Withdrawals, rejections and recalls cost the food industry $7 billion dollars annually – and the majority of these costs aren’t just from “worst case” recall scenarios where people fall ill and lawsuits occur. A large portion of this cost is created by internal re-working, commodity loss, inventory replacement, removing goods from shelves, lost sales and public relations/customer confidence repair.
These losses – and any associated liabilities – are spread across all participants in a particular goods’ supply chain, including suppliers, manufacturers, distributors, retail/services sellers, 3rd party labs and auditors.
And while food safety & quality assurance (FSQA) requirements are only going to continue to grow, most FSQA staffs are not expanding. The challenge therefore becomes “how to do more with less.” 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 answer? Emerging FSQA software technology innovations such as Safety Chain Management. The food & beverage industry will benefit from viewing FSQA technologies not as an added expense – but rather as a tool with a hard-dollar Return on Investment (ROI) that delivers bottom-line savings while creating efficiencies that enhance compliance.
Food & Beverage Industry Technology Investments
If we look at the traditional food & 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 ROI-based: they saved time, they saved money and they created efficiencies.
Today’s food & beverage industry technology innovations – particularly Safety Chain Management – are focused on FSQA and 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 major categories for Safety Chain Management ROI include:
• Time and labor
• Materials and yield
• Risk mitigation – withdrawals/rejections/recalls
• Reporting and analysis
I’ll come back to each of these shortly and describe how Safety Chain Management technologies create ROI. But before we can go there, let’s begin with a high level summary of the key concepts of Food Safety Chain Management to help put the rest of this paper in context.
Key Concepts of Food Safety Chain Management
“At Dole, food safety is always our first priority and we take a pro-active, prevention-based approach. We ensure all food safety programs are followed at the start of every point of production, from planting to harvest to post-harvest. Additionally, we are taking steps that prepare us for compliance with announced and anticipated FDA Food Safety Modernization Act (FSMA) rules. We partnered with SafetyChain because it has the food safety technology innovations, capabilities, prevention-focus and customer responsiveness that meets our needs exceptionally well.” Nye Hardy , Food Safety Manager Dole Fresh Vegetables
The underlying concept of Food Safety Chain Management is to have a single solution that helps enforce food safety & quality compliance at every point along a company’s supply chain, including:
• Inbound supplies and raw materials
• Production food safety and quality requirements
• Compliance associated with customer-driven specifications for outbound finished goods
A key concept of Food Safety Chain Management is that all regulatory, non-regulatory and customer compliance enforcement is done in realtime – promoting prevention. Realtime enforcement is the common preventative thread amongst the five key components that are the foundations of Safety Chain Management:
Concept #1 – Realtime Data Collection
Food Safety Chain Management allows all food safety and quality data to be entered directly into a company’s secure “cloud.” This can be test/attribute data received electronically from suppliers – entered, for example, on mobile devices by field inspectors or production technicians; test results input by laboratory technicians; and even data received directly from internal or external testing equipment.
Concept #2 – Realtime Analysis
Once data/test results are received, the food safety chain solution analyzes – again in realtime – all results against regulatory, non-regulatory and customer specifications. When regulations change – or customers add/change specifications – those specs are easily configured and then cascaded throughout the “safety chain” so that compliance can be immediately enforced.
Concept #3 – Automated COAs and Alerts
When results are in compliance COAs are automatically generated and sent to the next point in your chain. When non-compliant results are detected, automatic alerts are sent to the appropriate, identified people who can be any combination of internal/external individuals, such as FSQA managers, lab technicians/production personnel, distributors, suppliers, purchasing and more.
Concept #4 – Immediate Corrective Action
Because realtime alerts get the right information, to the right people, in the fastest manner possible – immediate corrective actions are facilitated. There are thousands of examples but some simple ones might include: not unloading a shipment of supplies/raw ingredients (or not allowing it to be shipped in the first place); correcting a temperature as it approaches its HACCP Critical Limit; not harvesting a particular field of produce when an alert is received that certain attributes were not in compliance; and avoiding sending a customer a shipment that does not meet one or more specifications – perhaps incorrect fat or moisture content. Think of food safety chain management as a “smoke alarm” in the cloud – preventing bad things from happening in the first place vs. trying to figure out how the fire started and how much it is going to cost to repair the damage.
Concept #5 – Performance and Trending
Because all information is time/date stamped and all results/corrective actions are electronically documented, you are able to gain in-depth access and insight into performance by various suppliers, producers and distributors; speed throughput; and be audit ready on- demand for almost any type of compliance or customer audit.
Now that I’ve described the basic concepts of food safety chain management, let’s now look at the major areas in which this enabling technology provides FSQA ROI along your entire supply chain – inbound supplier and COA management, during production and for outbound finished product testing and customer compliance.
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 attributes like weight or temperature are in compliance … sending finished product specs to customers … and, of course, perhaps the most time/labor intensive – preparing for audits – one thing is clear: time does equal money – and manual processes waste both.
Not only are manual processes time consuming and expensive – they are also error prone, and slow down sales throughput. Safety Chain Management eliminates a large majority of manual processes – saving time, saving money and creating efficiencies that support compliance and the ability to get safe, quality products to customers faster. And, they put time back in your busy day. There are thousands of ways in which Safety Chain Management creates time and labor ROI – but in the interest of time, I’ll just provide two examples in this paper.
Examples of Time and Labor ROI Include:
Example 1 – Supplier Compliance: Studies show that less than 5% of safety and quality data requires action. However it can take hours – and in some cases days – to go through all of the pen and paper reports, binders, PDFs, emails, spreadsheets, etc., to find the 2 or 3 non-compliant results. In the meantime, product is on hold.
• With Safety Chain Management – test results are being 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.
• Because 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: Let’s use the example of the dreaded “A word” – audit. 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 organizations 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 – production and shipping of product is often delayed during audit preparation – so there is cost in terms of time, labor and slow down in revenue-generating activities.
• With Safety Chain Management: scheduling capabilities ensure Standard Operating Procedure reviews/verifications are performed on time; supplier documentation is received on the required dates; all records are time/date stamped and unalterable; non-compliant results are documented electronically along with corrective actions – including before/after digital photos; direct observations can be taken from fields or plants – with information uploaded immediately into the system dashboards via forms; and exception and trending notices for Key Performance Indicators are automated.
• This means that audit information is ready on-demand. Safety Chain Management also facilitates full transparency throughout the supply chain – and may even reduce the number of audits – customer audits for example – because customers can receive all safety information, per your configured parameters – in realtime. And instead of spending weeks on audits – the FSQA team can continue to work on transformational, pro-active (vs. re-active) 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 & beverage industry. And unfortunately, manual safety & quality processes frequently result in waste, spoilage, re-work and yield loss.
Safety Chain Management helps 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 re-working 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%. 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 Safety Chain Management’s realtime analysis and alerts – the discrepancy would have been detected much faster – resulting in less re-work, higher yield and in some cases a credit for the non-compliant materials.
• The ability to have data sent directly from LIMS and production equipment – such as refrigeration systems and weigh-scales – speeds throughput to the next step in the supply chain and also helps to eliminate waste.
Risk Mitigation – Withdrawals/Rejections/Recalls ROI
One thing is obviously clear when it comes to compliance risk mitigation – the earlier and more pro-actively 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 tracked/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 the need to track and trace products, Safety Chain Management can help keep non-compliant ingredients/raw materials from coming in and/or going into production – and help keep non-compliant finished product from going out.
The following are just a few examples of the many ways in which Safety Chain Management mitigates compliance risk and helps prevent withdrawals, rejections and recalls – resulting in hard-dollar ROI:
• Because 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 – that is far less costly than having to retrieve product from the next customer in your supply chain.
• The ability to share safety data and quality attribute testing results with end customers shortens hold and release times and minimizes the risk of a customer rejection on the other end.
• Because test results are analyzed in realtime – with unalterable time/date stamping on all records along the chain – Safety Chain Management is an extremely pro-active approach to catching issues before they get to the point of a voluntary or involuntary recall … the most expensive risk of all in terms of loss prevention:
» Loss of inventory
» Loss of revenue
» Loss of customer and consumer confidence
» Loss of market value and brand
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 Safety Chain Management, all safety and quality data – from supplier compliance to finished goods testing – is available in the database. This includes realtime and historical data. In addition to having this data readily available for regulatory, non-regulatory and customer audits – the ability to do comprehensive reporting and analysis for all points in your supply chain provides many ROI opportunities. Examples include the ability to:
• Trend supplier performance over time to understand which suppliers are providing the best quality at the best cost.
• Understand which suppliers/materials have the highest and lowest risk – helping to focus food safety programs in the right places.
• Effectively respond to customer complaints with historical proof of compliance.
• Gain insight into inefficiencies in quality control and other manufacturing processes to target areas of improvement, implement new controls and trend results against benchmarks.
• Monitor and evaluate turnaround time with external laboratories, and reconcile billing records against sample analysis reports.
SafetyChain for Food™ – the Pioneering Food Safety Chain Management Solution
Key Features Include:
• Realtime data capture from all participants in the supply chain
• Realtime analysis
» Automatic COA/CCP data tracking and trending
» Realtime smart alerts for non-compliant results
• Easy-to-use dashboards for a central look at safety and quality performance along the entire chain
SafetyChain for Food™ ROI Opportunities by Module
SafetyChain for Food™ helps save time, save money and create efficiencies in these areas:
• Supplier/ingredient document management
• Supplier compliance & corrective actions
• COA tracking & validation
• Supplier contract adjustments
• Audit prep reduction
• Data collection & analysis
• Product release reviews
• Quality improvements
• Yield improvement
• Internal, external lab test management
• Lab retest reduction
• Product data collection
• Manual paper processing
• Finished product reporting
• Prevention of withdrawals, rejections & recalls and related materials, labor and litigation
• Customer complaint administration
SafetyChain for Food™ is delivered as a flexible, secure, Software-as-a-Service (SaaS) cloud solution – designed for rapid, cost-effective deployment and ROI
• We do the “heavy lifting” to configure, test, train and deploy SafetyChain for Food – including coordination to bring suppliers and third-party labs on board.
• SafetyChain for Food is completely configurable – with unlimited specs for different customers and the ability to add specs “on-demand.”
• SafetyChain for Food features SOA (Service-Oriented Architecture) web service connectivity with internal, shared, and external systems including ERP, PLM, WMS, QMS, LIMS, Document Management Systems and more.
Customized ROI Calculation for Your Company
SafetyChain has developed an in-depth calculator to help identify potential areas for hard-dollar savings and ROI. If you would like to schedule a complimentary 30-minute ROI calculation based on your specific needs, please send an email to firstname.lastname@example.org and put ROI Calculation Request in the subject line. Please be sure to include your contact information and we will follow up to set the online meeting.
About SafetyChain Software™
SafetyChain Software provides innovative, cloud-based solutions that help enforce safety and quality at all points along a company’s supply chain. SafetyChain for Food™ helps save time, save money and create efficiencies to support compliance. SafetyChain takes food safety and quality initiatives to a new standard by preventing losses in realtime to:
• Enforce food safety and quality compliance
• Eliminate manual processes and errors
• Prevent recalls, retrievals and rejections
• Protect market value/brand
Barbara Levin is SafetyChain Software’s Senior Vice President of Marketing and Customer Community. As a frequent speaker and publisher in the ERP and Software-as-a-Service communities, she is best known for working with customers to increase understanding of the role technology plays in meeting strategic business initiatives. At SafetyChain, she is focused on building awareness, throughout the food safety and quality community, of how innovations such as Food Safety Chain Management help companies stay ahead of the growing complexities of global enforcement of food regulations and requirements.
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SafetyChain Software, Safety Chain Management, and SafetyChain for Food are registered trademarks of SafetyChain Software. The content in this paper, unless otherwise noted, is copyrighted by SafetyChain Software © 2012.