3 ways to improve traceability and profit
Welcome, everyone. This is agcelerate. And my name is Nikolay Shchetikhin. And as usual, I have Jim Johnson with me. Hi, Jim. I know how you doing today. I’m doing good, doing wonderful. And as everyone noticed, probably that we finally got a name for our show. It took us a while, you know, it’s a second season, and we just got the name. Well, it appears that it’s kind of hard to pick the right theme. And there is a Russian saying that the ship will sail as you name it. So we named ourselves accelerate. And this really resonates with what we do and what we represent in the industry.
Yeah, and they come in and it’s great, good to have a new name. But also we’re going to continue with the season talking about topical issues in the industry, things that are impacting our customers, and the the poultry and Swine sectors particularly, and keeping it topical, having a discussion about key elements of how we can help how we can support the industry and our customer base. Today, what we’re going to talk about is three ways to use data to improve traceability to increase profit. That’s today’s subject.
All right, yeah, it’s a very big, broad subject as usual. But it can be really, really detailed. So let’s try to break it down. And maybe start with traceability that is really gaining importance these days, within the industry and from the outside. From the consumer perspective, so many companies are trying to improve it. But what is traceability in general. So this is the ability to link all the bits and pieces throughout the production and have it traced. So if I use some of the ingredients in my feed, then I will be able to trace it to the end product. And vice versa. From the back end, I need to be able to get the package of some product and be able to trace all the way to the production source.
Who’s driving that who drives the need for that Nik.
So I guess the The first step is the consumer is always a consumer because these days, people want to know what they eat in very, very detail. They want to make sure that it’s really organic, if they pick organic products, they want to make sure that there are no antibiotics, they want to make sure that its origin is for example, from their region or something. So they are really driving producers to provide them that traceability so that they can then be sure in the products they are consuming.
Yeah, it’s good I mean, I think consumers even if you look at the current pandemic have become more interested in where their food is coming from. And I think that’s something that’s going to continue. So traceability certainly is being driven from a consumer point of view. And also the larger retailers and food service sector players are driving it as well, through a number of different vehicles. You know, they’ve got a lot of these players, that Tesco as the eyes does it Walmart or wherever they’ve got their audit programs, along with KFC McDonald’s. So they’re auditing suppliers. But there’s also kind of national certification of quality marks and certain countries would be around the world that have their own mark stands for welfare and will produce product to a standard red tractor in the UK will also be another example of a of a UK based quality mark that’s looking at methods of production and trying to satisfy an end product up a level from just a normal run of the mill commodity to style of stuff so, company’s national branding and quality control, and then also retailers and QSR companies, food service companies are driving this thing. And I guess we get into other elements of food safety is a big one. Do you want to talk a little bit about that? And it can mean that is an important part of traceability.
Yeah, exactly. And, again, with all the pandemic happening in the world, food safety is really, really important because some of the transportation is limited. And everything should be traced, who goes where, what kind of products go where, especially these days. And again, this comes to all other areas of the business that are linked to the supply chain. So all the ingredients for feed, all the pharmaceuticals that are coming into the flocks, and all that should be traced and tracked through all the supply chain.
Yeah, absolutely things as well, in terms of bird health, or animal health diseases. salmonella has compiler back toes, you know, human food, poisoning organisms, etc, are very important. So the whole traceability things key to doing business in the future. And then the second comment of our title today and topic was profitability. And, you know, particularly poultry industry isn’t is It’s incredible, Every business has to be profitable to survive, of course, but and the pressures nowadays are increasing. And we’d been as an industry and particularly good at reducing their costs becoming more efficient, competitive over time. And, and we’ve passed some of that on to consumers by making poultry more affordable, and poultry products more affordable over the years. And that’s come through work in genetics, we’ve made tremendous strides in genetics, the efficiencies of the birds and livestock we use in the industry. And it is, is hugely different towards 20 3040 years ago, it’s coming through advancements in nutrition, we’re much better now, provided diets that suit the livestock, we’re using more efficient diets that improve performance. And it’s come from great gains in management and technical capability on farms and in processing plants and feeds mills. So there’s been gains, and all of these three areas that have helped significantly to reduce the cost of production make it more affordable, some of that gain has been passed to consumers, which has driven volume. And you know, we’ve grown the industry hugely over that period of time.
And I guess to keep it the same way to keep it affordable, producers still will need to get tighter and tighter and tighter on the cost because all the raw materials are growing in price. And also there is always a volatility, with everything, with labor, with pharma with feeds, with all the supplies, all the like electricity, water, all that is always fluctuating up and down. So that you need to be very strict on how you calculate cost, how you keep it in the bounds you want. But like with the amount of implementations we did, we saw all kinds of different calculations companies are going through. And again, the poultry industry, for example, is very different from regular manufacturing, where you get the raw materials, you put them together, you do assembly and then you have a product and all your materials plus labor. This is your cost in in poultry is very different. And again, it’s different for every segment for breeders is one type of calculations for hatchery it’s different for feed mill it’s different. So everywhere we need to keep tracking of the cost. This is where traceability comes into play, right? And we also need to make sure that we measure and capture all the basic and main buckets, like feel like supplies like labor, the material itself, in this case, a bird or egg, etc. So we need to be really cautious about the cost as an industry in order to make it still affordable tool to people and popular amongst consumers.
Yeah, I mean, in some respects to start listening to you talking I think there’s a kind of link strong link really between how we would manage cost and traceability and in a business and utilize systems and maybe we know we can talk of an explained that talk a bit about three ways really three ways that we can use the data to help improve both cost management and also traceability And the key thing nowadays is to have information to hand in real time so that you’ve got time to make decision. Time to take actions and tend to have an impact on your supply chain. So, yeah, talk a bit about that, Nick.
Yeah, so and like, like I said, three main points. And the first one is the most important one. And we really like to talk about this topic, Jim, you know, and this is integration and consolidation, that includes main database that would store all the data plus all the components, including IoT that will supply and gather the data in one single source. So that’s very important, both for costing and for traceability. Because in order to get all those pieces together, whether it’s a cost elements, or you’re tracking for the raw materials, or supply chain, you still need to have everything in one source. And there are all kinds of different aggregation models these days. That, you know, they called data warehouses, data, lakes, etc. But still, what it is, is just a single source of information that is formatted and cleaned a certain way so that it can be extracted. And it can have only one interpretation, right? Because it’s super important to have a single source of truth, so that you would not have a debate on how you calculate this or how you calculate that, or which number to trust. So, again, for both for costing, and for traceability, it’s super important to have all the valid data in one single source.
Yeah, I mean, that’s very true. And the other important thing just to leverage that data is that we make it in such a way they can flow between the different systems, it’s very important from data capture, but also, from that central single database that you can utilize the data, you’ll utilize it for accounting for cost calculation for inventory control, traceability, help close financial period end looking at it flowing into planning and forecasting tools, looking at it flowing comfortably into a business intelligence tool, for example. So the way the data is set up for my team, and how it can flow between the different systems in an automated and seamless fashion, is very important to leveraging the power of that data today. And then a lot more effort nowadays, going into IoT. And we’ve talked about IoT, Nick, in the previous season, and one of our one of our podcasts and capturing data that real time what’s happening in these chicken, barns or chicken houses or hatcheries or processing plants in real time, and bringing that making it visibility’s is critically important to helping us go forward and using data. The other thing, I just touched on it a little bit, the second point we want to talk about, I guess, is creating visibility, to allow you to interrogate data. And that’s critically important. When you’re managing a business looking at costs, looking at traceability performance of the organization, I’ve found in my career that if you can make if you can make performance visible, just the fact that it’s there, people are seeing it and reports you’ve standardized, you have a discipline about report roll out people then start to react and respond and try to improve the business, but you have to create it yet the visibility on the numbers, and manage the performance against targets and KPIs and manage the deviations. And then also, it’s very important from a traceability point of view that we make that whole traceability everything visible in reporting, and make people aware of it. That in itself strengthens the whole the whole disciplines behind data, costs, and traceability. And I mean, there’s tools, you need tools for that you need good software tools, you need strong systems disciplines, from validating data that goes into the system to how you use it and controls and who uses it. You know, it’s important that you have authorization levels set in the systems and software tools themselves. And you have the right skill sets available in the business of people to be able to utilize that data properly.
Yeah, and you’re absolutely right, you need to have tools and but you also need to have the data itself. But we all know that the data is in the industry is growing every day, every time there is more and more and more data. But now it is super important to have those skills to mine that data to get the outputs out of it. So if you have all the pool of data, whether it’s structured or unstructured, you need to know where to look at it or and also make sense of what it means whether we have to present Increase on our supplies? Is it okay? Or is it is it too much already? Or if for example, we have something happening on one end of supply chain, then how do we look and what it means on the other end of supply chain. So it’s very important to know how to dig the data. And I was watching some of the seminars recently, and many companies mentioning that IT departments are getting more and more pressure on doing analytical jobs or building those analytical tools. And company themselves. admit that it’s not right for IT people doing this job, it’s analytical job, they should be more related to a business. Right. And this is how probably most of the IT departments are transforming. And this is part of the digitalization process of organizations to have a dedicated department that would do analytics that would do reporting that will do that data mining, be able to link all the components together. And again, it’s very important to have a strong automation, especially for the reports, because those reports they are required every day, every day, every day. And if we can automate generation of those production reports, traceability costing reports, that would mean a whole lot of difference for any company.
Yeah, you’re absolutely right. Absolutely. Right now, and then the third area we want to talk about the highlight today is the supply chain planning. And this is a huge area in in most businesses is if you to gain efficiencies, if you manage that supply chain efficiently, has significant benefits across the supply chain. And we’re not just talking about bird volumes or you know, Swine volumes through your business here, we’re actually talking about managing efficiently everything, all the inputs, all the resources, our own producing these livestock, whether it’s breeders at hatchery level, commercial level, or in the processing plant on a female. So it’s it’s, it’s the birds, it’s the it’s the bags, but it’s the raw materials for the feed, and managing all of these aspects efficiently. It’s packaging materials, it’s human resource, staffing levels, etc. It’s everything that you need to produce, and, and manage that supply chain in an efficient manner. And a strong supply chain planning tool that covers end to end is really critically important these days to optimize that whole area. And how you manage the supply chain efficiently.
Yeah, we already mentioned that importance of the real time information that are coming in. So if you have that real time information at your fingertips, you will be able to react, like you said, so that if something changes in your production, you can react or if something changes on your orders and your demand is changing, your customers are reacting to the market changes or something, you also need to be able to react. But there are also some complicated cases and some complicated scenarios for planning like live whole scheduling, because you need to get all the routes, all the trucks, all the drivers, all the houses, everything should be put in place like ducks in a row. And same with the for example processing plant optimization. It’s also very complicated tasks. So the use of modern technologies like artificial intelligence really helps and saves the day.
Yeah, it sure does. And, you know, I guess really, in summary, I mean, the title today is really looking at three ways, three ways in the business that we can help utilize data to improve traceability, and profit. So what did we touch on, we talked quite a bit really about the integration and consolidation of data, getting it well format and getting it in one place and having one source of truth. The second point we talked about was creating visibility, visibility to the data through real time reporting through a format in data in such a fashion as you can interrogate it, you can analyze it, and you can really leverage the power of data in your organization. And the third important item here where we’re chasing cost and we’re chasing traceability is really how we manage the supply chain, and having strong tools there that give us visibility, allow us to improve our efficiencies across that supply chain and satisfy the customer’s demands at the end of the day.
And really, there are three main sections but we talked about hundreds of different points of how to improve things because there are always different alternatives. But we will talk about those a little bit more on our future episodes. But in the meanwhile, thanks everyone who joined us on this episode on this agelerate show, and we’ll see you in the next one. Thanks, Jim. And follow us on social media. We are on LinkedIn, on Twitter on Instagram. Thanks, Nick. Until the next one, ciao. See you then