future holds for any business. But one theme is clearly prevalent: the survival of certain industries will require a hyper-focus transparency.
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