Archive for February, 2009

Product safety is not just about food borne illnesses.

Thursday, February 26th, 2009

This author often writes about the lack of adequate controls relative to keeping our food supply chain as safe as it possibly can be. Product safety however is a much broader topic.

I was meeting with a customer in the health care industry recently and he asked me if I could check the SafeSourceIt™ Supplier Database for the number of suppliers that could provide bids on catheters. From his desk, it only took me about 20 seconds to identify forty three such suppliers.

At this point we had a conversation about certifications and other standards that he might want suppliers to adhere to. We discussed a variety of ISO standards, and then I asked if there were any environmental concerns or questions he might like to hold suppliers accountable to. He said what do you mean? My response was, what does the University that you are a part of do or support relative to the environment. Are there specific programs or initiatives? We talked about this for a while and came to the conclusion that with everything else being equal that he would use this area as a tie breaker in selecting a supplier if they supported the same or similar programs processes or certifications. We then went back to the database and looked at certifications and environmental support that some of these suppliers had in place.

Ok, you want to know why this is important and how it relates to product safety and food borne illness. We know from recent posts how the actions of individuals at the highest levels of companies can have a negative impact on product quality in the food space. The same issues impact non food products. Authorities are looking for a CEO whose company prepared heparin and saline syringes without insuring they were sterile. These products are believed to have sickened hundreds and killed up to five individuals. Do you believe that if these companies were asked questions relative to their safety and environmental standards that they would have stood the test of comparing themselves to well run companies? Probably not. That is why Triple Bottom Line is becoming so important when analyzing successful companies to partner with going forward.

Among many others, we have peanut products, medical devices, toys, ballpark turf etc. all recently causing illnesses or death. All should require diligence in ensuring that safety and other standards are adhered to. Ask your solutions provider how they accomplish this?

We look forward to and appreciate your comments

Now is the best time ever for food retailers to run reverse auctions.

Wednesday, February 25th, 2009

In this economy lower retail prices are more important to consumers than just about anything else. How far a dollar goes is part of the conversation in every home, every day.

So many times when I speak with retailers and we discuss e-negotiation tools, the categories they want to discuss are expense related categories or not for resale products. The fact is that this area can certainly have its pricing compressed, but it will not have the same impact on the bottom line as a reduction in Cost of Goods Sold or COGS or for resale products. These categories will put more profit in a retailer’s pocket. These categories will allow retailers to reduce pricing for their consumers, and it is these categories that will allow retailers to offer competitive promotions in order to take business away form their competition while also driving a greater wallet share from their top deciles of customers. And finally these categories are the ones that consumers watch every day.

The recent 2009 National Grocers Association SuperMArketGuru Consumer Panel survey taken between November 2008 and January 2009 asked consumers the following question. How important is price when deciding where to shop for groceries? Ninety seven percent (97%) of consumers answered the question that it is somewhat to very important. So, low prices are a huge priority. This author’s assumption is that food retailers are already aware of this.

What can food retailers do? The first thing is to compress pricing on the expense line. You get to keep all of that money. The second thing is to consider ten categories immediately for price compression in the direct spend area and share the compression with your customers. Run an add or place signs telling consumers what you a re doing and why. It might look something like this. “Because of the current economic condition, we are running reverse auctions with suppliers every week in order to drive pricing down on the products you buy from us”. Next week please look for savings in the following areas…

1. Peanut Butter
2. Eggs
3. Potatoes
4. IQF Chicken
5. Rice
6. Tomatoes
7. Juices
8. Jelly and Jams
9. Mustard
10. Deli Ham

These categories are a few in which sales are apt to rise when consumers are trying to stretch their dollars. Focus could be made on private label in these areas as well.

We appreciate and look forward to your comments.

Food Borne Illness Improvement requires more teamwork. What can you do?

Tuesday, February 24th, 2009

Public Meeting to Address Agenda Items for the 3rd Session of the Codex Committee on Contaminants in Foods

The Codex Alimentarius Commission was created in 1963 by FAO and WHO to develop food standards, guidelines and related texts such as codes of practice under the Joint FAO/WHO Food Standards Programme. Based on recent outbreaks, this is obviously this is not working as well as it should be after 46 years. The following meeting has all the right participants to make significant progress in protecting our food sources. Let’s hope it is not just another meeting about another meeting.

WASHINGTON, February 19, 2009 – The Office of the Under Secretary for Food Safety, U.S. Department of Agriculture (USDA) and the Food and Drug Administration (FDA), U.S. Department of Health and Human Services’ (HHS) are sponsoring a public meeting to provide information and receive public comments on agenda items and draft U.S. positions that will be discussed at the 3rd Session of the Codex Committee on Contaminants in Food (CCCF), which will be held in Rotterdam, the Netherlands, from March 23-27, 2009.

The public meeting will be held on Thursday, March 5, 2009, from 1:00 to 3:00 p.m. in the Harvey Wiley Federal Building, Room 1A-001, FDA, Center for Food Safety and Applied Nutrition (CFSAN), 5100 Paint Branch Parkway, College Park, MD.

Documents and agenda items related to the 3rd Session of the CCCF will be accessible at the Codex Web site at www.codexalimentarius.net/current.asp.

Please participate to the extent that you can.

When Peanut Corporation of America files for Chapter 7, what happens to all claims for damages from the Salmonella outbreak?

Monday, February 23rd, 2009

Chapter 7 is also known as liquidation or the converting of a company’s assets into money to pay creditors, or a straight bankruptcy.

The following case is a $13 million settlement for damages awarded from an individual food borne illness case that resulted in.

This unfortunate incident actually occurred approximately nine years ago at a Sizzler restaurant. The settlement was with the company’s meat supplier and others according to court records. Evidently, Brianna Kriefall did not even eat meat. She actually ate watermelon that had touched the tainted meat and passed away a week later. Additionally, one hundred and forty other people became ill from the outbreak in two sizzlers.

Today there is still a lawsuit ongoing where the national Sizzler chain and an insurance company are suing Excel Corporation a meat producer that is a subsidiary of Cargill Inc.

Beyond the settlement listed the actual legal and other expenses associated with this case may never be known, but with retail industry net profit averaging about 3.4% you can bet the impact on earnings to be significant for some CEO.

Beyond the obvious social costs associated with responsibility and culpability in the sale and consumption of tainted foods, the potential for huge litigation costs can put your company at risk for years after an incident actually happened.

It is important to know where your products come from with a complete trail to the country origin as well what your suppliers are doing in the way of certifications such as GFSI and SQF to insure the quality of the food chain for retailers and their consumers.

We look forward to your comments

What, not who is COO?

Friday, February 20th, 2009

Country of origin information needs to be a significant part of product traceability beyond one forward one back reporting if we are to limit food borne illness outbreaks and other product issues that continue to put consumers and companies at risk.

According to Wikipedia, Country of origin (often abbreviated to COO), is the country of manufacture, production, or growth where a product comes from.

This week during his visit to Canada, President Obama’s administration is seeking tougher labeling laws on fresh meat and other food products. Canada continues to be an opponent to country of origin labeling. Mexico our other NAFTA partner also does not support this type of labeling and has actually filed protests with the World Trade Organization.

It troubles this author when North America has suffered the two largest food borne illness outbreaks in decades in the last year that our local trading partners ignore this critical step in product traceability. I’m sure everyone remembers that last years Salmonella outbreaks source search was focused on tomato’s and peppers imported from Mexico.

What we clearly require is specific country of origin labeling. Standards tend to be inconsistent from country to country. By example products enter North America from Europe that may carry country of origin labeling like “Europe” or “EU” rather than specific labeling indicating a product comes from France or Germany.

Manufactured products create a more unique issue, as individual products may include up to hundreds of components, pieces and parts from dozens of countries and assembled in other countries. While this issue requires significant work, there is absolutely no reason that we can not include country of origin labeling on all food products that enter our country.

Consumers and the retailers they buy their products from demand this of suppliers.

We appreciate and look forward to your comments.

I was reading a post at Sourcing Innovation the other day on TBL and thought waht a good time for a re-post

Thursday, February 19th, 2009

When your company begins to consider the Greening of the Supply Chain: Mind your Three P’s.

What does it mean to go Green? I was reading the Aberdeen white paper Building a Green Supply Chain from March of last year and believe they may in a concise format have the best glossary of definitions as to the meaning of and impact on what it means to be Green. Their short but effective green glossary defines the following terms.

1. Corporate Social Responsibility (CSR) posits that companies have a responsibility to be social and environmental stewards and that having a positive impact on society and the planet is as important as profit.
2. Green refers to practices, processes and products that have a minimal impact on the health of the ecosystem. The emphasis is on non hazardous recyclable, reusable, and energy efficient products and processes.
3. Sustainability ensures the ability to meet present needs and profits, today, without compromising the ability to meet them tomorrow.
4. Triple Bottom Line (TBL) determines that business has positive impacts on the three P’s: people, profit and planet and is a standard framework for CSR agendas.

It might be interesting to ask CEO’s around the country if they agree with these definitions. Many probably do. The answer would however be a good indicator of a company’s commitment to being Green and not just caught up in green wash.

What if a companies results are not good due to the current economic conditions and same store sales are flat or down during the curent quarters financial reporting? However concurrently the company has also offered guidance of the significant and positive impact they are having on the evolution of a greener supply chain and a significantly reduced carbon footprint. Would Wall Street react negatively or positively?

The great news is that every day more and more emphasis is being placed on this subject by companies of all sizes.

IWelook forward to your comments.

Measuring the total people impact of food borne illness outbreaks.

Tuesday, February 17th, 2009

We don’t often see much more than the actual number of people taken ill or deaths when these cases are reported.

This author has posted many blogs on this subject and in particular has posed many questions relative specifically to the tow large Salmelosis outbreaks in North America over the lat two years.

We are all painfully aware of the more than 1600 people affected and of the unfortunate deaths attributed to these outbreaks. In a recent blog post I indicated that these numbers made me uncomfortable as to their accuracy because of the number of people that don’t or can not report their illnesses due to a variety of reasons which can include the fact that they do not have a health care program or the money required to go to the doctor.

Today we learned the company at the epicenter of the latest outbreak Peanut Corporation of America has filed for Chapter 7 bankruptcy which is a liquidation of assets and distribution to creditors. Your first question might be why not Chapter 11 or some other forms of reorganization. Was the company that bad off financially? Or is this the easy way out in order to protect from the cost of litigation in the future. It is purely my opinion, but current loses associated with product recalls will pale by comparison to the losses associated with upcoming lawsuits by the families of those taken ill or those that have died. The obvious question now, is if the existing entity no longer exists, what other company in the supply chain might be culpable or held accountable now or in the future.
With over 2000 products recalled, the list of potential distributors in enormous.

So far we have only discussed those directly affected by the food borne illness associated with these products. The losses however go much deeper. What about all of the employees of Peanut Corporation of America and their families. What about companies that service this company such as landscaping and cleaning businesses that will now also suffer a reduction in business? What about the distributors of these products that are now required to find new sources of supply. What about increased switching costs and higher prices as a result of reduced demand. What about reduced retail sales during a crappy economy when retailers are already challenged with profit pressures? What about products with an affiliation to peanut based products? Do they suffer category losses as well?

The waterfall effect is endless as are the lists of potential questions are endless. One thing we are certain of, is that there are varied and far reaching impacts anytime poor safety practices are followed.

How can your procurement company help mitigate your risk in this area?

As always, we look forward to and appreciate your comments.

When I go to the movies, which is every Friday night I like to eat peanut M&M’s. I just hope they are safe.

Thursday, February 12th, 2009

The House Energy and Commerce subcommittee held hearings this week on the most recent salmonella outbreak.

This outbreak has sickened some 600 people, may be linked to nine deaths; the latest of which was reported in Ohio this week on Wednesday and has also resulted in one of the largest product recalls ever of more than 1,900 food items.

This inforamtion drives me crazy. I’m not sure how we come up with 600 people. There are far too many people that can not afford health care and just stay home sick and never report to anyone just how sick they are. There are others that regardless of how bad they feel go to work any way because it is like a badge of honor to them not to miss a day of work. The fact is that this particular outbreak has probably sickened thousands and killed more than the nine reported above. That means that last years outbreak was probably even larger yet.

When Mr. Parnell the owner of the Peanut Corp. of America was question by the committee, he answered as follows. “Mr. Chairman and members of the committee, on advice of my counsel, I respectively decline to answer your questions based on the protections afforded me under the U.S. Constitution,” How’s this not as bad or worse than what Bernie Madoff did? I’m not sure of the total dollar value of losses attributed to this, but it has to be in the multiple millions.

Further testimony concluded that the company discovered salmonella at its Blakely, Ga., plant as far back as 2006. Food and Drug Administration officials told lawmakers more federal inspections could have helped prevent the outbreak.

So, what comes of all this? Another study? More money to staff the FDA so they can do more audits? They just finished hiring 1300 new employees for just that purpose last year.

I remember a movie from the late 1970’s. I think it was called Network. A reporter named Beale In one impassioned diatribe galvanizes the nation with his rant, “I’m as mad as hell, and I’m not going to take this anymore.

Well this is my opportunity to hopefully do the same. “I’m as mad as hell, and I’m not going to take this anymore. Tomorrow I am going to forward this post to anyone and everyone I can think off that does care. We don’t need committees, trade groups, governments and studies. We need action. The tools and processes are availed to solve this problem today. Innocent people do not need to continue to get sick and die from food distributed in the most advanced country on the planet.

Let’s stop talking and start doing. Relative to food and product safety we have done that at SafeSourcing and don’t just talk the talk with our origin and ECO stories. We walk the walk with specific programs and deliverables. I’d like to hear what the rest of you are doing.

We look forward to and appreciate your comments.

Corporate Social Responsibility and the procurement process

Tuesday, February 10th, 2009

Beyond food and product safety, this author has posted more than ten blogs in the last nine months on Social Responsibility in the supply chain and reinforcing it in the procurement process.

The following is taken directly form a great website “The CPO Agenda” and specifically from an article “How the Stars Shine Brighter”. The entire article is a great read as to the positive impact that best in class procurement companies can have on their company’s results even during these tough economic times. The specific information I found interesting was a sub section that relates directly to yesterdays post on supplier score cards and is titled.

Sustainability and corporate responsibility.

These have emerged as significant issues for the procurement function and are now factored into most companies’ corporate goals. However, there is still a long way to go until these goals are formally embedded into procurement strategies. Finding the right balance between economic viability, environmental awareness and social well-being is a significant challenge, but a competitive advantage can be gained by companies that locate intersection points for all three.

For Wal-Mart, sustainability has broad economic and social components, including healthcare, economic opportunity and the quality of life of the people who make the products it stocks. The company’s commitment to sustainability centers on three aggressive goals: to be supplied 100 per cent by renewable energy, to create zero waste, and to sell products that sustain natural resources and the environment. The key focus areas for its sustainability efforts include paper, packaging, textiles, jeweler, electronics and chemical-based products – categories selected based on a combination of consumption and the volume of product sold.

Wal-Mart helps its suppliers to develop goals and set expectations, assist with knowledge around sustainability practices, and evaluate and manage results. Suppliers are expected to “do right” by workers and the environment, examine the entire product lifecycle in order to develop sustainable merchandise and significantly increase energy efficiency throughout the supply chain, especially in the area of logistics and shipping.

Key scorecard metrics include greenhouse gas emissions produced during manufacturing, the product-to-packaging ratio, packing cube utilization, recycled material usage, renewable energy use at supplier facilities and raw material recovery rates. The involvement and commitment of the world’s largest retailer toward sustainability practices throughout the supply chain will accelerate the rate at which many companies come to adopt sustainability-focused practices.

As always, we appreciate and look forward to your comments.

The Senate takes action on Federal Food Safety Oversight.

Friday, February 6th, 2009

This author has indicated that the product safety area in procurement best practices becomes more sensitive every day.

However, safe products are not just about food. With that said what is taking place in the senate today is a positive step toward improving the oversight on all products.

Today in Washington the Senate took up the issue of food Safety Oversight. Following is the agenda and planned attendees.

Senate Committee on Agriculture, Nutrition & Forestry
Full Committee Hearing Notice

Examination of Federal Food Safety Oversight in the Wake of Peanut Products Recall
Date: Thursday, February 5, 2009

Time: 10:00 a.m.
Place: 216 Hart Senate Office Building
Panel I

Dr. Stephen Sundlof
Director, U.S. Food and Drug Administration, Center for
Food Safety and Applied Nutrition
Rockville, MD

Rear Admiral Ali S. Khan
Assistant Surgeon General and Deputy Director of the National Center for Zoonotic, Vector-borne, and Enteric Diseases, Center for Disease Control
Atlanta, GA

Panel II

Ms. Gabrielle Meunier
Mother of affected child
South Burlington, VT

Ms. Caroline Smith DeWaal
Director
Program on Food Safety, Center for Science
in the Public Interest
Washington, DC

Mr. William Hubbard
Former Senior Associate Commissioner for
Policy, Planning and Legislation, Food and Drug Administration
Chapel Hill, NC

A related question this author has posed in a number of my posts is who in the supply chain is culpable for damages as a result of breakdowns in product safety that result in illness, injury or death. A wonderful blog to view that speaks too many of these matters is The Marler Blog. Bill Marler is an accomplished personal injury and products liability attorney. He began litigating food borne illness cases in 1993. I hope you find his site educational.

As always we appreciate and look forward to your comments