The next wave of supply chain innovation

Venkat Rajaji has a theory. The next big push for technology in the supply chain could come about because of government regulation. “If you look back historically, a number of technology changes have been triggered by compliance to government regulation,” says Rajaji. “Think about Y2K. Think about Sarbannes Oxley.” 

Rajaji is global product manager for Infor’s (http://www.infor.com) product lifecycle management division. The government regulation he’s eyeing this time is the recently-passed Food Safety Modernization Act.

The bill aims to make food safer by giving the Food and Drug Administration (FDA) increased power to inspect food processing facilities and force companies to recall tainted food. As Infor points out, the bill and any new government regulation, for that matter, has been met with its fair share of controversy, but a story in this morning’s Wall Street Journal about another product recall from Johnson & Johnson related to quality issues from improperly cleaned machinery at a plant making Rolaids underscores the point.

In a press release, Rajaji argued that technology solutions can aid food manufacturers by helping companies better manage their internal processes and, where possible, implement solutions to prevent future outbreaks. “Savvy companies throughout the United States have already implemented technology solutions that provide better visibility into their operating processes and address manufacturing problems before they happen,” he said. “However, with this new regulation in place, more companies will likely invest in technology solutions to compliment their processes to ensure quality and prevent the lofty expense of food recalls.”

What does Rajaji have in mind? The bill, he told me, puts more responsibility and liability onto the shoulders of food manufacturers and processors. In the past, the FDA provided standards and guidelines, but the food industry largely policed itself as a matter of practice. Recalls were a negotiated process between the FDA and a manufacturer when the manufacturer self-volunteered that there was a problem. “Now, the FDA has police power,” he said. “They can issue a recall.”

The implication is this: In the past, a food manufacturer’s reputation was at stake. Now, they may be breaking the law. As a result, Rajaji said, “food safety will have to be part of your DNA from top to bottom. You will need to design your processes and systems for food safety.”

Everything from the R&D process to buying from the right vendors to how a company maintains its machinery may have an impact on food safety. If you doubt that, look no further than the latest J&J recall, which was blamed on product that was contaminated by improperly cleaned equipment.

To comply with the law, to minimize the impact of a recall and to provide transparency to distributors and retailers, Rajaji believes the food industry will increasingly turn to supply chain software and technology tools, like RFID and sensors that can monitor temperature to insure that food products were stored at an optimal temperature.

“You will need to make sure that you’re accountable and that every touch point across the supply chain is safe until it gets on the shelf,” he said. “To do that, you need tools to help you manage and capture data at every point. The legislation is going to drive the need for technology adoption to stay in compliance with the food safety legislation.”