The Technology Behind Automated Vendor Management
Contamination recalls from the U.S Food and Drug Administration (FDA) surged by an unprecedented 167% over the first half of 2016. This rise is largely attributed to tighter regulations and technological advances but also reflects the realities of our increasingly complex and interconnected food chain. As many of last year’s recalls illustrate, a single defective ingredient can devastate an entire supply system, affecting multiple manufacturers, brands, and products. Effective vendor management thus becomes a central issue for any food manufacturer.
SunOpta’s precautionary sunflower seed recall is an example of this multiplier effect. In May 2016, organic food company SunOpta voluntarily recalled a number of kernel products due to possible traces of listeria. The recall made headlines, affecting more than 645,000 units in the second quarter of 2016; it spanned 25 states and parts of Canada. Dozens of brands were affected by the recall, including Sunrich Naturals and Planter’s, Quaker Oats, Clif Bars, and even a Trader Joe’s Salad. For SunOpta alone, the cost of refunding customers and replacing products totaled more than $16 million. Remember, these are only direct costs – they do not account for lost sales and harm caused to the company’s market value and reputation.
Your company might be extra vigilant and have an air-tight food safety plan, but how do you guarantee that your vendors do as well? As a manufacturer, you not only have to ensure your own program abides by international food safety standards, but you are also responsible for incoming ingredients. This is especially true for companies that are now required to comply with the US Foreign Supplier Verification Program. In short, keeping track of vendor certifications has become a logistical nightmare.
The Problem: Ineffective and Outdated Supplier Management
Managing multiple vendors was already a challenge before the globalization of the food supply chain. Today, food manufacturers and importers must keep track of their suppliers and the certifications required for each, and maintain the ability to implement rapid corrective actions in the event of a recall (or other incident). Having efficient communication with suppliers and customers is crucial not only from a public health perspective, but from a PR standpoint as well.
Attempting to manage these tasks manually is error-prone, time-consuming and overwhelming, if not nearly impossible. The process entails regularly and extensively tracking vendor audits, qualifications, food safety systems, non-conformances, corrective actions and more. Yet despite this, many companies still strive to keep track of suppliers by means of ad hoc paper pushing. This results in inconsistencies, compliance failures, and as highlighted above, potentially cataclysmic recalls.
The Solution Lies in Technological Innovation
The good news is that recent years have seen some exciting advancements in food manufacturing software development. Leading industry experts are now turning to software applications to centrally manage a multitude of tasks including food safety and traceability, allergen management, preparing for audits and inspections, maintenance management, quality assurance, mass balance calculations, and more.
The key advantage of going digital is that everything is automated: not only does this remove the risk of human error, it eliminates a ton of paperwork. It also saves companies money by reducing the need for procurement staff.
How Technology Helps Vendor Management
As a manufacturer, it is your responsibility to not only ensure your program meets international requirements, but to check all your incoming ingredients – which could number in the thousands. Software allows you to track vendors and ingredients, monitor supplier audits and qualifications, and quickly sift through irrelevant information to pinpoint problem pressure-points.
For traceability purposes, most online food safety systems require users to upload a complete list of ingredients, materials, and packaging. Intelligent software then tracks products and materials, auto-generating a tailored HACCP or HARCP food safety plan for manufacturers to put into practice. For food production technology expert Steve Burton, this led to a realization. Since supplier information is already available and frequently updated, why not go one step further and create a comprehensive vendor management function?
With Icicle food manufacturing software, vendor management is integrated with all other functionalities out-of-the-box, including traceability, shipping and receiving, and food safety. All clients need to do is update their existing supplier list in cloud storage by adding copies of vendor certification documents and renewal dates, and by assigning tasks. The system then auto-generates a comprehensive and individually-tailored survey that clients can use to ensure their suppliers are making a safe product. Should a food safety issue arise, this survey can be used as evidence that the establishment took the necessary means to ensure their vendor complied with food safety requirements.
In addition, the software releases regular alerts to remind procurement staff to update vendor certifications to ensure that they are in compliance on an ongoing basis. Users are notified when vendor certifications are about to expire, and they can even auto-assign someone to follow up with the particular vendor to obtain updated information.
Software systems like Icicle eliminate paperwork and human error, improves communication and operational efficiencies, and seamlessly integrates a range of functions – like vendor management – within a single, user-friendly application.