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How PLM Prevents Lawsuits, Recalls and Protects Brand Reputation by Promoting Transparency

3 MIN READ
How PLM Prevents Lawsuits, Recalls and Protects Brand Reputation
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Transparency has become a must for food & beverage consumers today. Between environmental, social, governance (ESG) reporting requirements, corporate social responsibility (CSR) and consumers routinely examining nutrition labels/ingredient listings at point-of-purchase, transparency is essential.

Consumers vote with their wallets

A study by McKinsey and NielsenIQ that looked at actual spending (vs. simply declared intent) on different ESG claims, showed that those products with claims had 8% greater growth over the five-year study period than those that didn’t. Overall, the study “broadly revealed, in many categories, a clear and material link between ESG-related claims and consumer spending.” Claims fell into six classes: animal welfare, environmental sustainability, organic, plant based, social responsibility and sustainable packaging.

Legislation for ESG reporting is already here for EU companies that meet certain requirements. Beyond mere compliance with the law, companies need to be proactive regarding transparency. Consumers want to know where their food is from, what ingredients are used and where those originate, what certifications a food has. They want to know that their food wasn’t made from ingredients responsible for depleting rainforests and are packaged in safe, sustainable packaging. Further, there are targets to be met for food waste. Is the company they are buying their products from, doing their part toward this goal? The EU Commission is requiring Member States to take the necessary measures to reduce food waste by the end of 2030:

  • by 10%, in processing and manufacturing.
  • by 30% (per capita), jointly at retail and consumption (restaurants, food service and households).

The EU system known as Nutri-score ranks foods by grade (A=best, E=worst) and correspondingly by color (green through red). To underscore the effect of consumer sentiment, an IRI study cited in a recent Fortune article saw the cumulative market share of A and B products increase by 0.7% and conversely, those ranked an E, had decreased market share (-0.5%). The same article reports that an FMI-Nielsen study found that 72% of consumers deem transparent product information and labeling, ‘important.’

In the US, the Food Labeling Modernization Act of 2023 is looking to introduce front-of-package labeling requirements that call out when products contain high levels of sodium, sugar or saturated fat. These will include symbols as well, similar to the EU Nutri-score rankings. It will better define what can be called ‘natural’ and ‘healthy’. The proposed bill also addresses improved allergen awareness on ingredient listings.

Claims substantiation

A modern Product Lifecycle Management (PLM) solution tracks claims in distinct categories: nutritional, environmental, religious or other attributes. An integral part of product development is being able to substantiate the claims on package via documents, certificates or other means. It is essential that meticulous, accessible records are not just kept, but digitally tied to each product so they can be pulled up at will.

Checks and balances can be built into PLM so that (for example): no allergens are formulated into a product where they should not be, ingredient listings call out the top 9 allergens per the US food safety and modernization act (FSMA), allowable ingredient levels that vary from country to country are respected.

Consumers want to believe that claims like kosher, halal, organic, low fat, gluten-free are valid, whenever such a claim is made. Managing ingredient and packaging vendors and their certifications is key to making sure that labels reflect the true nature of the food they represent.

Cost of not being transparent

There are numerous examples of consumers who feel they have been misled by companies to the point where lawsuits against food & beverage companies are on the rise. Examples:

  • Single-use coffee pods that were supposed to be recyclable but weren’t, resulted in a $10 million court decision against the company.
  • An energy drink unable to literally deliver on its fanciful slogan rendered a $13 million judgment.
  • Mac and cheese that wasn’t ready in 3 ½ minutes like the package stated.

Numerous fast-food chains have had lawsuits regarding false advertising:

  • Fast-food companies not having enough meat in their products compared to their ads.
  • A chain restaurant for their ‘boneless wings’ being made from other chicken meat and not from actual deboned chicken wings.

Even though some of the suits were dismissed, the bad publicity surrounding them isn’t welcome. Companies need to tread more carefully. Transparency is the best policy.

Transparency at the source

The organization responsible for barcodes, GS1 US is introducing a new standard: the 2D code (an example of the format is a QR code that many are familiar with). Comparatively more data can be encoded on a 2D code by using the vertical as well as horizontal dimension. By virtue of this, information that consumers want to know, like allergens, procurement, ESG data, can be placed on products and scanned with a smartphone, prior to buying or at the consumer’s leisure after purchase. According to GS1 US, industry has set a date to accept 2D codes at point-of-sale, with the moniker ‘Sunrise 2027.’ Benefits touted are: improved inventory management, enhanced recall readiness, greater sustainability, ethical sourcing, better product authentication and improved brand trust.

Best-of-breed PLM: Centric PLM

PLM manages product development and quality from concept through to store shelves housing all product data in one secure space. It can integrate with your ERP to track BOMs, tracks documentation of ingredient certifications and perform where-used ingredient searches in seconds.

With Centric PLM™, a single version of the truth captures and records all product data in real time, including project status, supplier management, ingredients, allergens, formulation, packaging and quality parameters. PLM can flag when a banned ingredient in a certain market is used or an organic ingredient’s certification isn’t current. Being able to capture a mistake before the product ever hits the market is by far the best outcome. It is the difference between exposing the public to potential safety risks and damage to brand reputation, or not. Information can be exported to 2D codes, forms needed for compliance or specifications to send to retailers or manufacturers. By having the product information digitally organized, companies arm themselves with the tools to enact transparency.

Be prepared, benefit now

Take the first steps to being able to provide the information consumers want to know. Pave the path for your organization to be ready for the next set of regulations. Learn about how a modern PLM platform benefits your company right away! Build in efficiency, pare down your workflows and store all product information in one, accessible, digital repository.