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Supply Chain
How Real-Time Supply Chain Visibility Is Transforming the Food System

Implementing traceability systems puts food companies in a better position to navigate the changing regulatory landscape, build consumer trust and contribute to a sustainable food system.

A combination of changing consumer preferences and emerging regulation means that restaurant and grocery businesses are facing mounting pressure to disclose where their products originate. At the same time, more businesses are realizing that end-to-end traceability is central to advancing food safety, quality and sustainability.

The EU’s rules — known as the Corporate Sustainability Reporting Directive (CSRD) — will come into play in January 2024, requiring big companies operating in the EU to disclose new information about environmental and social risks. This will include data that makes it possible to trace products from raw materials to final form. In the US, new Food and Drug Administration rules on food traceability will come into force in January 2026 — including tighter record-keeping protocols to enable produce such as fish, cheese, fruit and vegetables to be tracked.

These upcoming legislations coincide with changing consumer attitudes and habits. Younger generations prefer businesses that are more ethical and environmentally conscious — demanding they enshrine values and ethics, not just profit, into their business model. A recent study by Avery Dennison of 7,500 shoppers globally found that 44 percent of food shoppers believe transparency about a product's origins and journey is important and over a third (37 percent) say that when brands are transparent about ingredients in their food products, it encourages them to make more sustainable purchases.

Implementing traceability systems will put food companies in a better position to navigate the changing regulatory landscape, build consumer trust and contribute to a sustainable food system.

End-to-end visibility

Food companies are improving visibility with digital solutions connected to their products. This includes a powerful combination of data carriers (such as QR codes and radio frequency identification [RFID]), a connected product cloud-based platform to manage the data generated by the myriad of interactions with those data carriers throughout the product’s lifecycle, and hardware and applications used for data capture across the variety of read points throughout the supply chain. The rapid capture of key information about thousands of items or multiple crates and cartons allows for better tracking and management of the supply chain, providing companies with a greater understanding and control — from farm to consumer. By integrating food traceability systems into their operations, companies can identify the exact source of their ingredients, which is essential for ensuring that they are sustainably sourced. Furthermore, providing an easily shareable record of provenance, processing and transit information will help retailers and food brands to reduce the risk of food-borne illness outbreaks by allowing for quick and effective product recalls.

Avery Dennison’s Freshmarx® uses digital connectivity to help ensure food freshness and quality. As an end-to-end solution driven by intelligent labels inlaid with RFID technology, item-level data-capturing solves the issues of inventory visibility, food waste, labor efficiency, and consumer impact.

Chipotle Mexican Grill became one of the first restaurant companies to pilot Avery Dennison RFID solutions to trace ingredients at its distribution center and approximately 200 restaurants in the Chicago area. The initiative is now scaling up, with plans to roll it out nationally in the coming months. The tech-enabled traceability system is designed to allow the company to act on food safety and quality concerns swiftly, efficiently and precisely.

Item-level visibility on dates also helps to ensure a high level of freshness. For products with strict use-by-date rules — such as fruits and vegetables, bakery, fish and meat — it's important to have visibility into when the produce has been shipped from the source, received at the supermarket, and so on. This 360-degree view of inventory at any given time helps to effectively manage sell-by dates on perishable goods. Retailers can strike a balance between stock that can be redistributed, stock that can effectively be marked down, and stock that isn’t safe to sell. Discounting soon-to-expire products will not only help to recoup revenue loss but also reduce food waste, as a large portion of food waste happens at store level when unsold products are discarded because of expiry dates.

Transparency in food production

Increasing transparency in food production will have great sustainability benefits. Digital IDs help to provide consumers with detailed information about the origin and production of their food, allowing them to make more informed choices about what they eat. Consumers can see if the food is sourced from local farms or grown using sustainable practices. This increased transparency not only empowers consumers to make more conscious choices but also creates a demand for sustainable food production practices.

Avery Dennison hsa partnered with the Boisset Collection, one of the world’s leading family-owned fine wine companies. By leveraging Avery Dennison's NFC (Near-Field Communication)-enabled tagging solution within their wine labels, wine connoisseurs can simply tap their smartphone on the label to find out more about the wine — including ingredients origin, tasting notes and a personalized message from creator Jean-Charles Boisset.

Reduction of food waste

Traceability systems can help to reduce food waste and improve overall sustainability by enabling more efficient management of inventory and reducing the likelihood of overproduction. Avery Dennison research found that stock inefficiencies and inventory ‘black holes’ are resulting in nearly 10 percent of food stock being lost before it even gets to the consumer. This supply chain waste is caused by 7.1 percent which is damaged or perished and 2.9 percent which is overproduced.

One of the key benefits of traceability in the food supply chain is that it allows companies to manage inventory more effectively so they can better predict demand and adjust their production and distribution, reducing the risk of food spoilage and waste. For example, digital IDs can help to identify products that are approaching their expiration date, allowing companies to prioritize those products for sale or distribution. Additionally, companies can identify products that are overstocked, allowing them to adjust production or distribution to prevent overproduction and further waste.

The platform — which enables products to connect with customers by turning them into digital communication channels — is currently used by four of the top 10 quick-service restaurants. Services include a Real-time Waste Elimination Tool that uses artificial intelligence and machine learning to analyze and highlight anomalies and inefficiencies across the supply chain. This includes information about the overdue movement of products at a pallet level, or even isolated individual items within a warehouse that are close to perishing or otherwise ‘lost’ — enabling businesses to get meaningful insights from data to make informed decisions that can dramatically transform their business agility and reduce waste.

For more information on how digital identification solutions are transforming the food industry, click here.