Transforming Food Safety through Traceability: How Dynamics 365 Can Prepare You for FSMA 204 Compliance
Food safety is a growing concern for food and beverage manufacturers dealing with the evolving complexities of modern food supply chains.
The Food Safety Modernization Act (FSMA) 204, introduced by the FDA, represents a transformative step toward improving traceability and recall effectiveness in the food industry. By focusing on Critical Tracking Events (CTEs) and Key Data Elements (KDEs), FSMA 204 sets new standards for food producers. These standards ensure that every step of the supply chain is transparent and accountable. Traceability lot codes (TLCs) are central to this framework, empowering businesses to pinpoint affected products and quickly issue recalls.
With the FSMA compliance date set for January 20th, 2026, adopting the right processes and software is a proactive step to safeguard public health, protect brand reputation, and maintain consumer trust.
In this blog, we’ll delve into the evolving landscape of food safety regulations and explore how businesses can meet these new requirements by:
- Detailing FSMA 204 and its critical components such as compliance criteria and what is expected of food suppliers under these new rules.
- Outlining actional steps food producers can take to achieve compliance
- Highlighting the benefits of precision recalls
- Discussing the indispensable role of traceability lot codes
- Providing a snapshot of how advanced technologies – like Dynamics 365 – are shaping the future of food safety compliance.
What is FSMA 204?
The Food Safety Modernization Act 204 represents the most comprehensive overhaul of U.S. food safety regulations in 86 years. Recognizing the need for greater accountability in the food supply chain, the act established the Food Traceability List (FTL), which identifies foods with higher contamination risks. This regulation sets new requirements across five critical areas:
- Food traceability
- Produce Safety
- Foreign supplier verification
- Preventive controls
- Sanitary Transportation
A key component of FSMA 204 is the requirement for a written food safety plan, detailing potential hazards for any product on the FTL and strategies to mitigate those risks. This includes the introduction of traceability lot codes (TLCs). By mandating that distributors and retail establishments record these codes, FSMA 204 provides a seamless tracking system from growers to retailers. This innovation allows for precision recalls, targeting specific batches, instead of sweeping commodity-wide recalls. This shift improves public safety, minimizing economic and reputational losses for businesses.
A cornerstone of FSMA 204's implementation is the Food Traceability Rule. This rule outlines the key events and data necessary for achieving end-to-end traceability across the supply chain.
What is the FSMA 204 Traceability Rule?
The Food Traceability Rule mandates detailed documentation or Key Data Elements (KDEs) of several Critical Tracking Events (CTEs) to ensure comprehensive traceability across the food supply chain. Here’s a concise breakdown of each event:
Harvest
For produce, the harvest location must be recorded with geo coordinates or field names. For aquaculture, the container name is required. You must also track the harvest date, quantity, unit of measure (UOM), and reference documents.
Initial Cooling of Raw Agricultural Commodities (RACs)
Cooling locations, dates, commodity and variety details, quantity, UOM, and reference documents are required to track the initial cooling process for RACs.
Initial Packing of Produce
This event captures the packing location, date, quantity, UOM, and the produce description. Another important step at this stage is the assignment of the traceability lot code (TLC).
First Land-Based Receiving (Seafood)
For seafood, the species name, date range, location of the catch, and date the food was landed are required. Additionally, the TLC is assigned, alongside details about the receiving location, quantity, UOM, and reference documents.
Transformation
Any transformation, such as repacking, relabeling, or using a product as an ingredient, requires tracking the original TLC. This includes assigning a new TLC and documenting the transformation date, location, product description, quantity, UOM, and reference documents. A key exception is if a bacterial kill step is applied, which removes the product from the FTL.
Shipping
You must document all shipping activities, including the product description, shipping date, quantity, UOM, TLC, origin and destination locations, and reference documents. Tracking TLCs through the supply chain is a notable expansion from previous regulations.
Receiving
Receiving requires documenting the product description, receipt date, quantity, UOM, and the TLC (if not assigned by the original packer, it must be created). Additionally, businesses must record the origin and destination locations and reference documents. This requirement now extends to retail food establishments, addressing gaps that previously led to widespread recalls like the Romaine lettuce incidents in 2018 and 2019.
Below is an example of the Key Data Elements (KDEs) required for a produce harvest under FSMA 204, illustrating the specific FDA-mandated information for compliance:
Moving into Action: Preparing for FSMA 204 Compliance
Becoming compliant with these regulations involves several key steps. Here's a structured approach to guide your efforts:
- Build Your Compliance Team: Assemble a team with support from senior management, operational leads, IT, and sales will help you drive compliance efforts.
- Identify FTL Products: Determine which products you handle, pack, hold, or ship are included on the FDA’s FTL.
- Review CTE Processes and Touch Points: Evaluate the CTEs performed at your facility and identify the associated KDEs.
- Capture KDEs: Pinpoint the best locations and processes for capturing KDEs within your CTE workflows.
- Map Data Flow: Map how KDEs flow between CTEs within your facility to ensure comprehensive traceability.
- Identify and Prioritize Traceability Contacts: Establish internal and external traceability contacts for efficient communication. Then integrate these into your food safety plan.
- Implement or Update Systems: Upgrade or install systems needed to capture, record, and report traceability data.
- Test and Improve: Conduct internal testing to identify and resolve any issues with your traceability processes.
- Document and Train: Create detailed documentation of your new procedures and provide thorough training for your staff.
- Test with Trading Partners: Verify your traceability process by testing data exchange with suppliers and customers to ensure smooth communication.
Following these steps will streamline your compliance journey while ensuring your traceability systems are robust and effective.
The Key Benefits of Automating Compliance with FSMA 204 Software
Automating FSMA compliance with strong ERP software gives you a streamlined approach to meeting and surpassing regulatory requirements. By integrating modular solutions, food processors can enhance efficiency, improve traceability, and maintain compliance at a pace that aligns with their unique timelines and budgets.
Six Benefits of Automating FSMA Compliance:
- Bi-Directional Traceability with Full Compliance Reporting: You will gain complete visibility across the supply chain, enabling the fast-tracking of ingredients and products from origin to consumer.
- Allergen Control: Manage allergen segregation and labeling effectively to mitigate risks and maintain safety standards.
- Quality Management: Ensures consistent quality control with reliable testing data throughout the lifecycle of ingredients and finished goods.
- Batch Management: Track lot numbers, substitutions, and ingredient specifics for accurate batch control and recall readiness.
- Warehouse and Logistics Management: Gain real-time insights into the movement of ingredients and products during receiving, manufacturing, and shipping.
- Supplier Management: Evaluate and monitor suppliers based on quality, delivery performance, and recall history, fostering stronger supply chain partnerships.
Meeting FSMA Requirements with Dynamics 365 Solutions
Preparing for this involves investing in updating data capture systems, analyzing workflows, and validating the traceability of data exchange with suppliers and customers. Dynamics 365 ERP solutions contain built-in processes and seamless integrations with third-party tools and apps to help you. Your two Microsoft cloud-based ERP options are Dynamics 365 Business Central - Powered by YAVEON ProBatch, and Dynamics 365 Finance and Supply Chain Management. If you start now, you will have more time to work through challenges, ensure accuracy, and achieve a smooth rollout.
Retailers are setting the tone by requiring traceability data for all products—not just those on the FDA’s Food Traceability List (FTL). The implications are clear: businesses must streamline processes, implement systems, and thoroughly test traceability workflows to ensure compliance before the deadline. Dynamics 365 solutions – administered by a strong Microsoft partner like Stoneridge Software – can help you do this effectively.
How Dynamics 365 ERP Systems Can Help
Looking strictly at Dynamics 365 ERP systems, there are some powerful features to help you prepare for FSMA 204 compliance, including:
- Advanced Lot and Batch Tracking: Dynamics 365 tracks ingredients and finished goods throughout production, providing end-to-end visibility. It does this through capabilities that boost advanced recordkeeping, mobile data capture, and automated reporting.
- Integrated Supply Chain Management: The platform connects procurement, production, inventory, and distribution. These tools ensure data consistency and enable faster responses during recalls or investigations.
- Compliance Reporting: Built-in tools generate reports that meet FSMA 204's data-sharing requirements, including detailed records of sourcing, processing, and distribution activities.
- IoT and Sensor Integration: Dynamics 365 integrates with IoT devices to capture real-time temperature, humidity, or other environmental data, ensuring compliance with safety standards for perishable goods.
- Automation and Workflow Management: Automated workflows ensure proper documentation of critical tracking events (CTEs) and key data elements (KDEs), minimizing errors and reducing manual work.
- Predictive Analytics and AI: Insights from Copilot in Dynamics 365 can help identify potential risks in the supply chain, optimize processes, and ensure consistent compliance with FSMA 204 requirements.
Extended Collaboration and Seamless Integration with the Microsoft Ecosystem
Dynamics 365 ERP solutions also go hand-in-hand with other powerful tools in the Microsoft stack. These integrations extend your capabilities to automate compliance, track data, and streamline processes even further. Some key integrations include:
The Power Platform
This includes the data visualization and reporting capabilities in Power BI, the ability to automate manual processes with Poewr Automate, and custom-built applications unique to your business process through Power Apps.
Microsoft 365 applications
This includes but is not limited to Word, Excel, PowerPoint, Teams, Outlook, and other tools your team might already be using.
Microsoft Copilot
With the proper licensing, Copilot becomes a powerful AI assistant that can help streamline processes in your Microsoft solutions.
Microsoft Fabric
This centralized data storage and management system makes it easier for you to access and build strategies based on your data
Dynamics 365 Customer Engagement Solutions
You can combine your Dynamics 365 ERP system with CRM applications such as Sales, Customer Insights, Field Service, and Customer Service to create a streamlined end-to-end business solution.
With Dynamics 365, food manufacturers can enhance traceability, improve operational efficiency, and meet FSMA 204's food safety and traceability requirements.
Start the Conversation with Stoneridge Today to Prepare Your Business for FSMA 204
This blog gives you a snapshot of how Dynamics 365 can help you automate compliance and prepare you for the FSMA 204 deadline. You can learn much more about the powerful capabilities of Dynamics 365 by talking to Stoneridge experts today.
Whether you are new to Dynamics 365 and are thinking about implementing it, or already have it and want to optimize it and get the best return on your investment, Stoneridge experts are ready to assist you every step of the way.
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