“Change before you have to.”
                       – Jack Welch

I’m amazed at how differently the U.S. Food and Drug Administration (FDA) manages the food industry versus the pharmaceutical industry. Every pharmaceutical company is required to earn FDA approval for each formula it intends to sell. FDA regulations include manufacturing and lot controls, along with clear identification of all items and suppliers in the supply chain who are involved in the final product. There is also an expensive and regulated process when making changes to formulas, packaging or the supply base. While these are resource- and capital-intensive requirements, they do ensure that the manufactured drug is consistent, controlled and safe for consumption.

When it comes to food, there is limited regulation, control or intervention unless there is a problem or failure in the supply chain. When this happens, people can become extremely ill or die before the offending food is even identified. Once the cause is known, it must be tracked back through the supply chain to its source to avoid further tragedy. Changes in suppliers and ingredients are made on the fly with limited oversight and tracking lot to lot. My own experience in importing spices revealed that only 10 percent of containers were actually checked by FDA. The resources to thoroughly monitor these imports were (and are) insufficient for this critical task.

Regulatory Management of Food Safety
I recently reviewed FDA’s “Recalls, Market Withdrawals & Safety Alerts.”[1] This site reports peanut butter, cheese and ice cream contaminated with Listeria; black pepper, fruit and cat food containing Salmonella; and a dizzying variety of foods with undeclared common allergens (milk, egg, soy, wheat) as well as many products with undeclared ingredients known to cause anaphylactic shock in some individuals (peanuts, tree nuts, fish). The key point is that these products have already made it into all phases of the food supply chain. Unless the ingredients are single-sourced, there is little record or tracking of where these ingredients came from. In many cases, once the products hit the distribution channels, they are widely disseminated, making it even more challenging to resolve. We have all heard a news story in which the geographical distribution of a product recall continues to spread as people get ill or worse.  

The U.S. Centers for Disease Control and Prevention (CDC) presents an even more compelling case. In 2012, the CDC’s Foodborne Diseases Active Surveillance Network (FoodNet)[2] identified:

4,563 hospitalizations and 68 deaths among cases of infection with pathogens transmitted commonly through food.[3] The percentage of patients hospitalized ranged from 15% for Campylobacter to 96% for Listeria infections. The percentage hospitalized was greatest among those aged ≥65 years for STEC O157 (67%), Vibrio (58%), Salmonella (55%), Cyclospora (50%), Shigella (41%), STEC [Shiga toxin-producing Escherichia coli] non-O157 (34%), Cryptosporidium (33%), and Campylobacter (31%). At least 95% of patients with Listeria infection in each age group with cases were hospitalized. The percentage of patients who died ranged from 0% for Yersinia and Cyclospora to 11% for Listeria infections. The percentage that died was highest among persons aged ≥65 years for Vibrio (6%), Salmonella (2%), STEC O157 (2%), Cryptosporidium (1%), Shigella (1%), and Campylobacter (0.2%).

FDA regulates the safety and accurate labeling of most of the food supply chain, but the U.S. Department of Agriculture Food Safety and Inspection Service (USDA FSIS) ensures the safety of meat, poultry, eggs and assorted canned categories. There has been some pro-gress in these areas through inspection policies, procedures and other practices. FSIS estimates that its new performance standards for young chickens and turkeys will prevent 20,000 cases of Salmonella and 5,000 cases of Campylobacter illnesses each year.[4]

FSIS also implemented a new Hold and Test policy in February 2013 that prevents manufacturers from recalling unsafe foods.[5] The new policy requires manufacturing facilities to hold product until FSIS completes the microbiological testing and determines whether it is safe to release the product to the public. FSIS estimates that the new process would have prevented 44 recalls of unsafe food between 2007 and 2009.

Addressing Differences in Management Styles
So why is there such a vast difference between FDA and FSIS in how they manage food safety issues? In every food manufacturing operation I have visited, there are stricter policies and more staffing in USDA-regulated facilities than in those monitored by FDA. I once was a commodity trader for spice ingredients, and much of the incoming imports were “green ticketed” or released without inspection. FDA simply did not (and does not) have the resources to inspect and clear every container of spices coming into the U.S. It was up to the food companies to inspect, sterilize and process the spices for safety and consumer use.

It is obvious that with the increasing incidents of unsafe food and the different programs and processes administered by the government, something needs to be done. I believe the food industry needs a chain of custody for raw components and products.

Simply put, the chain of custody is the unbroken path a product takes from the first stage in the supply chain to the end customer, including raw commodity materials, conversion, transformation, distribution and logistics. Anyone who has ever sourced products globally has probably outsourced the documentation process due to its extreme complexity. Logistics and shipments are a complete mystery to many companies. Once the shipment leaves its origin, it falls into a black hole until there is notification by a broker or customs agent that the shipment is clearing or, if it is a food product, sampled by FDA. Are your containerized shipments secured? Are they subject to theft, counterfeiting, contamination, tampering, drug trafficking, contraband or loss? The lack of a certification process combined with lack of visibility can introduce supply chain risk and, most importantly, human health risks.

The forest product industry, the logistics industry and others are developing standards for the chain of custody process and creating certification processes and programs. This article outlines the current understanding of the requirements and criteria for a workable chain of custody process and program. It should be painfully obvious that there needs to be a standard for chain of custody certification as well as a certifying organization.

Key Steps in the Chain of Custody Process
Step 1—Developing Key Control Points
After analyzing the manufacturing process, it is necessary to develop key control points. A key control point is an area with a combination of products. The key process control (KPC) shows where contamination or mixing of materials can occur. In an ideal world, all products are fully tested and certified prior to manufacturing. However, the reality of any manufacturing operation suggests that these KPCs are points of vulnerability. Once KPCs are developed, tracking and quality assurance can start to drive a uniform marking system.

Step 2—Product Identification and Uniform Marking System
The simplest way to ensure there is no mixing of certified and uncertified materials is to create a marking and identification system that is fail-safe for even the simplest of operators. The marking system needs to be clear in every part of the process and include raw materials, work in process, finished goods, distribution and logistics to cover the entire supply chain. A separation strategy for certified and uncertified materials would require different locations to segregate the materials. The marking system must be clear throughout the entire manufacturing process, including raw materials, work in process, finished goods and distribution/logistics. It is essential to have some policies and regulations around the third parties that will carry out the logistics and warehousing of the components.

Step 3—Record-Keeping and Document Programs
A chain of custody program requires detailed records and record systems to track all the activities of the product down to the lot, batch, minute and second of the manufacturing process. The documentation process will keep track of all this supply chain activity from the first producer through the end consumer. Some heavily regulated industries such as the pharmaceutical and aerospace industries can lead the way, as they have this process already in place.

Step 4—Assigning Responsibility, Authority and Accountability with Assurance of Compliance
Organizations need to invest in people with the responsibility, authority and accountability for the design, implementation and monitoring of the chain of custody process, certification, documentation and compliance. Compliance will be a key element to the process. Additional undertakings include: developing the process, policies and procedures, and training the internal organization.

Step 5—Auditing
The chain of custody process requires rigorous internal and external processes to drive compliance and ensure product and process integrity. Many organizations are not currently equipped to audit the supply chain, inside and out. The audit is key to the success of the program. Companies will have to add new staff to document control and manage the audits of the supply chain, ensuring compliance. Under a self-regulated or federally regulated program, government agencies will also have to develop additional processes, procedures and testing programs as well as increase their capital, human and technological resources.

Step 6—Supply Chain Integration
Supply managers will also have the burden of developing a certification process for the downstream integration of the chain of custody processes. Suppliers require procedures, processes, compliance monitoring and education. This is quite an undertaking for any organization. We have been identifying the need for integration and management of the supply chains, which will be forced through the chain of custody process.

What’s Next?
Don’t be surprised to see the chain of custody process mandated to the food industry by FDA and for it to be a requirement across all industries eventually. Are you ready to implement a chain of custody process?

•    Your quality and R&D departments must ensure that specifications are available and clear. In many of the food companies I have visited recently, the specifications are nonexistent or are reprints of the supplier’s specifications. I visited a company that produces breakfast cereals with no specifications at all. One company was rejecting an ingredient for not being purple enough, yet they did not have a specification, photo or Pantone Matching System color standard. In some of the food companies where I worked, they had ingredients that met specifications but failed organoleptic taste tests. There is a long way to go to ensure that we have proper specifications in the food industry.

•    Does your company have the systems capability to track lots through incoming inspection to the end customer? Many food companies lack this capability; however, it should be a consideration when upgrading the enterprise resource planning system.

•    Does your company have a risk management plan? This is a key element of any supply chain strategy. Many companies have very sophisticated risk management plans that identify the total risk in the supply chain and use predictive models to determine which suppliers are likely to impact the company in the long term, mitigation strategies and plans, and a disaster recovery plan. In the food industry, there is limited risk planning, limited supply chain mapping, limited reliability in the quality and many changes in sources of supply. It may be time to develop a risk profile and financial analysis of the total risk in the chain.

•    Finally, what are the human resources required to monitor, audit and control the process?

Thoughts to Ponder
Continued product failures resulting in public safety concerns, along with terrorism, product tampering, challenges from low-cost country sources, process failures and concerns about the security of our logistics and distribution networks, have all led to the chain of custody process discussion. Many consumer groups, nongovernmental organizations and lawyers are calling for increased regulation and controls on all products in the food supply chain. Some industries, including forest products, logistics and chemicals, have already taken steps to create the chain of custody process for themselves. Some are now marketing their certification process to other industries.

When we source globally, our supply chains become complex, with many stages and multiple border crossings. A deviation or disruption in the chain can be disastrous and introduce considerable risk downstream. Supply chains can reach a hundred links, depending on product complexity, local laws, tax incentives, manufacturing capability and skill level of the labor force.

In the vein of corporate social responsibility, it should be the goal of every food manufacturer to develop the processes to understand, test and track the components of its products. It is the right thing to do.

William L. Michels, CPSM, C.P.M., MCIPS, is president of ISM Services, a specialty training & consulting company that focuses on procurement and supply chain management. He is also a senior vice president of the Institute for Supply Management™. His ability to transform procurement and supply chain and deliver a change process has led clients to increased long-term profitability, enhanced staff competence and sustainable cost and value improvements.

1. www.fda.gov/Safety/recalls/default.htm.
2. www.cdc.gov/mmwr/preview/mmwrhtml/mm6215a2.htm?s_cid=mm6215a2_w.
3. www.cdc.gov/mmwr/preview/mmwrhtml/mm6215a2.htm?s_cid=mm6215a2_w#tab1.
4. www.usda.gov/wps/portal/usda/usdahome?contentidonly=true&contentid=2011/03/0122.xml.
5. www.fsis.usda.gov/wps/portal/fsis/topics/inspection/phis/articles-from-the-fsis-