Food Traceability – The role of software vendors

Living in California is wunderbar. I do have a Governor with a perfect English accent, at least from my perspective and there is no place else in the world where you have such a risk behavior that allows Gold rushes, Internet booms and other promises of riches we can accomplish in a very short time frame. They all have in common that the losers in these rushes outnumber the winners at least 10:1. I got a similar feeling when it comes to traceability systems.

Yes, I know, there is a law coming (or not) and Yes, it will change some requirements for the technical infrastructure of these systems and they will drive the software market again, but I don’t think they will to a large degree create really new software products, we are largely talking about new features in existing software products.

The level of Software technology adaptation in the food industry varies widely, the more a company already has, the closer they will be to have some form of system in place compliant with future requirements. They all work of the same principles.

First are all the ‘marking systems’ that drive traceability. They are sometimes part of MES Systems, other data collection systems or run independently. These marking systems (labeler, inkjet, packaging machines) help us identify the product, lot etc. of a product and determine the possible granularity of traceability systems. They do exist, they are largely in place and they are evolving as we recently saw the ‘Firetag’ Video on YouTube, a company that can laser engrave a bar-code on a box without a label, and that pretty fast.

Next will be the record keeping systems. Companies have internal recordkeeping systems for traceability. They are normally part of the Warehouse Management Systems, they are part of MRP and ERP Systems, they do exists, they are largely in place and they are evolving. They are especially evolving around external communication, integrating business process along the supply chain.

There are a few missing pieces which have largely not implemented yet. The topics above are mostly features in internal systems and they cover internal traceability more or less well, the missing pieces related to external Traceability.

The biggest potential for software vendors are the external traceability systems. A few years ago so called Supply Chain Management (SCM) Software evolved. The promise of these systems was to manage especially intercompany or interlocation transactions. ERP systems covered the internal accounting practices, SCM managed between companies.

We need now similar technologies for traceability. It is natural that some aspects of these external traceability systems will be added features to existing SCM software, like Lawson’s Trace Engine. Companies like trace-tracker, tracegains, Foodlogiq and Harvestmark to name a few are working on systems that share traceability data up and down the supply chain in one fashion or another. There are as a matter of fact, so many are out there that you cannot count them on two hands, there are more than the market will be able to support and I assume that at least two-third of these vendors, especially those that build the entire business model on traceability alone will fold in the next 5 years. I actually believe that the 5 companies I listed have the biggest and brightest outlook to survive the traceability bust.

Another option, and probably the most attractive one will be based on EPCIS. We need to link systems closer to each other, this is not limited to traceability. We link these systems today largely based on GS1 standards. By now it should be clear that GS1 standards will at least one option for the key element data definition in traceability systems, if not THE option. EPCIS is another addition to the GS1 stack of technologies. Most of the companies listed above have embraced that technology already. Add companies like IBM, HP, SAP and Microsoft to the list, and you know what other companies are implementing EPCIS applications with large CPG organizations such as Unilever and Nestle as we speak. Especially IBM and HP are companies that are not really providing any real business application, they provide the plumbing that these applications run on. They are working on improving their infrastructure software and communication platforms to enable participants to share more business information up and down the supply chain (Between you and me: Why do you think IBM acquired Sterling recently, huh?). EPCIS will be the electronic platform that will directly compete with external traceability systems, they make them obsolete. Who knows who will win.

One thing became clear to me. With the evolving market of traceability solutions, we will see that mostly established vendors will succeed who provide products and services beyond traceability alone. There will be very little space of ‘traceability only’ vendors. I also expect that quite some software vendors will bust, after gold rush, dot com, housing market, derivatives, another nice much smaller bust that will eliminated most of the traceability solutions we are looking at today. The losers in these rushes outnumber the winners always 10:1.

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