Welcome OnTrak with FSMA: A Webinar Series

Hosted by: ReposiTrak®

Today’s Presentation by: The Acheson Group

Supplier Expectations:

Time for a Change to Your Playbook

Presented by: Dr. Peyman Fatemi

Vice President, Scientific & Technical Affairs

The Acheson Group

August 11, 2015

Copied with permission from the National Center for Food Protection and Defense (NCFPD)

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Copied with permission from the National Center for Food Protection and Defense (NCFPD)

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Copied with permission from the National Center for Food Protection and Defense (NCFPD)

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Global food supply

Changing science

Media influence

New threats

Consumer expectations

The Changing Food Safety Landscape 6

Reduces food safety risks by delivering

equivalence and convergence between

effective food safety management systems

Manages cost in the global food system by

eliminating redundancy and improving

operational efficiency

Develops competencies and capacity

building in food safety to create consistent

and effective global food systems

Provides a unique international stakeholder

platform for collaboration, knowledge

exchange and networking

Global Food Safety Initiative 7

Signed into law on January 4, 2011

Most sweeping overhaul of the food

safety system since 1938

Law reflects risk-based integrated

global systems approach

Congress made the law…

• FDA must implement it

• NUMEROUS regulations

Food Safety Modernization Act 8

Proposed Rule Final Deadline

FSMA Status Summary

August 30, 2015

August 30, 2015

October 31, 2015

October 31, 2015

October 31, 2015

Mar 31, 2016

May 31, 2016

PC – Human food

PC – Animal food

Produce safety

FSVP

Third party accreditation

Sanitary transport

Food defense

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Sustainability And Environmental

Protection Expectations

Suppliers’ adherence to sustainability and environmental protection initiatives play an important role in marketing efforts, as well as protecting the brand and image of companies

The trend of the food industry is toward further future alignment with these, not the opposite!

The potential impact on consumer trust and reputation of a breach in alignment with these and others such as corporate social responsibility cannot be underestimated

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Protect your brand: Get to Know Your

Supply Chain, Enhance

its Resiliency and

Manage the Risk!

Two Components In Food Supply Chain Risk 12

Suppliers

Key questions to consider: Who is in your supply chain? Are there any unknown sources upstream?

How far back should you go?

Do you consider all suppliers to be of equal risk? If not, how do you

differentiate?

Do you rely on brokers to control supply chain risk?

Prioritize risk of suppliers based on historical performance,

geographical location, responsiveness/compliance with

requests, level of oversight, suppliers’ own sourcing practices,

vulnerabilities and risk mitigation strategies, audits, as well as

sourcing level/size of business (correlates with level of exposure) TAG encourages adoption of a scoring (quantitative) system to the risk

analysis to better understand and manage supplier risk

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Ingredients/Raw Materials

Key questions to consider: Do you use any ingredients or products that are imported?

If so, how do you control the risk? Does it require a different approach?

Do you consider all ingredients to represent the same level of risk? Should

you apply the same level of scrutiny regardless?

Prioritize risk of ingredients based not only on inherent likelihood

and severity of consequences but also on country/region of

origin, historical safety issues known to the industry, emerging

concerns, frequency and type of non-conformances, and

sourcing level/size of business (correlates with level of exposure) TAG encourages adoption of a scoring (quantitative) system to better

understand and manage risk in raw materials

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Ranking the Risk

How to allocate resources based on risk? What is really high risk

and what is really not?

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• TAG tool allows you to rank and then compare your products,

then suppliers and produce an overall risk assessment based

on the combination of the two

• Evaluate the risk of several key pieces of a companies business

using a structured approach. • Specific product,

• Supplier, and

• Potential suppliers’ risk

• The goal of this process is to create a system that assists with

targeting higher risk supplier and product combinations to

make the best use of resources in order to mitigate risk

Risk-based Evaluation 17

Brokers

Key questions to consider:

Do you require your brokers to reveal their suppliers?

Are you comfortable relying on someone upstream to control major

risks for you? Moving forward, would that still be compliant with

regulatory requirements?

Seeking direct visibility and conducting same level of initial

evaluation and ongoing monitoring of suppliers managed

through brokers as for suppliers that are directly managed

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Timelines And Corrective Actions

Enforce clear/strict criteria and timelines for suppliers to comply with documentation and other applicable requirements to move into (fully) approved supplier status

Ingredients/raw materials from suppliers that have entirely met criteria for full approval status should be the only ones used for production

Close the loop with any corrective and preventive actions associated with deviations from compliance with agreed upon food safety and quality specifications

Suppliers should not stay under pending/conditional approval status for longer than needed, or worse, indefinitely

Trend data from non-conformances and implementation of corrective actions

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Communications

Key questions to consider: How do your suppliers ensure that they meet your expectations?

How do you ensure that your suppliers are operating according to your

expectations in between audits?

Do you understand the potential disruption that a supplier incident

represents to your business?

Establish two-way communication guidelines with suppliers (e.g.,

frequency, acknowledgement of supplied information, etc.)

around key food safety/quality information (e.g., issues, trends,

changes in ingredients/formulation or production facilities, etc.)

and market demand signals, as well as evaluate their business

continuity planning (e.g., against catastrophes, sourcing or

distribution disruption, surging capacity, emerging regulations,

etc.) to minimize or eliminate need to use unapproved suppliers

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Suppliers’ Performance

Proactively monitor ongoing supplier performance and adjust

documentation/audit requirements accordingly and based on

prioritized risk levels (e.g., a higher frequency for highest risk

suppliers, or suppliers of high risk ingredients) Require a third-party assessment of their programs and operations

Consider visiting them, based on risk ranking

Consider implementing scorecards with clearly defined objective

and standardized metrics, and a scale that allows for continuous

improvement

Consider defining incentives that reward good performance, which

promotes healthy competition amongst suppliers

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Suppliers as Strategic Partners

“The suppliers are our front line, they are the guardians of quality”

-J.C. González Méndez, McDonald’s North America SVP Supply Chain Management

Define criteria to work towards supplier development and continuous improvement (strategic partnerships vs purely transactional relationships)

Ongoing monitoring of performance is a fundamental element to accomplish this goal

Frequency of non-compliance incidents or deviations from expectations as indicated by trending data from corrective actions are key data to help drive decision-making and progress

Performance-based partnerships – suppliers must be willing to take ownership, engage and be true partners

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Emergency Spot Buys

Evaluate potential hazards introduced to plant environment

and/or other products manufactured in facility depending on

risk posed by raw materials sourced from unapproved

suppliers (consider potential regulatory non-compliance as

well), and judging that against potential rewards

TAG recommends defining what happens with product manufactured

with ingredients from unapproved emergency suppliers if these (either

the ingredient through a COA or the supplier via the corresponding

process) eventually fail to achieve approved status

Is it worth the risk?

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Supplier Base

Have a broader base of

potential suppliers fully evaluated

and “ready to go” with minimal

notice in case of disruptions from

existing suppliers, to enhance the

resiliency of your supply chain

and eliminate the need to source

from unapproved suppliers

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Certificates of Analysis

Key questions to consider: What do you know about the COAs you based product acceptance on?

What is the sampling plan?

What laboratories are they using?

What tests are being performed?

How much does a COA control risk?

Develop minimum requirements for laboratory qualification (e.g.,

use of approved/official methods, proficiency testing, etc.) if

your suppliers utilize a third party to report COA data, as well as

sample size/number criteria based on contaminant risk level and

distribution (e.g., homogeneous vs non-homogeneous)

“Trust but verify!”

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Audits

Key questions to consider: Do you rely on second-party or independent third-party audits?

Announced or unannounced?

What type is best?

How about the qualifications of the auditor?

How much time was spent on the floor versus reviewing documentation?

What do audit scores mean?

Supplier audits can be a powerful tool as part of a comprehensive supply chain risk management program, as long as the pros and cons of the auditing approach as well as the significance of their outcomes and limitations are fully understood

“Trust but verify!”

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Leveraging Technology

Rank ingredient and supplier risks

into combined metric

Document decisions about

suppliers and products

Manage timelines/due dates for

documents

Analyze documents (e.g., COA)

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Maturity Levels In Supply Chain Risk Management

•Proactive, risk based, internalized supply chain risk management program

•Company standards exceed market regulatory requirements

•Minimal to no noncompliance issues; audits and CAPA compliance performed on all suppliers

•Program is fully documented, implemented and trained on

•Food safety data is trended and used in proactive long term company wide decisions

•Leveraging technology

Best in Class

•Some program aspects reactive; others proactive based on risk

•Some company standards exceed minimum regulatory requirements

•Some minor noncompliance issues; audits and CAPA compliance performed on some, reactively

•Some food safety data used in real time/near term; decision making by food safety department not trended/reported business wide

•Technology/tools leveraged in some key areas

Better

•Reactive, yet compliant with regulatory requirements

•Reliance on third party audits and/or COAs

•Noncompliance issues with requirements for suppliers exist, some significant; not auditing CAPA

•Food safety data recorded but not trended/used in proactive decision making

•Technology not leveraged

Good

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Supply chain risks create brand,

operational and regulatory risk

No more assuming that suppliers are all

equal, and/or that a third-party audit

score will protect you

No more thinking that if an issue occurs,

you can just blame your suppliers!

What Does it Mean to You? 29

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Repositrak.com/events: Sign up for Future Webinars

The Changing Regulatory, Criminal & Civil Liability Landscape

• August 26 | 1:00 pm

• Shawn Stevens | Global Food Safety Attorney

• Food Industry Counsel, LLC

FSMA Finalizes Preventive Control Rules: What now?

• September 8 | 1:00 pm

• Hilary Thesmar, PhD, RD, CFS, VP Center for Retail Food Safety and Defense |

Food Marketing Institute

• Melanie Neuman, JD, MS, EVP & CFO | The Acheson Group

Three Part Series: Measuring Food Safety Success

• Gina Nicholson Kramer | Executive Director | Savour Food Safety International

• September 29 | 1:00 pm | Part 1 – Smart Intelligence

• October 27 | 1:00 pm | Part 2 – Holistic Gap Analysis

• November 17 | 1:00 pm | Part 3 – Measuring Failures

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