As food & beverage companies prioritize initiatives and investments for 2023, many areas are still front and center as companies recover and rebuild following the pandemic, including managing inflation, supply chain challenges, changes in the industry and consumer trends, operational costs, product pricing and labor challenges. While some of these challenges saw some improvements over the course of 2022, supply chain management will likely continue to be a major concern for food & beverage companies in 2023, particularly related to lack of visibility and flexibility, coupled with the changing consumer trends and government initiatives related to food safety and traceability of the food supply.
In January 2011, the Food Safety Modernization Act (FSMA) was signed into law, which expanded the Food and Drug Administration’s (FDA) authority to regulate the way foods are grown, harvested, and processed. Section 204 of the FSMA (FSMA Rule 204) was published in November 2022 which requires the FDA to designate foods for which additional recordkeeping requirements are needed to protect the public health. Companies have two years to be compliant with the new recordkeeping and traceability requirements. Accordingly, any facility that holds, packs, manufactures, or processes one or more foods on the Food Traceability List (FTL) must keep records of any Key Data Elements (KDEs) resulting from Critical Tracking Events (CTEs). CTE are events recorded throughout the supply chain that are essential for achieving food traceability and supply chain visibility, such as growing, receiving (including First Receiver), creating, transformation, and shipping. The FSMA Rule 204 allows the FDA to request CTEs and requires businesses to respond within 24 hours. Therefore, it is imperative that suppliers, wholesalers, distributors, and retailers are able to capture the numerous key data points for each item as it moves end-to-end throughout the supply chain and to the consumer.
The additional recordkeeping requirements apply to the foods specifically on the FTL and to foods that contain listed foods as ingredients, provided that the listed food that is used as an ingredient remains in the same form (i.e., fresh) which appears on the list. The FTL includes food items such as tomatoes, melons, leafy greens, all types of fresh and fresh-cut fruits and vegetables, cheeses other than hard cheeses, shell eggs, nut butters, finfish, and fresh and frozen crustaceans and molluscan shellfish.
The FDA’s goal is to better establish linkages throughout the supply chain during a foodborne illness outbreak investigation and more quickly identify potential sources of contamination and prevent additional illness and death. More comprehensive and harmonized systems of traceability through access to records of KDEs associated with CTE in food production and distribution could help identify more quickly the exact source of food involved in outbreaks and remove such foods from the market with the objective to prevent or minimize further illness or death.
Although companies have two years to come into compliance with FSMA Rule 204, the longer a company waits to begin these efforts the more challenging it may become to be fully compliant by 2025. Companies that are currently relying on manual paperwork can provide information to the FDA in this manner but may ultimately determine that it is quite overwhelming to track the volume of data required by the new traceability rules, particularly given that KDEs must be created for all CTEs.
Accordingly, now may be the time for companies to consider investments in digital transformation to modernize data management efforts particularly as the global supply change grows and changes. The ability to respond with ease to the FDA within 24 hours and in a sortable electronic spreadsheet when a public health threat or outbreak occurs may necessitate such a change for many companies. Governmental agencies, organizations within the industry and consumers can benefit from the transparency and visibility that comes with this new regulation. With continued focus on food safety and sourcing, traceability and safety requirements are likely to further expand over the next decade which may necessitate leveraging more digital, tech-enabled traceability systems. Therefore, companies should consider their current capabilities and determine whether investments in more sophisticated systems are warranted.
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