Building Visibility in the Food Service Chain

Even as food supply chains grow longer and increasingly complex, pressures on transparency, quality, safety, and cost continue to rise. Consumers want nutrition and sourcing information, while chain operators and distributors need “track and trace” capabilities, and more. Having complete data on real-time and historical locations, temperatures, and quality indices for food and other supplies is the holy grail of track and trace, but the even larger goal of “visibility” beckons. A “visible” supply chain adds to basic track and trace data richer information on capacities, assets, forecasts, costs, and possible disruptions.

How close are we to achieving extensive visibility? Not very, but the potential grows exponentially each day, as technology and collaboration continues to build capabilities to sense, record, and connect processes across food supply chains. Last fall, SupplyChainScene (the NRA-TCU benchmarking partnership) conducted a survey of distribution practices in restaurant chains.  The figure below shows that data feeds received by chain operators rarely provide more than invoices, inventories, and purchase orders. Location information such as delivery data, ASNs, or other notifications are less regular. The recent challenges highlighted in the stories of competitors like Chipotle and others provide additional evidence of the lack of transparency in many of even the larger and more sophisticated food supply chains.

graph data feeds

GSI – a first step?

To build visibility, a logical starting point is to define common data standards so that information can be captured and shared more seamlessly. GS1 standards provide a platform for structuring and sharing product information globally, including: Global Location Numbers (GLNs) for location identification, Global Trade Item Numbers® (GTINs®) for product identification, and the Global Data Synchronization Network™ (GDSN®) to exchange information through a network of certified electronic data pools. These attributes provide a uniform way of identifying food as it moves through supply chain from field to restaurant. Firms implementing GS1 are reporting improvements in accuracy of shipments and invoices, cost reductions by elimination of rework caused by inaccurate/inconsistent data, and tighter inventory control.

A GS1US report suggests that manufacturers and distributors making up about 75% of industry revenues have adopted GS1. NRA research from 2011 indicated that companies making up 45-55% of the foodservice industry’s revenue used the GS1 standard at some level. Our SupplyChainScene survey shows that close to 66% of respondents use bar code scanning in either distribution centers or at the time of delivery to restaurants. However, only 1 in 5 respondents said their organizations have applied GS1 standards everywhere possible in their supply chains. About 35% of respondents use GS1 standards for some aspects, leaving 45% of respondents who have not implemented GS1, or did not know if they had. So, while GS1 seems to be progressing in manufacturing and distribution, operators still have a way to go.

graph g1 standards

Unavailable and non-standard data are, at best, major sources of inefficiency. At worst, lack of visibility in a crisis severely hampers recall and root cause analysis efforts. GS1 standards provide a platform to identify, capture and share consistent information that enables companies to collaborate with supply chain partners. Even greater supply chain visibility can be achieved by encoding other types of meta-data, such as suppliers’ safety audit data, dates of shipments and arrivals, and product specifications. Availability of such information at every step of the supply chain enables companies to create checkpoints at important junctures to provide greater traceability, easing the process of identifying sources of contaminated food, missed shipments, and other problems. For example, capturing physical attributes of shipping pallets can reduce instances of overweight load rejections. With better information, DC’s and warehouses are better equipped to optimize truck loads and minimize freight costs. 

Combining RFID and QR tags for identification with GS1 information services, shipments can be tracked from farm to fork. Trucks can be identified with RFID, and shipments can be identified with RFID and QR codes. The GS1 provides standardized data values for connected partners to track and trace movements and procedures. Traceability information can also be used for targeted recalls, fraud protection and to detect counterfeiting.

Making it happen

In the aftermath of bouts with contaminated foods last year, Chipotle partnered with FoodLogiQ to build a cloud-based traceability system, providing real-time visibility into products as they moves through the supply chain. Subway/IPC provides another example of improved visibility. When IPC compared product data from its internal systems with data from distributors’ systems, they found that 89 percent of the products had data issues. IPC determined that resolving a 1.5-pound discrepancy in mayonnaise weight could produce as much as $100,000 in annual transportation cost avoidance.

Global standards are hard to implement, but may yield huge economic benefits. GS1 barcodes have produced billions in savings since their adoption in the grocery industry in the 1970s. Similar results are possible in foodservice, if we can find ways to overcome significant barriers. As with any new technology, the benefits of GS1 standards are currently hard to predict, and use-cases need to be clearly documented. Major chains like Darden (more than 1900 restaurants across North America) appear to be committed to GS1 standards. However, to implement standardization on a global scale, more restaurants, distributors, 3PLs, and other supply chain players need to embrace GS1. Once a critical mass of adoption is reached, the benefits of a visible supply chain will be more apparent. Important on-going efforts are needed to reduce inconsistencies in terminology, types and formats of data tracked and stored, information systems used, and levels of partner collaboration and information sharing. While these challenges are likely to impede widespread adoption of global standards for some time, one cannot help but expect that visibility will continue to grow in restaurant supply chains–it is inevitable. Does it make sense for you to be a leader in this space? A fast follower? A late adopter? It’s important to view visibility as a strategic choice that must be made repeatedly, as both technological capabilities and consumer expectations evolve.

Here’s looking at you!

Stay tuned for more on this topic – This spring the NRA-TCU benchmarking partnership is launching a research study of track and trace/visibility in restaurant supply chains.


Morgan Swink and Rakesh Kantharajappa