Compliance with Food Safety Regulations

March 1, 2011
Our company has conducted research in the food safety and traceability space for the past five years. Last year’s report started by citing President Obama’s creation of a U.S. Food and Drug Administration (FDA) working group focused on the topic, and a prediction that “change is on the way.” This year, we will start by stating that change has arrived, and the Food Safety Modernization Act has passed.

Clearly the law is aimed at three main goals: improving the enforcement capabilities of the FDA, improving the food safety processes in manufacturing and distribution, and improving overall product traceability in the supply chain. The law is also having an impact on the pressures driving manufacturers to focus on food safety and traceability.

In 2009, only 45 percent of respondents from food companies chose the need to adhere to government regulations as a top-two market pressure. In 2010, this percentage grew to 60 percent and topped the list, showing a marked increase among executives. The second most prevalent pressure from 2009, the need to ensure product quality and satisfaction, held steady and was again the second most prevalent pressure in 2010. Anecdotally, this pressure is becoming more common among thought leaders and Best-in-Class companies, with many wondering how investments in food safety and traceability can eventually be leveraged to create a personalized customer experience.

As companies begin to be more compliance focused, there will be a range of experiences across the industry regarding how easily they achieve compliance and what additional business benefits are achieved as a result of this compliance. To better understand these differences, we have segmented the marketplace based on performance. Analysis found Best-in-Class companies are gaining significant competitive advantage when compared with Industry Average and Laggards.

One of the key benefits for large food companies to invest in compliance with the Food Safety and Modernization Act is improved supply-chain control and performance. In Aberdeen’s analysis of the Best-in-Class, these organizations are outperforming the competition in Performance Management capabilities and supporting technologies.

Best-in-Class Strategies

Although there were major changes in the market pressures observed in 2009 and 2010, the strategic actions being deployed to address these market pressures has remained stable over the past year. In 2009, the top strategy being deployed was “building compliance and traceability into production processes,” and this is still the top strategy in 2010, with Best-in-Class manufacturers being 31 percent more likely than other manufacturers to be pursuing this strategic action.

The strategy of building compliance and traceability into production processes is one that is especially well suited for the food-and-beverage industry. This industry as a whole has a lot of experience with understanding the risks associated with a process, identifying the control points for those risks, and ensuring that within standard production processes, control points are measured, recorded, and maintained each and every day. In specific terms, this is referred to as Hazard Analysis and Critical Control Points (HACCP), and we will be hearing a lot more about this in the future.

The next step in this strategy for many manufacturers is connecting shop-floor production processes data with real-time traceability data. Although many manufacturers today in the food-and-beverage industry do a good job of managing food safety in production processes through HACCP, very few actually connect shop floor HACCP data to the overall traceability data. Moving forward, the FDA intends to be focused on the production process itself and how well standard processess ensure both food safety and traceability.

Matthew Littlefield, [email protected], is a Senior Research Analyst; Nuris Ismail, [email protected], is a Research Associate; and Mehul Shah, [email protected], is a Research Analyst; at Aberdeen Group Inc., in Boston.

September 2008, Related Feature - Information Nuggets in the Track and Trace Data Stream
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