Tag Archives: Food supply chain

Food safety in the news again – Purchasing failure or regulatory failure?

strawberry-snail-tape-worm-animal-medium

Two food headlines disappointed me the past two weeks; the first to grab my attention was “The Food and Drug Administration and the Centers of Disease Control and Prevention (CDC) and state and local officials are investigating an outbreak of Hepatitis A illnesses linked to raw scallops from the Philippines.” The second was “an outbreak of Hepatitis A caused by the imported frozen strawberries from Egypt has sickened 55 people in six states, the US Centers for Disease Control and Prevention said on Wednesday.”

In an interview with FoodQualityNews.com in 2013 and in an article in Food Safety magazine in 2014, I explained that not every container coming in to the US is inspected by the regulatory authorities. This means all food processors need to self-regulate their products. It is essential that the procurement team map and audit the supply chain on a frequent basis. As someone who has purchased seafood, it was necessary to visit the region, inspect the boats and factories. It was not uncommon to see modern stainless steel processing facilities with good manufacturing processes and sanitation protocol. It was also not uncommon to see old, rusty processing facilities with no protocol. It’s the same with the way the fish are handled on the boats. The unfortunate news is that not every buyer visits suppliers and limited audits occur.

In my consulting life, I have worked with many companies to build strategies for buying fruits, including frozen strawberries. The strawberry origins were Mexico and California. My advice was to visit the crop as it was growing and to be on hand when their products are being processed. In many cases the procurement team and their technical support intervened to assure the quality is achieved.

Too often low cost country sourced food materials provide attractive pricing, but they come with a big risk. It is never a good idea to source through third parties without building a map of the supply chain, auditing the supply chain and visiting the suppliers first hand. Many companies, unfortunately, will not fund such programs.

Since many food products are imported without regulatory checks, it’s up to the companies and procurement teams to self-regulate. The risks are many: reputation risk, creating illness and potential criminal charges if the company is known to have endangered lives.

Is it worth the risk?

Lip Service and Promises don’t lead to Sustainability

dog on floor

Many corporations post in their news releases and annual reports that they embrace sustainability and corporate social responsibility. As responsible consumers, we invest in those corporations and buy their products. As we know, from companies like Chipotle, who truly think they are conscientious and are providing healthy food, if the investment in a sound chain of custody process and policy are not embedded, disaster may strike. A Bloomberg article on Chipotle highlights that the cost of building the right process will be very expensive and take a long time.

Monday, shares of Lumber Liquidators tumbled more than 19 percent after the CDC said people exposed to certain types of the company’s laminate flooring were more likely to get cancer than it previously predicted. The road to recovery will be very rocky for them for sure.

I have long said that companies need to implement a robust chain of custody process for their supply chains. To put it simply, the chain of custody is the unbroken path from the first stage of the supply chain to the end customer. The chain of custody is a key area were food and other supply chains lack process, focus, procedure, systems and audit capability. Without it, they can be inviting regulation, which is not a desired outcome from the company’s perspective. Because there is no traceability from point-of-origin to point-of-consumption, it takes regulators a long time to reverse track the chain of custody when there’s an incident involving personal injury, illness or harmful chemicals found in the product. The chart below identifies a simple six-step process that companies should consider to identify, maintain and track the chain of custody.

Chain of Custody Process

chain of custody1

To learn more about the steps, there’s a description in this article I wrote for Food Safety magazine.

The end result is that chain of custody requires systems, processes, audits, training and additional people to manage and document the chain of custody. The pharmaceutical and aerospace industries have perfected this to assure regulatory compliance. If the food and other industries fail to self regulate, the government will step in. Sadly, most companies are not willing to make the investment before a catastrophic event causes negative publicity, tanked stock prices and lawsuits; then it may be too late for the business to recover.

The days of lip service to sustainability and social responsibility will catch up to companies that cannot track their products through the supply chain.

Isn’t it time to make that investment?

Will the Heinz and Kraft merger impact your supply chain?

 

The food industry has been consolidating for the last decade with a big impact on its supply chain. Traditionally, the supply chain has been a combination of small suppliers producing ingredients that are combined by the manufacturers and then sold to food service and retail distribution channels. In my opinion, consolidation, regulation, increased cost of doing business, demand for additional inspection, demand for longer payment terms, just in time production systems and drive for lower cost has driven many suppliers out of the business.

Consolidation has also caused issues for the industry leaders since there are fewer suppliers, reduction of capacity, increased risk and increased costs and fewer choices for key ingredients. Many of the key ingredients and specialty packaging solutions come from only one or two suppliers. As companies like Heinz and Kraft merge and focus on homogenizing specifications and the supply base, it is essential that attention remains on maintaining a strong supply chain that can deliver in the ever-increasing demands of the industry.

For the suppliers in the industry, it will be essential that they maintain a healthy bottom line, innovate new products, remain lean and align with strategic partners both up and down-stream in the supply chain. The ability to continuously improve, remove risk and compete will be an essential factor in the ability to survive in an age of massive industry consolidation.

No one can predict the future, but understanding the ever changing environment will be the key to survive and thrive.

Will your strategic supplier get “voted off the island?”

From Carrot Skins Come Chicken Wings

Here’s an extreme example of recycling in the food supply chain. Several New York City restaurants are sending some of their kitchen scraps to an Amish chicken farm in Pennsylvania. Chickens of a breed imported from France eat the kitchen scraps, and when their day comes, are slaughtered and shipped to those restaurants to be served to customers.

Of course, feeding table scraps to your domestic chickens is not exactly a new idea in many rural parts of the world, but when four-star chefs do it, the idea sounds like an innovation.

Here’s the story in the New York Times.

OK, so technically it’s not recycling. And the driving force seems to be taste, not sustainability, as the participating chefs are raving about the flavorful meat from the pampered poultry. Someone ought to run a total cost analysis, though. The restaurant would have to get a break in its waste removal costs because of the diversion of the kitchen scraps. The chickens are still fed soybean pellets to supplement the scraps, but not as much as they would without the recycling program, so there’s some savings there.

Perhaps the same truck delivering the chickens returns to the farm full of fresh scraps. There might be value there if the trucks had been returning to the farm empty. Nevertheless, it does seem that the transportation costs of shuttling between a Pennsylvania farm and Manhattan kitchen would prevent the program from being a value AND flavor win. You certainly can’t blame them from thinking outside the coop, though.

Possibly the next step has to be roosters on the roof, pecking in the sedum turf. Or “Central Park Free Range Fowl.” What do you think?