Building trust in today’s food system with full transparency ! This year brings with several challenges and opportunities for food retailers to move business ahead, or at least not get left behind!
In this article, our goal is to share insights on the current state of the food industry and how grocery retailers can gain a competitive edge in this complex industry with multiple processes and numerous stakeholders (farmers, manufacturers, transportation companies, distribution centers, grocery stores and consumers). Building trust in today’s food system with full transparency is key to increasing consumer loyalty.
Purchasing power drives change
Consumers’ growing concerns around overall health, wellness and ethically-sound production is leading to a radical shift in the food retail industry. In this highly competitive market, successful retailers are the ones that have the capacity to provide crystal clear transparency throughout the entire food supply chain. Whether it’s for ethical reasons (organic, fair trade, cruelty-free), food allergens (gluten, nuts, eggs) or lifestyle choices (paleo, veganism, keto), consumers are asking more questions about the ingredients used in the production of their food. They are demanding the exact history of the food items they purchase. Study results from Response Media clearly demonstrate the importance of building trust in today’s food system with full transparency.
Food security and traceability are not only ways of retaining customers; they also contribute to increased revenues: according to Nielsen’s annual Global Corporate Sustainability Report, 66% of consumers are willing to spend more on a product if it comes from a transparent or sustainable brand. Consumers are more and more educated, and they are looking for increased clarity throughout the entire food supply chain. Building trust in today’s food system with full transparency leads to increased profitability.
The spike in food recalls carries costly consequences
The recent food outbreaks and recalls (e.g. massive romaine lettuce recall) have put the food industry in the spotlight more than ever, leading to brand damage, shaking customer trust, increasing costs in product waste and reducing sales revenue. When a disruption such as a product recall or supplier issue takes place, it has a long tail effect on the entire supply chain. Doing reverse forensics to figure out where a problem originated costs time and money. It breaks the promise of delivering fresh, high-quality food and it represents an obstacle to building trust in today’s food system with full transparency. That’s in part because of the disparate systems many businesses use to manage supply chain processes today, preventing retailers from tracing back the origin of a product and anticipating potential risks.
Reinforced regulations affect all food businesses
Building trust in today’s food system with full transparency is also a key concern for government and regulation bodies. New standards and regulations are constantly appearing all around the world, which puts the agri-food sector under significant strain. Inventory management, the purchase of raw materials, shipping, processing and marketing require fastidious and increasingly demanding controls. In Canada, the Safe Food for Canadians Regulations (that took effect on January 15, 2019) is the biggest change in food regulation in over 25 years!
With the introduction of the Safe Food for Canadians Regulations from the Canadian Food Inspection Agency (CIFA), 14 existing food regulations will be replaced by one rule framework intended to both simplify the system for businesses while improving safety for consumers across the food system and building trust in today’s food system with full transparency. The regulations cover everything from labeling, packaging and advertising, to importing, exporting, interprovincial trade and standards. The CFIA said food businesses would be affected in three fundamental areas: licensing, preventive controls and traceability.
Advanced technology, one piece of the puzzle for grocery retailers
Building trust in today’s food system with full transparency is critical to remain competitive, differentiate a grocery retailer and increase customer loyalty. Innovative companies are focusing on strategies that provide transparency and traceability from ingredient origination and sourcing to the point of sale. With advanced technologies such as blockchain and IoT, retailers can easily provide the information consumers want as well as avoid crisis and recalls.
When it comes to technology and software solutions available in the market, not all systems are created equal. When looking to invest in new solutions, grocery retailers should look for systems that meet at least the following criteria:
- Integrate all business functions into a single system (sales, production, finance, etc.)
- Improve the traceability of your products, while having a clear view of your inventory
- Manage critical product recall situations
- Improve your productivity by leveraging the best business practices in the food retail industry
- Standardize and simplify your processes
- Significantly reduce your operating costs
SAP’s commitment to building trust in today’s food system with full transparency
Proven processes adapted to the agri-food industry
In the pharmaceutical industry, security and transparency have been prerequisites for a long time, as without the assurance of traceability, it is impossible to place a pharmaceutical product on the market. SAP has been working for a long time with pharmaceutical companies and has adapted these proven processes for building trust in today’s food system with full transparency. Furthermore, SAP is constantly fine-tuning their solutions for grocery retailers, thanks to their cumulative experience with food retailers. The ERP software giant is also up to date with all food industry regulations around the world, working with influential companies like Walmart and Nestle, industry groups like the Grocery Manufacturing Association, partners like Deloitte who have well-regarded food safety practices and even the regulatory agencies like the FDA to stay on top of changes.
Pioneer with blockchain technologies
SAP recently convened a “Farm to Consumer Traceability Proof of Concept,” including food value-chain leaders such as Kellogg, Natura, Naturipe Farms, Simplot, Johnsonville, and Maple Leaf. SAP and the participating companies are working together to begin developing a solution that unites producers, manufacturers, and retailers toward the common goal of building trust in today’s food system with full transparency and food safety. The specific goal of this project is to determine whether a blockchain solution can achieve “transparency of genealogy” – or the ability to view the origin of a given food item from the shelf all the way back to the farm.
The result? The “Farm to Consumer Traceability Proof of Concept,” clearly demonstrated that building trust in today’s food system with full transparency increased loyalty in participating brands. The collective view of the participants was that building a blockchain network not only enables end-to-end food traceability, it also drastically reduces the time required to identify a necessary recall and ensures consumers’ health protection.
Building trust in today’s food system with full transparency is at the heart of your concerns?
Do you have the tools and knowledge to provide complete information on the food products you sell to your customers?
If these questions challenge you, our grocery retail specialists can offer guidance and direction to support your thinking process.