NTT DATA Business Solutions
Martijn van Giessel | January 22, 2019

Chocolate letter exposes food challenges


Although the first weeks of this new year are already behind us, I would nevertheless like to reflect on last December’s safety warning for the hazelnut chocolate letters from a warehouse shop. This food safety crisis reveals two of the greatest challenges for companies in the food sector: gaining more insight themselves, and becoming more transparent outwardly. This applies to both the quality of products and expenses incurred. But fortunately, technology can help.

Key word = Batches

The keyword in this example is batches. The warehouse first recalled chocolate letters with one specific production number, rather than the entire stock. Hence, the batch in which something had gone wrong was identified. (It later appeared, however, that the safety of other batches could not be guaranteed either, and therefore the whole stock was recalled anyway.)

In previous blogs, my colleagues have already written about the advantage of batch traceability in the case of a food safety scandal. It reduces the financial damage, as less products have to be recalled and destroyed. Any loss of image is also limited when there is evidently sufficient knowledge to guarantee the safety of other products.

Recalling products is, however, a worst-case scenario. It is of course better when batches that do not meet the quality requirements never leave the factory in the first place. Which is why Quality Management (QM) departments are gaining an increasingly greater role. At many manufacturers, the QM employees mainly work manually, and notes on paper are added to the system later. This not only causes errors, it also makes the work hard to verify. This is where automation can make a big difference.

Quality above all

Quality employees are obviously always on the move. Quality tests, for instance, take place in a truck, at different areas on production lines or in the cold stores. This explains the paper memo system: it is mobile. It is relatively easy to upgrade the work process by providing employees with tablets on which they can take down notes. But what will really create optimization is when data entered into these tablets are immediately stored and processed on the central data system.

This way of quality testing and data processing is possible with a QM app. Not only does it make the work of quality workers more pleasant and efficient, it also lowers the costs of running a quality department. Apart from this, after the correct analyses have been performed, the collected data will provide new insights on product quality, work processes, and even margins.

Increase the margins

The insights into margins in particular can make a big difference in the food production chain. With a good ERP system, it is no longer complicated to increase the understanding of margins and to adjust future operations to this. But with clarity on the margins per batch, doors will open that would otherwise remain closed.

Here, the trade in fresh produce springs to my mind. Consumers expect more and more – as I already mentioned in my previous blog. Mangos or avocados are no longer seasonal fruits, but should be on the shelf the whole year through, and for a competitive price too. The price of these goods fluctuates all the time, which makes it difficult to gain insight into the actual costs of trading these popular products. And so there is little insight into the margins. This is a big issue, as the purchase price is determined based on the selling price. No insight into batch margins means no accurate batch administration. A clear view of the costs per batch, however, makes optimizing margins a lot easier.

The warehouse and its chocolate supplier obviously have no margin whatsoever on the recalled hazelnut milk chocolate letters. By implementing the right applications, they can not only reduce the risk of a recall, they will also gain more accurate costs of the margins per batch. And all of this in good time before the next letters arrive with Saint Nicholas by steamship next December.

Not convinced that there is a solution like this? Let the possibilities surprise you:

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