Food Regulatory Compliance: Food and Beverage Laws and Food Fraud Prevention

By George Delp | July 13, 2023

Food Regulatory Compliance Microsoft Dynamics 365

Microsoft Dynamics 365 gives you access to a powerful suite of tools to help food manufacturers stay compliant in an industry where rules and regulations constantly evolve.

What Is Microsoft Dynamics 365?

Microsoft Dynamics 365 is a comprehensive set of cloud-based software-as-a-service (SaaS) business applications that can be implemented as an ERP or customer relationship management (CRM) system for businesses of all sizes.

Before we dive into a more thorough breakdown of what Dynamics 365 can do for you, let's look at how food manufacturing rules and regulations came to be and why complying with them is so important.

In the early 20th century, nothing barred charlatans and quacks from marketing false remedies, worthless panaceas, and bogus medical devices. And food manufacturers weren’t held to any established processing or manufacturing standards.

Congress remedied this situation in 1936, passing the Food, Drug, and Cosmetic (FD&C) Act, which commissioned the Food and Drug Administration (FDA) to regulate the production and distribution of foods, drugs, and medical devices.

The FDA developed rules and codified them in Title 21 of the U.S. Code of Federal Regulations (CFR), and the agency is invested with the power to enforce rules using:

  • Inspections and audits of food handling facilities
  • Investigations of suspected violations
  • Warning letters notifying companies of violations and steps needed to correct them
  • Seizure of adulterated or misbranded products
  • Court injunctions mandating or prohibiting certain actions
  • Criminal fines and prosecution

Updating Food and Beverage Industry Regulations and Compliance

Lawmakers have updated the FD&C Act multiple times since its original passage in 1936. The most recent legislation to impact regulatory compliance in the food industry is the 2011 Food Safety Modernization Act (FSMA).

In implementing the FSMA, the FDA has proposed and adopted a host of new regulations aimed at preventing rather than reacting to outbreaks of foodborne illness, including:

  • Updated Current Good Manufacturing Practices (CGMPs)
  • Mandatory food handling and safety education and training
  • Requirements for food facilities to prepare food safety plans incorporating an assessment of food-related hazards and process, allergen, and sanitation controls
  • Requirements for companies to establish procedures for approving suppliers

Food Traceability: The FDA’s Push for a Transparent Supply Chain

One critical change initiated by the FSMA is the FDA’s new Food Traceability Rule, which requires that any person or entity that handles food on the FDA’s Food Traceability List (FTL) maintain records for Critical Tracking Events (CTEs), including:

  • Harvesting a listed food
  • Cooling a listed food (e.g., icing seafood)
  • Initial packing of a raw agricultural product
  • First land-based receipt (e.g., when wild-caught fish are brought ashore)
  • Shipping and receiving (not to a consumer but as part of the food-handling or manufacturing supply chain)
  • Transforming a food commodity (mixing, packing, relabeling, cooking, etc.)
  • Generating a traceability lot code (TLC) that can be used to track the food through an entity’s supply chain

Companies must have a traceability plan that details their procedures for ensuring traceability within their supply chain, and records must be made available to the FDA within 24 hours if requested. This rule goes into effect on January 20, 2026.

Modernizing Food Compliance Means Using Technology

Although the FDA allows paper recordkeeping under the new Food Traceability Rule, paper records will quickly grow cumbersome in a food or beverage operation of any size.

The first core element of the FDAs current “New Era of Smarter Food Safety” initiative is “Tech-Enabled Traceability.”

“The New Era of Smarter Food Safety represents a new approach to food safety, leveraging technology and other tools to create a safer and more digital, traceable food system,” the FDA says. “It is clear FDA and our stakeholders should be looking at how to tap into new technologies that include, but are not limited to, artificial intelligence, the Internet of Things, sensor technologies, and blockchain.”

How Dynamics 365 Can Help Food Manufacturers Adapt to the New Regulatory Environment

If you run a food or beverage manufacturing operation of any size, FDA regulations loom large in your day-to-day operations. Aside from the new requirements imposed under FSMA, you still need to take care of long-standing obligations like the FDA’s stringent labeling rules.

The reality is that if the FDA is looking for complete supply chain transparency with digital traceability, accomplished using technology like the Internet of Things (IoT) and blockchain, your company should be heading in the same direction.

Ultimately, food law compliance is intertwined with every aspect of your business.

Did a recipe change, or are you making a new product? You need new labeling. To create a label, you may require input from:

  • Supply chain: Where did the ingredients come from? Have the suppliers been vetted and approved?
  • Manufacturing: Are there allergens in the product or the facility where it was produced? What is the batch or lot number?
  • Marketing: Are all marketing claims compliant with FDA restrictions?

Traceability also touches every area of your operation. Quality assurance and food regulatory compliance personnel stand between regulators outside your company and supply chain, warehousing, manufacturing, distribution, and marketing within.

The bottom line is that keeping track of and having reliable information related to food regulatory compliance requires a systematic and technological approach.

We often consider enterprise resource planning (ERP) systems from the standpoint of integrating financial, operations, and supply chain data. This integration enables you to make informed, savvy business decisions based on reliable, data-driven insights.

An ERP built on Microsoft Dynamics 365 and implemented by Stoneridge Software can provide you with the same kind of assurance in the realm of food regulatory compliance by becoming the one source of truth for all your compliance-related data.

Stoneridge provides ERP solutions for batch manufacturers and food and beverage manufacturers and stays with you every step of the way from implementation to providing ongoing support.

What Are the Advantages of Dynamics 365?

There are several compelling advantages to using Microsoft Dynamics 365 as an ERP, including:

  • Cloud-based: Computer infrastructure is hosted in the Microsoft Azure cloud, eliminating the need for on-site server rooms, etc.
  • SaaS: Avoid loading security patches or feature updates on dozens (or hundreds) of devices. Users can access the system securely via a web browser on any device, and all updates are automatic.
  • Secure: Benefit from Microsoft’s massive and ongoing investment in cybersecurity.
  • Controlled costs: There’s no up-front or ongoing investment in hardware to host the system. Licensing is per user, per month—a consistent, clearly defined cost you can plan for.
  • Flexible: When you need more users, add them. If you need additional information technology (IT) infrastructure, you can quickly add it on Azure.
  • Expandable: Add functions from any application in the Dynamics 365 suite as needed. If you need additional industry-specific functionality, add an extension from an independent software vendor (ISV) on the Microsoft AppSource.
  • Connected: In addition to allowing your ERP and CRM systems to be in sync, Dynamics 365 also connects seamlessly with Microsoft 365 Office applications and Microsoft Power Platform.
  • No more data silos: All your business data is in one integrated system, giving you one universal source of truth for food regulatory compliance, optimizing your operations, and making high-level business decisions.

How Can Dynamics 365 Help With Food Regulatory Compliance?

Imagine a supply chain where your suppliers apply IoT-enabled labels to ingredients as soon as they’re harvested. At every step along this digitally traceable supply chain, an entry in a secure blockchain records each ingredient or product’s movement.

Every ingredient in a prepackaged food or baked item—with all its source information—is recorded in your ERP. Products go out to retailers with next-generation GS1 barcodes that identify more than just the item in the package—they include things like lot number, expiration date, ingredients, and allergen information.

A Microsoft Dynamics 365 ERP can facilitate all this and more.

A Dynamics 365 Example: Preventing Food Fraud

According to the FDA, food fraud—economically motivated adulteration (EMA), in FDA parlance—is when “someone intentionally leaves out, takes out, or substitutes a valuable ingredient or part of a food. EMA also occurs when someone adds a substance to a food to make it appear better or of greater value.”

For example, an unethical supplier might dilute an expensive oil with a cheaper oil or increase the volume of a spice product by adding plant waste. The FDA requires you to have controls in place to prevent food fraud.

You can leverage a Dynamics 365 ERP to prevent, detect, and eliminate food fraud by:

  • Establishing an end-to-end traceable supply chain.
  • Requiring all ingredients to be sourced from approved suppliers.
  • Identifying ingredients at high risk of being adulterated.
  • Establishing workflows that include regular testing of ingredients for adulteration.

Microsoft Dynamics 365 and Food Regulatory Compliance

As the FDA pushes for increasingly technological solutions to keep the nation’s food supply safe, an ERP built on Microsoft Dynamics 365 moves your company in the same direction. A Dynamics 365 ERP facilitates food regulatory compliance in multiple ways:

  • Maintain one unified source of reliable data for food compliance and business operations.
  • Establish an end-to-end traceable supply chain, enabling you to respond quickly to FDA audits and inspections and avoid costly and reputation-damaging recalls.
  • Position your company to adapt to future FDA-introduced rules and technologies effortlessly.
  • Coordinate and automate workflows for employee training, sanitation, and labeling requirements along with your supply chain, recipe, and manufacturing management processes.

Stoneridge Software: Your Dynamics 365 Implementation Partner

Stoneridge is a Certified Microsoft Partner for Business Applications and has earned the Specialist/Expert designation for Small and Midsize Business Management. In fact, Microsoft named us Partner of the Year 2022 for Dynamics 365 Business Central.

Our approach to implementing ERP and CRM systems is to partner with client companies, taking time to understand your business needs and customize your systems. Then, we provide training and ongoing support to help your employees adopt and exploit your ERP, giving you the maximum return on investment.

Contact us today to learn more about Stoneridge’s Dynamics 365 ERP systems for food and beverage manufacturers.

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