Part I of this blog series introduced the burning issues of food safety and the resultant need for a holistic and proactive safety strategy (rather than to reactively recall plagued products). The previous post also talked in more detail about Lawson Software’s holistic approach entitled The “4Ps” of Food Safety.
In this part, Rory Granros, process industry and product marketing manager at Infor, also strongly opines that in order to protect product safety, companies need a holistic and proactive Product Compliance Strategy.
Infor’s Proactive Product Compliance Strategy
In a nutshell, process manufacturing companies need to transition from reactive and firefighting strategies that mainly minimize recall costs to proactive product safety strategies that protect the company and its products. With a significant increase in high-profile product safety failures, reactive strategies like lot track-and-trace cannot stop recalls, even though they can make the recall process far more efficient.
In 2008, the root causes of various recalls covered a wide range of issues that included material tampering, allergen labeling issues, inadequate end-user food handling or preparation instructions, potential cross contamination of ingredients, plant health and safety conditions, unsubstantiated (or even willfully inaccurate) marketing label claims, and shelf life issues. The increase in recalls and the above wide range of root causes have highlighted opportunities for more than just internal improvements and need to “prove the absence” of anything that can result in a product safety issues or in a recall.
Yet, many companies continue to operate with the assumption of that an “absence of proof” is sufficient. They continue to assume that all suppliers have adequate data, controls, and safety and compliance processes. They thus operate under an opportunistic quality and compliance strategy, whereby the goal of supplier quality audits is to find ways to pass (certify) the supplier.
To adequately insure supplier capabilities, companies must move from an opportunistic “absence of proof” stance to a risk-based “proof of absence” strategy. Since a holistic strategy cannot always be achieved immediately, companies need to focus on their greatest areas of risk, minimize their time to close product safety risk, and continually build on existing capabilities.
With all members of the food supply chain (i.e., from farms, material/ingredients suppliers to product manufacturing, distributors and retailers) continuing to consolidate, the impact of what had been traditionally a small and localized incident is now multiplied across many regions and customers. Not only are traditional product safety issues magnified by industry consolidation and broader distribution, but also increased product complexity, associated claims substantiation requirements, and the speed at which the Internet spreads information further amplify the opportunities for risk and shrink the time available in which to respond effectively.
To protect their products and long-term viability, companies need to build on any existing reactive product safety capabilities to implement a proactive product safety strategy and provide the much needed “proof of absence.” Proactive product safety will not only protect their products but will also reduce non-value-adding costs and improve profitability.
Reactive Product Safety Approaches
A core component of an effective reactive product safety approach is bi-directional lot control and track-and-trace capabilities. To meet ever-shrinking recall response mandates, the lot and sub-lot track-and-trace feature must be integrated into every material movement, product production, packaging, and distribution process.
Whenever manual or document-based lot track-and-trace is used, the time, risks, and cost to respond is increased. With every additional hour required to respond, the cost of a recall is increased and the risk to the company and its brand are increased. With an effective lot track-and-trace feature available, companies can leverage such capabilities to more actively ensure product safety and protect brand and company image.
Building upon Reactive Product Safety Strategies to “Proactive Product Safety” Strategies
Companies can implement a sound process manufacturing enterprise resource management (ERP) system like Infor ERP Adage [evaluate this product] at both the lot and sub-lot level or Infor ERP LX [evaluate this product] at the lot level only. Enterprises can than immediately capture extended lot and sub-lot data that can be used to actively protect product safety. They can integrate data from quality assurance (QA), analytics, specifications, and lot tracking modules to actively manage product safety and minimize the chance of a recall.
With every lot-based transaction, companies can initially capture and incrementally add safety, compliance, performance, and cost data. With information like vendors’ location and risk rating, dates for shelf life, effective and retest dates, allergens (or other labeling data), proof of absence of harmful attributes, etc., automated specification matching ensures that lots or sub-lots can only be used for safe or approved usages.
This can stop cross-contamination or reduction of the product’s value based on co-mingling of high value lots with lower value lots. As an example, the higher value of organic or specific farm lots or sub-lot is reduced to the value of product to the lowest co-mingled lot value. Since co-mingling of an organic lot with an inorganic lot reduces all the lots to an inferior inorganic value, not only are you overpaying for the organic lot but also the price of associated products is reduced.
Integration of QA data from Advanced Shipment Notice (ASN) through inventory, production, shipping, and logistics modules (and their respective departments) enables companies to actively protect their product safety. Until all tests are completed and approved, a higher risk or lower quality material lot or sub-lot cannot be used throughout production and logistics.
Based on risk or quality ranking of a lot or sub-lot, additional testing for contaminants can be required to provide the coveted “proof of absence”. Not only is safety ensured this way, but also the ability to prove the origin (or another proof of absence) can improve the value of the end product. Active monitoring can actively identify risks or issues and preempt suspect lots from being used or shipped. Companies can actively monitor from initial shipment into inventory to production and through distribution.
Based on the risk and quality rating of the material, formula, or recipe, the appropriate level of testing can be activated and managed. This could include increased sample testing sizes (or more frequent intervals) and more extensive testing. More frequent sampling will identify issues earlier and ensure timelier issue mitigation.
As companies improve the depth and accuracy of supplier, material, and production data, performance analysis can be used to more accurately rate supplier, material, and production quality. Use of Supplier Scorecards with risk ratings can help drive purchase order (PO) volumes to more reliable suppliers and reduce safety risks. Since many suppliers are not staffed to implement advanced quality and compliance programs, many manufacturers are moving from just auditing to value-added supplier education.
Improved supplier quality can help reduce both manufacturer’s and supplier’s costs and improve the manufacturer’s quality and product consistency. While companies find that non-value-added costs are reduced and throughput can be increased, improved shelf life and quality can reduce returns and quantities of non-saleable or expired products. With higher quality products with value added lot genealogy, the ability to prove country of origin or organic type claims can increase the value of the products.
Moving to Proactive Product Safety in Planning, Scheduling, Asset Management, and Product Development
Most companies need to incrementally improve their processes, information, and systems to achieve holistic product safety and compliance. By using a risk-benefit and cost-benefit analysis strategy, companies can identify areas to start with, and gradually close product safety risk holes. As they adequately control an area of risk, they can incrementally move to the next area of improvement and incrementally minimize risks.
To that end, companies should develop a master plan to holistic product safety. This overall plan should include:
Holistic Enterprise Asset Management
Leaky pipes or roofs, metal shavings from poorly maintained equipment that fell into packaging processes, inadequate sanitation procedures, and other asset maintenance issues have lead to several high profile product recalls and corporate embarrassments. Effective preventative maintenance capabilities within EAM systems like Infor EAM Enterprise Edition [evaluate this product] not only reduce product quality and safety risks, but also increase asset availability and extend the lifecycle of assets. Effective preventative maintenance (including reliability centered maintenance [RCM]) or stopping the usage of any “out of tolerance” conditions proactively improves product safety, minimizes write-offs, and improves fill rates (customer service).
Design for Compliance, Quality and Product Safety
In contrast to Lawson’s 4P approach in Part 1, Infor considers PLM as a focal system of record. Allergen labeling and claim substantiation recalls, home handling and usage instructions, supplier enablement, and designing products for compliance, quality, and food safety issues (including design for environment [DfE]) are all supported by integrated PLM processes. Starting with initial material testing via release of a product to localization at a plant, a PLM system controls more data about compliance, quality, and safety than any other application.
Trial protocols to ensure that companies are testing for the right issues can be developed within the product and seamlessly integrated to QA processes. Full labeling and compliance documentation by end-user, market, and country can be automatically generated.
With the increased use of outsourcing and pushing more research and development (R&D) tasks out to suppliers, manufacturers will strive to protect intellectual property (IP). Process manufacturing PLM solutions like Infor PLM Optiva [evaluate this product] should allow suppliers to disclose all the risks while protecting vendors’ IP.
To that end, secure constituent formulas manage compliance data and provide masked R&D material data as necessary. When a compliance issue arises with a material that has critical security, compliance managers can search across this secure data and find other similar materials to proactively address other potential issues.
Designing with built-in quality, compliance, and sustainability in mind will minimize the time and cost to scale, ensure product safety, and improve the product success rates. In parallel, companies can benefit from reduced costs, improved product performance, sustainability, minimized time-to-market (TTM), and ensured product’s regulatory compliance.
Material and Product Screening and Control
Since suppliers represent a high area of potential risk, integrating more data and more frequent supplier interactions can proactively improve safety. The appropriate level of material disclosure, supplier or third-party testing and certification, and internal testing and certification can be enforced based on the supplier, commodity and item quality, compliance and risk rating, .
As requests for information (RFIs), requests for proposal (RFPs) or Plant Certifications documents are processed, integrated material disclosure processes can streamline processes for low risk and high quality suppliers and provide additional scrutiny for higher risk suppliers, materials and plants. Materials disclosure and screening processes can proactively identify issues, protect product safety, and reduce process lead times and costs.
Optimized Scheduling and Planning with Product Safety and CTP Constraints
With compliance and safety constraints integrated into planning and scheduling processes, companies can simulate the impact of a product safety occurrence. Planning that stops organic lots from being stored in a bin with inorganic lots is an example of proactive planning. As time pressures increase, supply chains and products get more complex, and relying on manual processes or human intervention is increasingly risky.
The chance of product safety issues from cross contamination or Hazard Analysis and Critical Control Points (HACCP) monitoring for inability to make product claims is increased as products and package options proliferate to meet consumers’ demands for wider variety of products, improved compliance and ensure product claims. Companies can ensure compliance and product safety while increasing throughput by up to 40 percent (based on Infor customers’ results) via deploying constraint-based optimization software that includes handling organic requirements, allergens, impurities, processing aid contaminants, package compatibility or stability, or equipment or storage constraints.
Moreover, as companies look to outsource more, the ability to include supplier or internal CTP capabilities can ensure that the lowest risk suppliers are proactively selected. This can not only improve product safety, but can also minimize inventory levels and improve cash flows.
Shaping Demand to Improve Compliance
When companies are faced with suppliers or products that cannot meet future compliance, risks become unacceptable and demand will likely be reduced. The only decision may be to sunset products. The use of integrated pricing and promotions planning and management can identify impacts on margins, cannibalization, and more profitability transition to lower risk and higher margin products.
To proactively identify and mitigate compliance, safety or other internal or supplier risks, risk management should be included in all levels of planning and execution. As suppliers face increased financial pressures, will their quality suffer (or might they even go out of business)? With increased risk transparency, companies can start to improve compliance and product safety while minimizing risks.
Ensuring Product Safety is not an Option, it is a Necessity
At the end of day, your company’s and your product’s image is all you have! Tarnishing of reputations not only impacts short-term revenue or profits but has also resulted in many bankruptcies or forced acquisitions. An effective recall process can reduce costs and disruption, but has not slowed the pace of recalls and can only slightly reduce impact on a company or brand.
Companies must implement or build upon an effective lot track-and-trace ability to create an active product safety strategy. To minimize the time to improve safety and protect the brand, most companies should focus on the best risk reward areas and incrementally improve product safety.
Organizations will improve product safety and reduce non-value-added costs as they move from traditional reactive (and semi-active) strategies to proactively developing and certifying products and materials, preventing equipment safety risks, scheduling and planning with compliance constraints, and improving decisions and mitigating risks with compliance transparency. These forward-thinking companies should profit from improved customer or consumer confidence, more competitive products, and improved profitability.
Future whitepapers from Infor will provide many more details on opportunities for companies to proactively improve product safety. Until then, dear readers, what are your views, comments, opinions, experiences, etc. about the abovementioned food or drug safety issues? Also, what real-life experiences have you had with product safety (and product recalls), and what solutions have you used in that regard?
18001 lead auditor…
BS OHSAS 18001 standard specifies requirements for an OH&S management system to allow a business to develop and implement an occupational health and safety policy and objectives which take into account legal requirements and information about OH&S risk…
Absolutely! prevention is better than cure. Most importantly on our health, however, it also applies on our business and daily life activities. Planning is very important. It goes with research, thorough studies, risk management, development and implementation.