Skip to main content
Perspective:
Perspective

FSMA Section 204: Traceability and Tracking in the Food Industry

Using Digitalization to Track and Trace Foods in the Food Value Chain

In response to the FDA’s New Food Traceability Rule, digitalization and traceability will play a crucial role in increasing the effectiveness of identifying and recalling foods.

Food Safety Modernization Act Section 204: Leveraging compliance to unlock value
Download PDF (2MB) View PDF

FSMA Section 204 – Accelerating food industry shifts

In response to the growing food safety challenges occurring within the food system, the Obama administration signed into law the Food Safety Modernization Act (FSMA) in 2011.1 On November 15, 2022, the Food and Drug Administration (FDA) published the highly anticipated and long-awaited finalized Food Traceability Rule, implementing Section 204 of FSMA (FSMA Section 204).2

A component of the FDA’s “New Era of Smarter Food Safety” blueprint, the rule encourages more investment in digital technology and traceability.3 By creating a “digital twin” of their supply chain, combining traceability and digitalization, companies can play a crucial role in increasing the effectiveness of recalls through the swift identification and removal of contaminated foods from the market.

FSMA Section 204 requires the FDA to:

  1. Establish and publish a Food Traceability List (FTL) identifying high-risk foods to human health.
  2. Set additional traceability recordkeeping requirements for “persons” who manufacture, process, pack, or hold foods on the FTL.4

Industry challenges that shape leading practices

When working to modernize systems and comply with the Rule, companies may face four types of challenges across the following areas: data, processes, stakeholders, and technology.

Data governance and privacy: Existing data-sharing processes need supplemental traceability data and should be assessed for privacy considerations. Additionally, companies may incur increased compliance costs and risk without transparent governance over the traceability of data or insight into its integrity.

Data architecture and capture: Critical Tracking Events (CTEs) may require architectural data changes to facilitate data capture. The state of existing data may vary (e.g., paper-based versus digital) and may require widespread effort and coordination across supply chain participants to begin capturing and sharing data digitally.

Data processing: Processes needed to validate, enrich, and transform traceability data can be resource-intensive and pose risks to existing critical business processes within supply chain technologies (e.g., enterprise resource planning systems).

Lot-level traceability: Some suppliers and producers do not currently adhere to a standardized system that enables the provision of globally unique identifiers. Therefore, some inbound products may not have or receive scannable labels that include Traceability Lot Codes (TLCs), resulting in lost lot-level traceability.

Consistent scanning of labels: Some companies undertake scanning of the product in an inconsistent manner, which may result in the loss of visibility into lot-level details at different stages of the supply chain. The Rule requires Key Data Elements (KDEs) to be tracked at each CTE; and while this information can be used through digital means, the physical scanning of labels at certain stages of product handling allows companies to also confirm if the digital information is accurate.

Labeling strategies: Today, some suppliers perform labeling at the pallet level and practice lot mixing within a single pallet. Neither practice may provide the granularity needed for compliance with the Rule.

Supplier considerations: The transfer of KDEs across supply chain partners can increase a company’s compliance risk if upstream partners do not send the traceability data required for their own compliance (e.g., TLC). Also, there is an increased dependency on suppliers to provide ingredient details, which may be considered intellectual property.

Traceability culture and training: A company’s employees and their supply chain partners likely need training on how the new culture of traceability will impact their day-to-day responsibilities.

Legacy supply chain systems: Companies may need to implement processes to analyze and capture traceability data throughout its supply chain. Some of these processes may need to be event-driven, which can add complexity to legacy systems.

Centralization of traceability data: Existing traceability data may bespread across different source systems, and companies may need to centralize and enhance their data for reporting to provide an electronic sortable document to the FDA within 24 hours of their request.

Data sharing: Companies may need to develop data-sharing mechanisms that account for stakeholders with different levels of technological maturity.

 

Overcoming challenges may require establishing physical-to-digital links

Companies can find their way through the above challenges by establishing dedicated links between the physical food products in their supply chain and the digital markers and identifications they create to track those products. Barcodes, labels, or RFID (radio frequency identification) can create a physical-to-digital link at the intersection of handling physical products and capturing digital data. These links support the accuracy and completeness of a company’s overall food traceability data.

A next step is to identify technology that addresses your unique needs

With an understanding of what it takes to build a foundation for improved food traceability systems through physical-to-digital links, the next steps revolve around identifying the right technology considerations for reporting compliance.

Step 1: Data readiness

Unlocking value with traceability should start with a system-wide focus on standardization, digitization, and unique identification. Since data becomes less reliable and more expensive to maintain the further it moves from its source, standardization practices should begin in the first mile.

Step 2: Processes readiness

The physical-to-digital link established by a companies’ unique TLCs should be maintained for each product as it moves through the value chain. Companies should assess current processes to identify areas of possible traceability complications.

Step 3: Stakeholder readiness

Compliance with the Rule also may require widespread effort and coordination across a company’s supply chain. Supply chain partners may need to agree on mechanisms to share digital traceability data.

Step 4: Technology readiness

The Rule does not stipulate the use of specific digital technologies. However, the huge volume of data required to maintain granular levels of traceability can be challenging to manage without digital records. While implementing digital systems to achieve lot/-/level traceability might seem costly, improving current recall processes can have a significant upside.

Using the cost to comply to unlock additional value across the supply chain

While the Rule primarily focuses on preventing illness from foodborne pathogens and to facilitate food recalls, establishing traceability is an essential step to digitizing the food system and addressing growing concerns around environmental impact and supply chain logistics. Pursuing a lot-level traceability program can also provide additional value in the areas of reducing recall cost and waste, optimizing supply and inventory management and sustainability data capture.

Lot-level traceability can reduce the cost of recalls by reducing recall scope and the resulting expenditures from coordination including responding to regulatory inquiries, product identification, re-shipment and destruction. A smaller scale recall can also mean reduced brand damage, loss of trust and damage to brand loyalty.

An increase in supply chain and sourcing transparency and traceability provides the opportunity for near real-time monitoring of shelf life, temperature and product routing. This can reduce food and packaging waste expenses and enhance brand reputation due to increased freshness at the point of sale.

Traceability data and systems can be leveraged for insights into the supply chain including supplier performance. Savings can potentially be realized from improved inventory management and operations can be streamlined for a gain in efficiency.

Supply chain data collection should include technology implementation and process redesign, both of which can be leveraged to collect environmental data and facilitate sustainability progress reporting and a reduction in disclosure times. Additional value can be realized in the monetization of carbon abatement data.

The time for action has come

Consumers are demanding more transparency into the safety, quality, and sustainability of the food they eat. Food companies have responded by proactively offering more information and making claims on their labels and packaging. Still, in the absence of adequate traceability, the industry has struggled demonstrate real progress, leading consumers to question the authenticity of these claims. While not all misleading claims are intentional, they can contribute to the continued deterioration of public trust in the food system.

Downlad the full report

Endnotes:

1. Food and Drug Administration (FDA), FSMA Final Rule on Requirements for Additional Traceability Records for Certain Foods, November 12, 2024.

2. Nielsen IQ, ”The CPG sustainability report”, January 19, 2023.

3. Deloitte Global, Deloitte’s 2024 Gen Z and Millennial Survey, May 15, 2024.

Did you find this useful?

Yes
No

Thanks for your feedback

Your feedback is important to us

To tell us what you think, please update your settings to accept analytics and performance cookies.

Need help updating cookies?

Recommendations

Fresh food as medicine for the heartburn of high prices

The 2022 Future of Fresh survey explores how, amid rising inflation, fresh food producers and retailers have an opportunity to cater to consumers' consistent demand for health and wellness.
Article