Unlocking the Future: The Opportunity for Product Passports in the Food Industry
In the world of food supply chain management, businesses face unique challenges ranging from maintaining the quality and timeliness of products throughout the supply chain, to ensuring efficient, sustainable practices at every step of the journey. Addressing these complexities increasingly requires innovative solutions.
Traceability solutions and supply chain visibility platforms have sprung up but typically address only a limited set of requirements, rather than providing a holistic solution which addresses the range of commercial, supply chain, sustainability and traceability needs that businesses have to manage on a day-to-day basis.
Meanwhile, the EU is pursuing the concept of a 'digital product passport' as a key enabler for its objective to deliver its Green Deal and Circular Economy Action Plan. DPP has a more holistic scope as a solution, but to date have been focused on other industries, where recyclability, and reuse, at a component level are more pressing concerns.
This article will explore the relevance of DPP to the Food Industry and how they can be a powerful change agent for greater digitisation, transparency, and efficiency in the end-to-end supply chain.
Understanding Digital Product Passports (DPPs)
Digital Product Passports are required to provide a comprehensive digital record of a product's lifecycle. From the source of raw materials or ingredients to consumption and disposal by the end consumer. Data is added to the Passport by each party in the supply chain and needs to be verifiable and auditable so that it can be trusted by all parties. Data can be captured in multiple ways but comes together in a digital stream of information that can easily be accessed by stakeholders and consumers when needed. This digitalisation of information captured through processes and events also paves the way for more informed and effective decision-making throughout the whole value chain.
In the context of the food industry, DPP could be instrumental in advancing the principles of a circular economy. By offering detailed insights into a product’s environmental impact, DPP aids businesses in reducing waste, promoting resource-efficient practices, and ensuring responsible recycling. This approach not only benefits the environment but also aligns with consumer demand for sustainable products.
The Value of the Product Passport in the Supply Chain
With a common purpose, that of delivering more sustainable products, the granular data captured by DPPs can also be shared to help pinpoint inefficiencies and waste within the food supply chain. This event and product-specific level data analysis can then provide actionable insights into each stage of a product’s journey, and the use of resources, allowing businesses to identify ways to optimise processes, reduce waste, and swiftly respond to unforeseen challenges.
Another way to look at DPP is to see that it gives a product or unit of products (eg a case, a pallet, a container) an identity. Like the passport we use to travel across borders which tells a story about who we are, where we’ve come from and where we are going, the product passport has its own unique story. Encapsulating its entire lifecycle data in a digital format, verifiable not only at borders but in advance as data is made available to support external processes such as customs clearance. This "Passport" therefore increases transparency for all; product owners, consumers, and regulatory authorities, and offers businesses a single view of the costs and value created by the product, from the start of its lifecycle.
However, with great transparency comes great accountability. With origin and process data shared in near real-time, there is no hiding place for ‘bad actors’ or poor decisions. Sharing all the good things about the product, will not be enough. It’s about performing to a consistently high level over and over again. To use an analogy from sport, it’s the one time a marathon runner is found to have used a shortcut that they will be remembered for, not the many medals they won over a long career.
Getting it consistently right though, and sharing the quality of data this high standard can deliver throughout the value chain, will foster much greater and innovative opportunities for collaboration between trading partners in the food industry. This in turn will boost trust among stakeholders, improve the alignment of cross-business operations, and enhance the overall efficiency and effectiveness of the supply chain. Furthermore, it can provide businesses with additional insights from their partners' perspectives, further enriching their understanding of the product journey.
Finally, through all parties having a shared investment, and interest, in the capture and digitalisation of granular level data, there’s a greater incentive and opportunity to simplify and automate the collection, analysis and sharing of data and the management of broader shared commercial and financial processes. Processes that have traditionally required intensive manual labour inputs and siloed paper-based ways of working can now be addressed as part of the product journey, leveraging the data in the product passport to populate new digital automated workflows. This will reduce labour costs and minimise the risk of human error and product delays caused by a lack of timely human intervention. With the focus finally off the day-to-day operational ‘fire fighting’ due to a lack of actionable data, businesses can focus more on strategic planning and addressing new areas of opportunity.
Shrinking the World Beyond the 'Four Walls' of the Business
The push for greater sustainability and the need to capture ever greater levels of information about the product highlights the need to look beyond internal operations and the supporting core capabilities of ‘four walls’ enterprise systems. Instead, to look at the the broader network of interactions with suppliers, distributors, and customers and how concepts such as the Product Passport can help businesses “shrink” this space, filling the gaps with shared data and transparent processes, which in turn generate insights to deliver benefits for all stakeholders.
The space between businesses is not just a physical concept: it includes the time, information, and systems that connect companies in a supply chain. For example, communication delays, information inconsistencies, or systemic incompatibilities can all contribute to a 'larger' space: the broader the space, the more inefficiencies, delays, and costs you'll likely encounter. When companies work together to 'shrink' this space, they can achieve smoother operations, quicker turnaround times, and lower prices.
The question then becomes, how do we go about 'shrinking' this space? The key lies in harnessing technology to streamline and integrate processes across businesses. This could mean implementing a shared digital platform for tracking product journeys or synchronising databases for real-time information access. Companies can also collaborate to standardise procedures or establish shared metrics for performance evaluation.
The aim is to create an interconnected, seamless supply chain where secure information flows freely, decisions are data-driven, and operations are synchronised. As companies work together to 'shrink' this space, they can achieve smoother operations, quicker turnaround times, and lower prices.
Conclusion
The integration of the global regulatory requirements in the Food Industry, from US Traceability legislation to the EU’s Sustainability and DPP initiatives, signifies a transformative shift towards more efficient, sustainable, and consumer-centric practices. By leveraging the power of Product Passports, businesses can achieve not only operational excellence but also carve out new opportunities for growth and innovation in an increasingly competitive market.
For us at Virifides, this broad shift of focus highlights the rise of the “product-centric supply chain”, where instead of having siloed expertise in the language and practice of supply chain management on the one hand, and of commercial and quality management on the other, there is a holistic understanding and management of the product throughout its lifecycle.
We believe that food businesses and trading partners who embrace this new thinking will be best prepared to face current and future supply chain challenges and will emerge stronger in a new digitally enabled marketplace.