Other Voices: Will the food safety and modernization act be a non-event?

Editor’s Note: The following column by Tom Kozenski, vice president of product strategy for RedPrairie, is part of Modern’s new Other Voices column. The series, published on Wednesdays, will feature ideas, opinions and insights from end users, analysts, systems integraters and OEMs. Click on the link to learn about submitting a column for consideration.

There has been a fair amount of discussion about the new Food Safety Act that came down from the US Government recently. I think everyone is trying to figure out what will be the true impact, both short term and long term. That goes for software providers, as well as the companies that are producing and handling the goods. By comparison, if you look at the overall impact of the Bioterrorism Act of 2002, it did not seem to create that big a stir in the industry. This time, I’m not so sure it will be such a “non-event.” I sense that we will all be working hard towards a common goal of being compliant, but in the most efficient way.

If the Government plays a heavy hand, where they perform strict audits and apply fines, it will definitely change how things are processed and move within the extended supply chain. I envision that more and more companies will invest in software tools and new operational practices to accommodate the new regulations. We have been fortunate to work with some of the finest companies in the world, and many of them have practiced strong accounting of inventory genealogy and recall procedures since the mid-90’s. They are proactive on any initiative in which they can take the higher ground and protect their brands. But not every company takes that approach. Some come kicking and screaming and delay making process changes until the last minute. I’m not saying one is right or wrong. But I do think that these required changes will not be quick to implement and the laggards may suffer penalties or need to respond to fire-drill requests to be compliant.

When you look at all the potential processes that are required to support compliance, some companies will have a long road ahead of them. They will need to provide documentation for when the on-site audits occur. They will need to ensure they have the proper traceability data and inspection procedures in place. They will need to keep records for a 2-year minimum. They may need to track the supplier for each unit of inventory they handle. RFID technology may be raised again as a good answer to the inventory tracking problem. The GS1 labeling initiative will help certain aspects of traceability “from farm to fork.”

But in all honesty, most of these added steps are going to slow down the speed in which inventory moves through the extended supply chain. When inventory slows down, the amount of days-on-hand inventory will increase and the handling and storage costs associated with your supply chain will increase. It’s not a good scenario. That is why an efficient change in process is critical so that these added costs can be minimized. I believe that companies will also think differently about their suppliers. Where previously, a company might treat a purchase as a commodity-buy, and choose a supplier based solely on costs, they may now start to look at their suppliers as strategic partners. They will want to ensure that their suppliers have all the necessary tools and processes to protect them from issues during the Safety Act audits. After all, we are all in this together.