The Situation: Food withdrawals, rejections and recalls cost the food industry $7 billion dollars annually. The majority of these costs aren’t just from “worst case” recall scenarios where people fall ill and lawsuits occur. A large portion of these costs are created by internal reworking, commodity loss, inventory replacement, removing goods from shelves, lost sales and public relations/customer confidence repair. Increasingly, these losses are being spread across all participants in the supply chain, including suppliers, manufacturers, distributors, retail/services sellers, 3rd party labs and auditors. The Challenge: While food safety & quality assurance (FSQA) requirements continue to grow, most FSQA staffs are not expanding. The challenge therefore becomes how to do more with less or, in other words, how can I meet my regulatory, non-regulatory, operational and customer requirements while:
– Getting product out on time? – Remaining competitive? – Remaining profitable?
The Potential Solution: The answer may lie in emerging FSQA software technology solutions that are designed to help prevent non-compliant raw materials, supplies and finished goods from coming in or going out. The Business Case If we look at the traditional food and beverage industry technologies, adoption has largely been focused on manufacturing and logistics – supply chain, distribution, procurement and other similar types of software. The business case for these technologies was based on return on investment (ROI). They saved time, they saved money and they created efficiencies. Today’s food and beverage industry technology innovations focus more on FSQA, and they have the same business case: They save time and manual labor hours. They save money. And they create efficiencies throughout your supply chain to enhance regulatory, non-regulatory and customer-driven compliance. The emerging category of food safety chain management, for example, helps automate functions such as:
– Collecting FSQA data and test results in realtime – from anywhere, at any time. – Analyzing results – against regulatory, non-regulatory and customer specifications – in realtime. – Generating COAs when results “pass” – and sending realtime notifications when corrective actions are required. – Documenting all records, tasks and corrective actions with unalterable time/date stamps. – Creating a central repository of data for performance trending and benchmarking against key performance indicators.
Let’s look now at the key categories in which these types of solutions create hard-dollar savings and ROI. Time and Labor ROI Today many FSQA processes are manual in nature. Whether it’s checking to see if supplier documents were received, pouring through hundreds of safety and quality test results daily to find exceptions for hold and release programs, monitoring plant floor equipment to ensure that attributes like weight or temperature are in compliance, sending finished product specs to customers, or, of course, perhaps the most time/labor intensive – preparing for audits – one thing is clear: time does equal money – and manual processes waste both. There are thousands of examples of how emerging FSQA technologies provide time and labor ROI – following are two that will be very familiar to readers:
– Example 1 – Supplier Compliance: It can take hours, if not days, to sort through supplier paper reports, PDFs, emails, spreadsheets, etc. to find the few non-compliant results that may require action. In the meantime, product is on hold. Emerging technologies that automate supplier compliance allow results to be entered by suppliers globally; form and visual inspections can be sent directly from the field using mobile devices; and test results can be sent directly to the system from testing equipment. When the results are automatically compared to specifications in realtime – the FSQA manager gets automated notifications of non-compliant conditions or materials. This allows the manager to focus immediately on only those results that require corrective action while COAs are automatically generated for everything else (including completed finished product tests) – creating efficiencies that allow all compliant components to get to the next point in the supply chain and/or process – or “from farm-to-fork” – faster. – Example 2 – Audit Readiness: When you add up regulatory audits, non-regulatory audits such as GFSI, and random customer audits – some companies might face 10-12 audits per year. I’ve personally spoken with FSQA managers who have told me that these audits “bring (their) organization to its knees” in terms of the time it takes to gather the policies, review forms and documents, verify Standard Operating Procedures, show proof of corrective actions and gather and show documentation for safety and quality attribute compliance. This not only takes up staff time in preparing for audits, but production and shipping of product is often delayed during audit preparation, so there is cost in terms of time, labor and slowing of revenue-generating activities. Emerging FSQA technologies can provide scheduling capabilities to help ensure that Standard Operating Procedure reviews/verifications are performed on time and that supplier documentation is received on the required dates. They can centralize all FSQA records with un-alterable time/date stamps – including documentation of corrective actions – from suppliers, during production and for outbound finished goods. This means that audit information is ready on-demand. An additional benefit is the facilitation of full transparency throughout the supply chain, even, perhaps, reducing the number of audits – customer audits for example – because customers can receive all safety information in realtime. Therefore, instead of spending weeks on audits – the FSQA team can continue to work on transformational, proactive processes and practices while plants, for example, keep operations and product moving to the next point in the chain.
Materials and Yield ROI Maximizing materials and commodity yield is critical in the traditionally low-margin food and beverage industry. And unfortunately, manual safety & quality processes frequently result in waste, spoilage, reworking and yield loss. Emerging FSQA technologies can help increase materials usage and yield in a number of ways, including:
– Realtime analysis of raw ingredient/materials test results helps prevent non-compliant ingredients from going into production. – Immediate exception or omission notifications – on supplier non-compliant COAs or internal COA verification tests – results in reduced reworking and/or the need to use more expensive materials to meet a customer specification:
•For example, perhaps you are producing private label beef patties and the customer spec is for 80% lean. You receive a supply of ground beef labeled 80% and put it into production – only to find out after your own samples (and the time it takes to get the information to the right people) the material was 75% lean. This means that you have to add more expensive commodity to meet the customer spec – or re-work the beef for another customer product code. With some first-in-class FSQA technologies the discrepancy would have been detected much faster – resulting in less reworking, higher yield and in some cases perhaps a credit for the non-compliant materials.
– Additionally, if you deploy a solution that allows safety and quality data to be sent directly from LIMS and/or production equipment – such as refrigeration systems and weigh-scales – you can further speed throughput to the next step in the supply chain and help eliminate waste by getting the information to the right people in the fastest manner possible for immediate corrective actions.
Risk Mitigation – Withdrawals/Rejections/Recalls ROI One thing is clear when it comes to compliance risk mitigation – the earlier and more proactively non-compliant ingredients, processes and products are detected, the less risk and cost there will be. Once a non-compliant product has left the building – to the point where it has to be traced or traced – the costs begin to rise. Whether the product is pulled off of the truck or off the grocery store shelves, there are associated costs that will have a negative impact on your margins – it’s just a matter of how much and how severe. These costs of course range from replacement of inventory or goods on shelves all the way to the costs of lawsuits in worst case scenarios where consumers are subjected to health risks. And of course there are the costs that are harder to measure but definitely have a financial impact, such as loss of customer and/or consumer confidence in your products and brands. While it would be unrealistic to say that there will never be a need to track and trace products, FSQA technologies that focus on preventing non-compliant ingredients/raw materials from coming in and/or going into production and non-compliant finished products from going out in the first place will have the highest hard-dollar ROI while keeping consumers safer. For example:
– When FSQA test information is received and analyzed in realtime – with automatic notifications of out-of-spec results – non-compliant ingredients and/or raw materials do not go into production. While an ingredient may need to be replaced – this will be far less costly than having to retrieve product from the next point in your supply chain … “it’s less costly to replace the feed than the chickens.” – The ability to share safety data and quality attribute test results with end customers shortens hold and release times and minimizes the risk of a customer rejection on the other end.
Reporting and Analysis ROI In recent conversations with hundreds of FSQA professionals at industry conferences, one theme was very consistent – that many FSQA departments lack the tools to effectively report on and analyze safety and quality data and performance. With technologies that allow all current and historical safety and quality data – from supplier compliance to finished goods testing – to be available in a central database, you have the ability to do comprehensive reporting and analysis for all points in your supply chain. This provides many ROI opportunities, for example:
– Trending supplier performance over time helps identify which suppliers provide the best quality at the best cost. – Understanding which suppliers/materials have the highest and lowest risk helps focus food safety efforts in the right places. – The ability to quickly and effectively respond to customer complaints, with historical proof of compliance, facilitates customer confidence and can speed sales. – Gaining insight into inefficiencies in quality control and other manufacturing processes help target areas for improvement, implement new controls, and trend results against benchmarks. – The ability to compare results against billing records may result in credits.
In Summary In the low-margin food and beverage industry, there has been a constant struggle to balance FSQA programs, best practices and technology investments with the ability to remain competitive and profitable. By leveraging emerging FSQA technologies however, it’s possible to have your cake and eat it too. All members in the supply chain – including growers, suppliers, manufacturers, distributors and food services/retail companies – can benefit from viewing FSQA technologies not as an added expense – but rather as a tool with a hard-dollar Return on Investment that delivers bottom-line savings while creating efficiencies that enhance both safety and quality compliance.