Key Challenges in The Implementation of
Traceability Initiatives for FMCG Companies

Whether you are a manufacturer, distributor, retailer, or even a raw materials provider, the pressure to enable traceability – both from a regulatory and customer perspective – is at an all-time high.

With conscious customers demanding clear proof of product origin and authorities requiring real-time insight into the supply chain, traceability has become a global trend, further compounded by the ever-increasing focus on health and safety concerns. But enabling visibility into the entire food journey is not without challenges.

Read on as we uncover key challenges in the implementation of traceability initiatives for FMCG companies.

Over the last couple of years, food traceability has transitioned to the forefront of the FMCG sector. Traceability is needed not just to identify issues on the production line, but for a variety of other purposes also. Here are top reasons why traceability has become so important in the FMCG sector:

• FMCG companies are increasingly being expected to comply with an evolving set of strict regulations that ensure food products are of the highest quality.
• Environmentally conscious customers are increasingly demanding information on product origin, along with accurate information about ingredients and allergies.
• As discussions about sustainability surge, there is also pressure on the sector to ensure the products that reach customers have been produced or sourced in a sustainable manner.
• Economic disruptions and unforeseen events like the pandemic have made it important for retail shelves to always be full, which is only possible if companies know where products currently are in the supply chain network.
• Overly stocked warehouses or lack of inventory can propagate into poor sales, missed revenue, and lost customer trust.
• Perishable products that have limited shelf-life need to be brought to customers – in the quickest possible time – to keep up with the demand while also reducing wastage.
• Potentially compromised or adulterated products have to be quickly identified by lot number, batch number, ingredient list, or the assembly line, so recalls can be planned efficiently, and customers can be notified in time.
• Companies are also expected to avoid cross-contamination of products, evade contact with non-compliant products (and processes), and minimise product recalls

Traceability has, without a doubt, become a top priority for FMCG companies. But implementing effective, new-age solutions while innovating the business and implementing changes is no mean feat.

Let’s look at some of the key challenges in the implementation of traceability initiatives:

1. Outdated technology: FMCG companies that have been in the industry for a long time often rely on several outdated tools and systems to run their business. These systems are extremely rigid and lack the modern data-sharing capabilities that the digital era demands. These fragmented legacy systems act as a barrier to achieving real-time end-to-end visibility across different supply chains.
2. Manual processes: The reliance on manual, paper-based processes also acts as a big hurdle in achieving the right level of traceability. Since these processes leave no digital record, they compel stakeholders to depend on siloed systems and Excel spreadsheets to trace products from farm to fork, which not only delays traceability but also leaves substantial room for error.
3. The sheer number of stakeholders: The FMCG industry comprises an array of stakeholders: from farmers to suppliers, distributors to retailers, and more. With so many parties involved, and so many entry and exit points, enabling traceability across each channel is a Herculean task.
4. Decentralised systems: Most technology systems used by FMCG companies are poorly integrated and restrict the free flow of data and information. Not only do they not connect with other systems; they also make it difficult to achieve efficient and timely traceability across the supply chain.
5. Varying industry/product requirements: For FMCG companies with limited IT skill sets, determining what products or processes to monitor to collect and maintain traceability information is also tough. Since traceability varies by industry and product, it becomes difficult for companies to know where to begin collecting data or what data to collect.
6. Conflicting regulations: Overlapping and conflicting regulations across different regions and nations further impede the success of traceability. With different regulatory bodies enforcing different regulations, companies have a tough time in striking the right balance and avoiding non-compliance while curtailing instances of fraud and counterfeiting.

The competition in the FMCG industry is constantly growing and consumers are demanding sustainable and healthier food options. Traceability has become a key requirement. Traceability and transparency can strengthen a brand’s authenticity while inviting trust from consumers. Together, they help in building brand loyalty and achieving a competitive edge, as when it comes to choosing among products, traceability can act as a key differentiator for the millennial generation.

As the consumer and regulatory demands for transparency increase, companies will need to evolve their current systems and methodologies for traceability or embrace advanced traceability solutions that allow for efficient, real-time tracing across the entire product lifecycle: from the origin of raw material to distribution to end customer.

QodeNext offers a traceability solution with Unique ID creation that results in increased business intelligence, faster on-time deliveries, higher customer satisfaction, as well as improved sales. The solution not only helps in increasing the operational efficiency or improving business visibility; it goes the extra mile to maintain higher levels of transparency and quality standards, so you can ensure customer satisfaction while curtailing reputational damage and potential financial losses.