How will the additional food traceability regulations effect the enterprise?

ABSTRACT

The Food and Drug Administration’s (FDA) rule on Additional Food Traceability Records Regulation under the Food Safety Modernization Act (FSMA) that goes into effect January 2026 signifies a significant transformation in how we approach food traceability. Unlike previous FDA regulations, this rule will directly impact a company’s technology ecosystem, including operations, supply chain and customers. While the implementation of this rule will occur in phases, it is crucial for companies to prepare for potential future implications. Developing a traceability plan and involving information technology and technology stakeholders early is essential for successful implementation and system modifications. Companies should address challenges, such as data sharing, unique traceability lot codes and maintaining the connection between physical goods and data sets. It is important for organizations to assemble a cross-functional team and create a food traceability plan proactively. By embracing the FDA food traceability rule, organizations can turn it into a strategic advantage and pave the way for overall success.

New FDA Food Traceability Rule

The FDA has recently released the final rule on Additional Food Traceability Records, which is an expansion of the FSMA. This new set of regulations are outlined in section 204(d)(2) of the FDA FSMA. We are just about 24 months away from the rules going into effect in January 2026. That may feel like a long time from now, but there are several changes to processes and systems that may need to be completed in the next 24 months.

The FDA, industry and other government agencies have used various names to refer to this regulation. In the federal register, it is titled “Requirements for Additional Traceability Records for Certain Foods.” The FDA has also referred to it as the “FDA final rule on Requirements for Additional Traceability Records for Certain Foods” or simply the “Food Traceability Final Rule.” Another commonly used reference for this regulation is “FSMA 204.”

I will refer to the regulation as the FDA Additional Food Traceability Rule. This regulation addresses the requirements for additional traceability records for certain foods, as mandated by the FDA. It aims to enhance food safety and ensure effective traceability throughout the food supply chain.

The FDA Additional Food Traceability Rule is not a simple or incremental change in the regulation of traceability. It represents a significant transformation in how we approach food traceability. I won’t delve into the specifics of this new rule, as there are already excellent resources available for that purpose; however, it is crucial to understand that it will directly affect your company’s technology ecosystem. Unlike many FDA food safety regulations that tend to have minimal impact on IT and primarily focus on manufacturing plants and processes, this rule will directly influence technology-related aspects of your operations, your supply chain and your customers.

Like most FDA regulations, the implementation of this rule will occur in phases. Initially, the focus is on high-risk foods and specific processes outlined in the FDA’s Traceability List (FTL). However, considering past experience and messaging by the FDA, we anticipate that this initial phase will eventually be expanded to encompass a broader range of products. It is essential to keep this in mind when exploring the details of this regulation. Even if your current operations do not involve products on the FTL, it signals that you need to prepare.

Understanding the impact of the regulations can be quite complex, as merely reading them does not provide a clear picture of how and to what extent they affect your operations. Factors such as your position in the supply chain, specific processes performed, ingredients utilized, and their respective uses all play a role in determining traceability requirements. To navigate this complexity, one of the initial steps is to develop a traceability plan as outlined by the FDA. This plan is established at the product level and involves aligning the FDA Additional Food Traceability Rule with your company’s position within the food supply chain to comprehend the necessary traceability, record-keeping and transformation requirements for each specific product. Due to the comprehensive nature of the FDA traceability plan requirements, it would be impractical to cover all aspects within this article. What I can say for certain is that the FDA traceability plan serves as a fundamental document in understanding the impact of the FDA Additional Food Traceability Rule on your company and its technology systems.?

To promote the successful implementation of system modifications and prevent any misinterpretations, it is imperative to engage various stakeholders, including information technology, supply chain and operations, during the traceability planning stage. This collaborative approach promotes a shared understanding of the objectives and facilitates the exploration of potential alternatives. By involving these stakeholders early on, companies can harness their expertise and diverse perspectives to make informed decisions.

Additionally, it is crucial to treat traceability plans as essential resources that should be consulted during the assessment of technology systems for adjustments, enhancements or replacements. Given the potentially significant impact of the FDA Additional Food Traceability Rule on the company’s enterprise technology systems, it may be advantageous for the IT department or the office of the chief information officer to take the lead in investigating the traceability plan technology assessment and its associated impact.

While the IT department plays a crucial role, it is important to acknowledge that traceability implementation goes beyond technology alone. The overall ownership of implementation may best reside within the supply chain or operations departments, as they can effectively manage and address the broader impacts of traceability on the company. This comprehensive approach ensures that all aspects of the implementation, beyond technology, are properly considered and managed to achieve the desired outcomes.

Stakeholders across the enterprise must be made aware of your company’s traceability plan prior to finalization so that they can address dependencies and collaborate to hone how your company will execute its plan.? From the view of enterprise technology, there are a few items that I want to call out:

• While the FDA Additional Food Traceability Rule emphasizes the importance of an interconnected traceability ecosystem for seamless data transfer across the entire supply chain, it does not prescribe a specific standard or data sharing platform. Consequently, it becomes apparent that, to effectively support the long-term goals of the FDA food traceability initiative, companies within the supply chain may need to adopt a standardized approach to data sharing. One example of such a standard for data transfer is the GS1 standard. However, it is important to align impacted technology systems within your organization, such as product information management, customer relationship management, enterprise resource planning, supply chain management systems, business process management and automation.
• ?To support either an internally or externally interconnected traceability ecosystem is no small feat. It requires meticulous planning and potential significant modifications to existing enterprise systems and processes. Meeting the requirements of this interconnected traceability ecosystem necessitates careful consideration and implementation to facilitate compliance with the FDA Additional Food Traceability Rule.
• ?The FDA Additional Food Traceability Rule requires certain steps within the supply chain to share information with downstream counterparts, passing along relevant data from prior stages. For instance, harvesting details like location and date may need to be transmitted several steps down the supply chain. This presents various challenges for businesses in terms of both process and technology systems. Companies must consider how they will receive this information, determine appropriate storage methods, establish links to manufacturing and shipping processes, and devise mechanisms for transmitting the data downstream. Addressing these challenges is critical for ensuring compliance with the FDA Additional Food Traceability Rule and maintaining a seamless flow of information throughout the supply chain.
• ?The FDA Additional Food Traceability Rule introduces a new concept called the “traceability lot code,” which serves as a unique identifier for tracking products. The traceability lot code is the key data connection that is used by the FDA in a recall. For this reason, the traceability lot code can be used in other ways within your organization, but it cannot be altered in a manner that interferes with, dilutes or alters the code’s primary purpose.All other data elements within the regulation are linked back to a specific traceability lot code. The rule specifies which steps in the supply chain are authorized to create the traceability lot code, while all other steps must utilize and pass on the code. This requirement may present a significant departure from the current processes of certain companies, especially those accustomed to generating new lot codes. The regulation does not explicitly outline any naming standards for the lot code, allowing the company responsible for creating the traceability lot code to design one according to its discretion. Nevertheless, downstream supply chain partners may encounter system challenges when consuming the code generated by upstream partners. To address these challenges, emerging standards are being developed to establish global standardization. Embracing these standards could streamline processes and potentially reduce processing errors, particularly if they are widely adopted throughout the industry.
• ?The new rule highlights the importance of maintaining a connection between physical goods and their associated data sets. While not all of the required information is included on the label, the traceability lot code serves as the link between the physical product and its associated data. It is crucial to carefully manage this linkage throughout the overall process.Timing plays a significant role in the transmission of the product’s associated data to downstream supply chain consumers. Internal processes and procedures may exist that prevent the use of the product until the associated data set is received. Therefore, the timing of when the physical product transitions between supply chain steps and when the associated data is transmitted should be considered to ensure seamless integration and adherence to internal protocols.
• It is important to fully understand the legal implications for your organization when it comes to data sharing and privacy agreements with suppliers and other stakeholders. Consider the measures in place to protect received data that needs to be passed downstream, ensuring its immutability. Additionally, it is crucial to adhere to the time window requirements defined by the rule for supplying the FDA with the necessary data to support recall efforts. Failure to do so can have significant consequences for your organization.

Whenever there are significant transformational changes, both known and unknown impacts are expected to arise. The data elements utilized by the FDA Additional Food Traceability Rule may not be entirely new within the supply chain, but they could be new to certain involved parties. It is crucial to recognize that various stakeholder groups within an organization may rely on the data in its current form. Additionally, other areas, such as cybersecurity, existing data sharing agreements, technology roadmaps, data management, disaster recovery and legal, will also be impacted as the new regulation is rolled out.

Do not wait! Now is the time to assemble a team from various departments to create a food traceability plan and determine how to implement it effectively. This includes working closely with quality assurance, data governance and IT leaders to develop a solid plan and adjust strategies as needed. This way, the FDA Additional Food Traceability Rule can be more than just a business requirement – it can become a strategic advantage. By approaching the regulation with a proactive mindset and envisioning a more interconnected food system, organizations can comply by employing methods such as product level tokenization, incorporating new features into ERP systems, aligning with expanding and emerging standards, or utilizing other capabilities. By embracing this regulation and using it as a catalyst for growth and resilience, organizations will pave the way for overall success.

The views reflected in this article are the views of the author(s) and do not necessarily reflect the views of Ernst & Young LLP or other members of the global EY organization.