- Rhiza Guevarra, FSCO
Managing supply chain risks, the ingredient brothers' way
According to Terapak 2020 Index Report, COVID-19 has significantly focused attention on hygiene and food safety, with more than two-thirds (68%) of consumers worldwide now believing that food safety is a major concern for society.1 Consumer nowadays want to know where the ingredients come from, how they were grown, and how they were processed and are demanding greater transparency and compliance regarding food safety.
Market pressures are driving additional pressure on our food safety standards.
As ingredients become scarce, there is also an increased risk of food fraud and adulteration. These drive manufacturers and importers to raise their food safety and quality standards, create robust food safety systems, and get certified to third-party food safety standards.
Consumers continue to demand new, innovative products with rare or novel ingredients. These new ingredients require a significant amount of upfront due diligence to ensure they are manufactured in a responsible food safe manner. The increasing number of unique ingredients dramatically increases the knowledge required by internal QA teams.
As importers of records, our responsibility is to do due diligence and be data-driven in evaluating our suppliers to ensure they meet the same standards imposed on domestically produced food items.
At ingredient brothers, we are constantly evaluating hundreds of suppliers!
After 10-plus years of experience in seafood manufacturing and export companies that export mainly to the US, EU, and Japan has helped me to understand our suppliers’ product and process controls based on the documents and procedures they submit. Not all vendors present the same risks; some ingredients will always pose more risks than others. That is why we must weigh these risks and ensure that our resources are used effectively. We have dedicated our resources to the areas that present more significant risks.
Supplier Risk Assessment
Every organization has a different approach to conducting risk assessments. There is no cut-and-dry approach. This process, if effectively conducted, can help to avoid potential problems in the long run and to ensure that we’re getting the best possible products from the procurement process.
We have established the following steps in our supply chain management program that are based on the requirements of the FSMA Foreign Supplier Verification Program:
Performing a hazard analysis by a qualified individual
This step is vital in identifying known or reasonably likely hazards associated with each type of ingredient. After identifying the hazards, a risk assessment is conducted to assess the likelihood and severity of this hazard causing harm. This process intends to ensure that our organization understands the associated risk of the ingredient in terms of safety, quality, authenticity, and legality and to determine how to manage or mitigate those risks. A review of the hazards analysis is conducted annually or if there are any changes in raw materials, product formulation, processing, packaging, distribution, or intended use.
Supplier verification activities
This is performed to ensure that the hazards associated with the ingredients are controlled and ensure that vendors are managing or mitigating any risks. The following are some of the supplier verification activities that are performed by our food safety and quality assurance team: a review of customer requirements versus supplier’s specification, a review of documents and procedures (e.g., specification sheets, HACCP plan, process flow, allergen management, certificate of analysis, etc.), review of updated third-party audit reports and corrective actions, review of the history of recalls and fraud, country of origin of suppliers, etc. The result of the verification determines the approval or disapproval of the supplier.
Supplier performance evaluation
We measure the supplier’s performance against various criteria such as quality of products delivered, timeliness of deliveries, compliance with food safety and quality, etc. By conducting supplier evaluations, we can determine if the supplier meets our organization’s standards and needs. The frequency of evaluation is always based on risk.
HACCP approach in supplier risk assessment
During our assessment, we will consider the following: the result of the hazard assessment of the product that the supplier supplies, the historical performance review of products, the result of supplier evaluation, and the suppliers’ audit performance. A cumulative scoring system is used to calculate a risk score for every supplier and identify their risk level. There are corresponding controls per supplier risk level – reduced inspection for low-risk suppliers to tightened inspection for extremely high-risk suppliers. Risk assessments are conducted annually or if there are emerging risks, potential hazards, food safety incidents, food fraud cases, and other significant incidents that may affect the products and suppliers.
A Corrective action procedure
This is in place to ensure that non-conformities are identified, controlled, corrected, verified, and given corrective actions accordingly. We will require our suppliers to investigate the nature, cause, and reason for the non-conformities and, to create an effective corrective action to prevent the recurrence of the same issue.
An online platform is used as a repository for massive amounts of data and documents we currently have. This is also used to streamline tasks and workflows, allowing us to move away from a paper-based document and record-keeping system. Records related to compliance status, supplier verification and approval activities, hazard analysis, corrective action reports, and other food safety documents are maintained and are available and can easily be accessed by FDA upon request.
As the organization grows, supply chains become increasingly complex. This can lead to increased risk for food safety, food fraud, and adulteration, thus the need for proper risk management and supply chain controls.
Every link in the supply chain has a role to play. As importers, we are responsible for developing a supply chain program and identifying appropriate suppliers who meet our organization’s and our customer's standards and expectations. It is also our responsibility to manage our suppliers – from identifying the hazards and assessing the risk associated with the product to the selection, approval, monitoring, and ongoing verification.
It does not start and end in the approval activities. The real work begins with continuous monitoring and verification. Our long-term goal is to establish a robust supply chain management program to ensure the success not only of our organization but also of our customers and suppliers.