We Must Invest in Digitally Transforming Food Safety
NEOGEN Corporation has decided to waive the first-year investment to its’ EMP automation software for Food Suppliers.
Here’s Why…
COVID-19 has had a terrible impact on the world during the past year, and it will continue to do so for the foreseeable future. Throughout this pandemic, food and beverage producers have continued to operate and provide safe food, despite the increased stress on the supply chain and risks to those who work within and support the operations of these firms.
The pandemic has accelerated the imperative that food and beverage producers apply the most advanced digital technologies to alleviate risks associated with “business as usual.” For example, now, more than ever, it is important for food producers to have visibility into all their facilitates whether they are around the block or the globe. This must be done 24/7 while protecting the health and well-being of their employees. But for too many food supplier organizations, the requirement to operate food safety and quality assurance (FSQA) functions is still largely a manual, on-site process that necessitates a high-risk, high-touch approach to performing mandated and regulated processes.
The impact of the pandemic is not the only reason why food safety teams need a lower barrier to entering the digital age. While digital transformation’ itself, and the increased automation that results, has been successfully deployed across many industries and functions, it lags far behind within the food industry.
Within the manufacturing sector, we have seen digital transformations drive production automation – led by robotics, computer-aided design, process automation, and other improvements. We have lived through major industry-level digital transformations, such as on-line banking, e-healthcare, and web-based publishing. The benefits these transformations have yielded are both obvious and significant, including the ability to:
- Digitally connect operational processes
- Correlate new cause/effect implications via data-driven findings
- Gain visibility into new areas of business growth, risk reduction, and efficiency
Meanwhile, the management of food safety and quality functions within the food processing segment languishes in an analog state, often a paper-based scenario involving three-ring binders and printed, hand-marked reports.
There’s a reason for this.
Food suppliers operate at extremely low margins as compared to other global industry segments. This makes it difficult to justify the financial and human resources necessary to implement and be successful with a digital transformation. In fact, aside from auto manufacturers, food processing and agricultural production firms are at the bottom of the heap as compared to the profit margins of other example manufacturing sectors (see figure 1: Example Manufacturing Industries – 2020 Net Income % of Revenue, Through Q3’20).
Figure 1: Example Manufacturing Industries – 2020 Net Income % of Revenue, Through Q3’20’
Source: CSIMarket.com; https://csimarket.com/index.php
As we have witnessed the devastating impact of COVID-19 on an already economically challenged food industry, it has now become imperative that we find a way to remove the up-front financial risk associated with digital transformation and automation initiatives. Moreover, the benefits derived from automating food safety programs must provide a clear ROI to food suppliers in order to justify the time and resources required to digitally transform this business function.
The extent to which paper-based and siloed operations remain in-place provides the highest potential for impact and ROI. This is where remote monitoring and centralized information gathering and reporting have a direct impact on accelerating improvements, efficiencies and now, with the Covid-19 crisis, the priority of providing safe environments for line workers and FSQA teams alike.
NEOGEN’s decision to provide access to its technology at no cost for a full year is focused on a top area where companies can rapidly achieve tangible ROI – the automation of EMPs (Environmental Monitoring Programs). We are already seeing early adopters experience the ROI of digitally transforming their food safety operations.
Measuring the Benefits of Digital Transformation
The benefits of automating food safety programs are best exemplified with a common use case line of thinking. Here is a scenario that we have discovered to be almost universal within current environmental monitoring programs (EMPs) at food supplier organizations:
Today:
- Food safety teams manually collect and process diagnostic testing (swabbing program) to verify their sanitation effectiveness.
- The test results (i.e. paper-based – sometimes combined with an Excel file) are delivered by a lab (internal or external) to the food safety team, typically via a “Certificate of Analysis” (CoA) document – often formatted as a PDF file.
- The results are then manually entered into a spreadsheet (or filed in a binder).
- The spreadsheet data is then, sometimes, built into pivot tables.
- From there, management reports are created on a weekly basis and used by upper management to make decisions.
… Sound familiar? This is a thirty-six-step process documented within HACCP and food safety program policies.
Future:
- In a digitally transformed world, management reports are created automatically as the lab and workflow data is transferred digitally.
- The lab’s diagnostic results are ingested into a digital platform that automatically conducts pre-programmed analysis of the data, resulting in the management reports being updated and available in an “always-on” environment that can be accessed anywhere via a cloud-based interface.
- As data changes, alerts are automatically sent to stakeholders, accelerating the response and launch of corrective actions, drastically reducing risk of adverse events.
- This results in a series of organizational and cultural questions:
- What can your team do with the time they were spending in spreadsheets and pivot tables?
- Is there a new TRADE-OFF that would enable your organization to use the scientific training and backgrounds of the team more effectively?
- Could the time spent within legacy methods of manually collecting and formatting data be traded in for analyzing the data and putting more emphasis on new innovations, corrective actions, investigative testing, root cause analysis and the like?
You can see that the ROI realized is immediate and significant. To put this in real terms, a typical calculation of measurable ROI looks like this:
The daily Food Safety operations cost per hour for each facility is calculated:
[$18/hr.] x [4 staff] x [2 shifts] = $144/hr.
By eliminating just one hour of unplanned testing/cleaning per day, the total annual savings adds up to: $52,560.
By comparison, the annual cost of NEOGEN Analytics™ for one facility is $15,000.
Therefore, staff efficiency ROI in Year 1 is $37,560, more than 2x investment!
This is just one ROI category example and a common means of justifying a digital transformation project.
Here are the four topmost ROI categories:
- Risk reduction: Testing programs are often riddled with opportunities for error. Human error creeps in when paper/manual spreadsheet-based record-keeping is relied on as the source of truth for accuracy of testing program execution and diagnostic results analysis. The exchange of information with the lab is another area where data can be mishandled, corrupted and mistakes overlooked. Risk occurs anytime that a presumed positive test result is missed or is flagged erroneously and is therefore a false positive. Either a potential outbreak (recall-potential) may be missed, or in the case of a false positive, resources are wasted on unnecessary and expensive corrective actions. Reducing these instances provides immediate ROI by lowering both the risk and cost associated with proper management of the food safety function and its data.
- Quality improvement: The faster an issue can be discovered and addressed, the more rapid a problem can be identified, quarantined and removed. Waiting for days or a week to see an actionable quality report impedes and delays the ability to address issues. Automation of this data and the analysis of trends can point to problems BEFORE they impact quality. This relates to ROI in several ways, including customer relations, brand value, and competitive positioning.
- Efficiency gains: Manually executing a testing program to verify the effectiveness of their sanitation controls, even when performed precisely and in conformance with all internal policies, is an arduous multi-step process. NEOGEN has found that automation of the process reduces an EMP program from thirty-six manual steps down to just six. This 6x gain translates to fewer resources being required to execute an EMP program, while freeing up trained scientists to perform higher-0level functions – such as analyzing the data rather than manually managing it within spreadsheets and pivot tables.
- Staff utilization & retention: When trained scientists are freed from tedious and repetitive manual processes, and can focus on their true calling, they tend to find greater job satisfaction and fulfillment. This translates to lower turnover and greater business continuity. Over time, an automated EMP program enables scientists to do what they do best – form hypotheses, test theories and ultimately improve the overall food safety through more effective means of testing, tracking, tracing and eradicating harmful pathogens and contaminants from food production areas. The result – decreased recruiting, hiring and training costs translate to significant ROI.
NEOGEN has published a white paper describing how digital transformation of food safety delivers ROI, including calculations and approaches that your organization can adopt.
The ultimate benefits described above are where objectives can be prioritized. The technology is simply a means of getting there. NEOGEN provides both the technology and a market-tested strategy to transition from a manual to a digitally transformed automated reality. In the end, your processes, the language you use, and the way you spend time will be transformed. Digitally transformed.
Food safety teams that use NEOGEN Analytics have digitally transformed their operations. They have improved visibility and accelerated their ability to take action on the digital performance, risk and mitigation information at their fingertips. When data related to their safety and quality performance changes, auto-alerts allow actions to be taken immediately.
In addition to the ROI categories listed above, a digitally transformed food safety operation also enables the data needed for audits and inspections to be “always on” and available with only a few clicks. This, in-turn, changes the dynamic and relationship with customer auditors and regulatory inspectors alike, as they witness and experience your new advanced level of information management and insight-driven food safety performance.
Thank you for continuing this 5-part blog journey with me. I know digital transformation doesn’t happen overnight, but if I can bring awareness to speed up the process then that is exactly what I will do.
About David Hatch:
I’ve been involved in some form of a digital transformation for a very long time. I was fortunate to start my career right around the same time that the Internet was emerging from the world of the government and military to commercial use. My first project was transforming the Boston Red Sox baseball and Bruins hockey video content from an analog to a digital medium… meaning that for the first time, the owner of the content could digitally access, search, and find the exact video they needed to fulfill certain new business opportunities. That experience, which resulted in building a video content licensing business, led me to various experiences across a multitude of industries, including banking, publishing, healthcare and food & beverage. I’ve spent my entire career working on one challenge: How can a business use technology and their digital assets, data and analytics to make better, more informed decisions that improve the business, meet customer needs and achieve desired outcomes and objectives.
