Keeping track of the food journey
A complex and sophisticated global food supply chain is needed to deliver the variety of foods consumers have come to expect on supermarket shelves. The challenges of the subsequent supplier management and risk minimisation are huge. Alicia Dimas, Content Executive at the Chartered Quality Institute (CQI) explores industry best-practice and what needs to happen when something goes wrong in the supply chain.
The food supply-chain is not always front-and-centre of a consumers’ mind, however, if things go wrong then its important to know the details of the intricate supply journey. Food scares make front page news around the world, from the E. coli O157:H7 outbreak from romaine lettuce in the US in April 2018, to the so-called ‘horsemeat scandal’ that swept across Europe in 2013. Situations such as these cause serious reputational damage to businesses and erode consumer trust in the food supply system. With many food regulation and assurance schemes already on offer, what more can be done to ensure future crises are avoided?
The roots of the problem
The difficulty in keeping track of products in a complex food chain is highlighted repeatedly in several notable cases. A central issue in the spread of the E. coli outbreak in 2018 was the traceability of the lettuce which had been contaminated through irrigation systems. Finding the root of the problem was challenging because much of the contaminated finished lettuce products contained romaine sourced from multiple sources. Additionally, most records collected during the investigation were handwritten.
This poses a serious challenge for traceability efforts; businesses are urged to explore modern approaches to standardised record-keeping and the use of labels on product packaging to improve traceability. Alarmingly, 90% of all global food companies are SMEs, and most do not follow international standards. The vast majority use paper-based forms to run their quality systems.
The role of regulation
Risk and supplier management have moved up the agenda in recent years. For example, Clause 8.4 of ISO 9001:2015 focuses on control of externally provided processes, products and services. It requires an organisation to address all forms of external provision. The latest 31000:2018 risk management standard focuses on the basis that “yesterday’s risk management practices are no longer adequate to deal with today’s threats and they need to evolve”.
The UK’s Food Standards Agency (FSA), in its 2017 Regulating Our Future document, said that new players that have entered the global food and safety landscape have “…reduced risks, created different risks, increased risks. But the current regulatory approach doesn’t allow us easily to focus our effort on changing risks”. The concern is not about a lack of regulation, but that regulation is not getting to the right places.
Sharing is caring
Elements of all food audits cover food safety, food standards and brand integrity, these basics should be openly shared, while standards relating to individual brand integrity, such as product requirements can remain competitive matters. This would mean we can all assess the risks inherent in any food system.
There is currently no uniform regulatory system in the food industry. For instance, the British Retail Consortium (BRC) standards are the dominant scheme in the UK, while other schemes include Safe Quality Food (SQF) and the International Featured Standard (IFS). These schemes are being benchmarked by the industry self-appointed Global Food Safety Initiative (GFSI) – an umbrella body backed by seven major international retailers, including Tesco. While GFSI is building momentum, many food assurance schemes such as the International Organisation for Standardisation (ISO) remain outside of the regulatory body.
Audit and new technologies
Independent third-party audit can help eliminate the need for individual customer audits, reducing the audit burden and allowing organisations to refocus on monitoring and continuous systems improvements.
The third-party audit of the future will be more user-friendly and forensic. For instance, Google-style ‘audit glasses’, ‘audit-bots’, and drones which can observe farming and food quality operations remotely, will be used. Potentially the most game-changing technology in this area is blockchain. Blockchain allows multiple stakeholders to securely share access to the same information, through a distributed ledger using independent computers to record and share transactions in their electronic ledgers.
Digital Ledger Technology (DLT) will transform the way data is handled and how companies share food safety and quality information in the very near future. This technology has the power and potential to revolutionise food safety and quality – provided that data is clean and validated.
Even with technology taking quality control to new levels, relationships will remain key to managing and maintaining a successful supply chain. A close working relationship and trust, is critical to attaining exceptional quality performance within any supply chain. Nurturing long-term supplier relationships is fundamental to business success.
A robust approach to risk management and a willingness to adapt may be required, but these are already focus areas in quality assurance and supplier management. The food supply chain has weathered plenty of storms in the past and will, no doubt, face more in the future.
The whole point of assurance and quality standards is, after all, to create an industry which can deal with whatever is thrown at it.
By Alicia Dimas, Content Executive at the Chartered Quality Institute (CQI).
NTT DATA Services, Remodelling Supply Chains for Resilience
Joey Dean, the man with the coolest name ever and Managing Director in the healthcare consulting practice for NTT DATA and is focused on delivering workplace transformation and enabling the future workforce for healthcare providers. Dean also leads client innovation programs to enhance service delivery and business outcomes for clients.
The pandemic has shifted priorities and created opportunities to do things differently, and companies are now looking to build more resilient supply chains, none needed more urgently than those within the healthcare system. Dean shares with us how he feels they can get there.
A Multi-Vendor Sourcing Approach
“Healthcare systems cannot afford delays in the supply chain when there are lives at stake. Healthcare procurement teams are looking at multi-vendor sourcing strategies, stockpiling more inventory, and ways to use data and AI to have a predictive view into the future and drive greater efficiency.
“The priority should be to shore up procurement channels and re-evaluate inventory management norms, i.e. stockpiling for assurance. Health systems should take the opportunity to renegotiate with their current vendors and broaden the supplier channel. Through those efforts, work with suppliers that have greater geographic diversity and transparency around manufacturing data, process, and continuity plans,” says Dean.
But here ensues the never-ending battle of domestic vs global supply chains. As I see it, domestic sourcing limits the high-risk exposure related to offshore sourcing— Canada’s issue with importing the vaccine is a good example of that. So, of course, I had to ask, for lifesaving products, is building domestic capabilities an option that is being considered?
“Domestic supply chains are sparse or have a high dependence on overseas centres for parts and raw materials. There are measures being discussed from a legislative perspective to drive more domestic sourcing, and there will need to be a concerted effort by Western countries through a mix of investments and financial incentives,” Dean explains.
Wielding Big Tech for Better Outcomes
So, that’s a long way off. In the meantime, leveraging technology is another way to mitigate the risks that lie within global supply chains while decreasing costs and improving quality. Dean expands on the potential of blockchain and AI in the industry.
“Blockchain is particularly interesting in creating more transparency and visibility across all supply chain activities. Organisations can create a decentralised record of all transactions to track assets from production to delivery or use by end-user. This increased supply chain transparency provides more visibility to both buyers and suppliers to resolve disputes and build more trusting relationships. Another benefit is that the validation of data is more efficient to prioritise time on the delivery of goods and services to reduce cost and improve quality.
“Artificial Intelligence and Machine Learning (AI/ML) is another area where there’s incredible value in processing massive amounts of data to aggregate and normalise the data to produce proactive recommendations on actions to improve the speed and cost-efficiency of the supply chain.”
Evolving Procurement Models
From asking more of suppliers to beefing up stocks, Dean believes procurement models should be remodelled to favour resilience, mitigate risk and ensure the needs of the customer are kept in view.
“The bottom line is that healthcare systems are expecting more from their suppliers. While transactional approaches focused solely on price and transactions have been the norm, collaborative relationships, where the buyer and supplier establish mutual objectives and outcomes, drives a trusting and transparent relationship. Healthcare systems are also looking to multi-vendor strategies to mitigate risk, so it is imperative for suppliers to stand out and embrace evolving procurement models.
“Healthcare systems are looking at partners that can establish domestic centres for supplies to mitigate the risks of having ‘all of their eggs’ in overseas locations. Suppliers should look to perform a strategic evaluation review that includes a distribution network analysis and distribution footprint review to understand cost, service, flexibility, and risks. Included in that strategy should be a “voice of the customer” assessment to understand current pain points and needs of customers.”
“Healthcare supply chain leaders are re-evaluating the Just In Time (JIT) model with supplies delivered on a regular basis. The approach does not require an investment in infrastructure but leaves organisations open to risk of disruption. Having domestic centres and warehousing from suppliers gives healthcare systems the ability to have inventory on hand without having to invest in their own infrastructure. Also, in the spirit of transparency, having predictive views into inventory levels can help enable better decision making from both sides.”
But, again, I had to ask, what about the risks and associated costs that come with higher inventory levels, such as expired product if there isn’t fast enough turnover, tying up cash flow, warehousing and inventory management costs?
“In the current supply chain environment, it is advisable for buyers to carry an in-house inventory on a just-in-time basis, while suppliers take a just-in-case approach, preserving capacity for surges, retaining safety stock, and building rapid replenishment channels for restock. But the risk of expired product is very real. This could be curbed with better data intelligence and improved technology that could forecast surges and predictively automate future supply needs. In this way, ordering would be more data-driven and rationalised to align with anticipated surges. Further adoption of data and intelligence and will be crucial for modernised buying in the new normal.
These are tough tasks, so I asked Dean to speak to some of the challenges. Luckily, he’s a patient guy with a lot to say.
On managing stakeholders and ensuring alignment on priorities and objectives, Dean says, “In order for managing stakeholders to stay aligned on priorities, they’ll need more transparency and collaborative win-win business relationships in which both healthcare systems and medical device manufacturers are equally committed to each other’s success. On the healthcare side, they need to understand where parts and products are manufactured to perform more predictive data and analytics for forecasting and planning efforts. And the manufacturers should offer more data transparency which will result in better planning and forecasting to navigate the ebbs and flows and enable better decision-making by healthcare systems.
Due to the sensitive nature of the information being requested, the effort to increase visibility is typically met with a lot of reluctance and push back. Dean essentially puts the onus back on suppliers to get with the times. “Traditionally, the relationships between buyers and suppliers are transactional, based only on the transaction between the two parties: what is the supplier providing, at what cost, and for what length of time. The relationship begins and ends there. The tide is shifting, and buyers expect more from their suppliers, especially given what the pandemic exposed around the fragility of the supply chain. The suppliers that get ahead of this will not only reap the benefits of improved relationships, but they will be able to take action on insights derived from greater visibility to manage risks more effectively.”
He offers a final tip. “A first step in enabling a supply chain data exchange is to make sure partners and buyers are aware of the conditions throughout the supply chain based on real-time data to enable predictive views into delays and disruptions. With well understand data sets, both parties can respond more effectively and work together when disruptions occur.”
As for where supply chain is heading, Dean says, “Moving forward, we’ll continue to see a shift toward Robotic Process Automation (RPA), Artificial Intelligence (AI), and advanced analytics to optimise the supply chain. The pandemic, as it has done in many other industries, will accelerate the move to digital, with the benefits of improving efficiency, visibility, and error rate. AI can consume enormous amounts of data to drive real-time pattern detection and mitigate risk from global disruptive events.”