HERE's an alarming statistic that might make you lose your appetite: The World Health Organisation estimates that foodborne and waterborne diseases lead to 2.2 million deaths every year. Every so often, we hear and read about cases of food fraud, contamination and major food recalls.
It is alarming when consumers cannot even trust basic food items such as eggs or rice because these commodities can be artificially produced, distributed and sold for consumption. Just this month, there were news reports of “poisoned” or contaminated candy in the Philippines that made nearly 2,000 schoolchildren ill.
ConAgra Grocery Products Co LLC in the US has agreed to pay a fine and forfeiture totalling US$11.2 million for shipping contaminated peanut butter under its Peter Pan brand and Wal-Mart Stores Inc’s Great Value label. More than 700 people across the US were sickened by the salmonella outbreak in 2006 and 2007.
It is not surprising then that food-related regulations are now a major focus of governments. They want to increase oversight and sanctions, fines and penalties to strengthen their food safety systems. The most significant reform affecting the global food industry in decades is the US Food Safety Modernization Act 2011.
The Act gives the US Food and Drug Administration the authority to recall contaminated foods and hold everyone at each step of the supply chain, including foreign food suppliers, accountable. While this Act is expected to lift food safety standards throughout supply chains across the world, is it enough?
In light of the increasing number of high-profile food safety and integrity scandals, it is clear that consumers want to be able to trust and be assured about what they consume. Legislation only sets minimum standards. Complying with regulatory change is a start but winning customers’ trust and confidence will require much more.
Never has this issue been more pressing than in this digital age, where easy access to news and research, particularly on social media, makes for a more knowledgeable, but also a more sceptical, consumer.
More than ever, I feel there should be greater emphasis on preventing food safety issues from occurring rather than reacting to problems after they occur. Food companies need to demonstrate greater transparency across their supply chains, reduce risks and position themselves positively in the marketplace to give customers confidence in their products.
So, how do food companies deliver on this promise to their consumers? Here are some ways.
Adopt a culture of safety and quality
The theme of food safety and quality must be reflected in the corporate culture of the organisation. An organisation with a strong food safety culture demonstrates to its employees and customers that producing safe food is an important commitment. This commitment must be reinforced through staff awareness and training programmes.
However, providing a dedicated team to deal with deficiencies and recalls is not enough. The company needs to instil a sense of responsibility in each and every employee for the quality and safety of its products. ConAgra Foods now cultivates this through a simple message: “Your family is also going to eat the food produced.”
To stay ahead of the game, business leaders must be fully informed and engaged on food trust issues. When business leaders actively participate in industry bodies and share their viewpoints in publications and industry events, it helps build their credibility as a thought leader.
This sort of interaction also allows them to monitor current and emerging food issues, exchange best practices with peers, and take the knowledge gained back to their respective companies to develop a company culture that is relevant, agile and responsive to industry trends.
One way for companies to differentiate themselves in the market is to invest in new technologies to improve their processes, particularly in early detection of hazards and to manage supply chain risks. Today, as more businesses rely on suppliers and partners in different parts of the world, even those organisations that have mature supply chain management processes don’t always have full overview of their vendors.
Product traceability, which allows us to track products from their origins up to the point they are sold to the consumer, is one technology that is quickly gaining ground. Companies that implement this technology together with analysis over the whole supply chain will promote consumer confidence in their products because they have the data on their entire supply chain at their fingertips.
Providers of corporate software and IT infrastructure are integrating modules for traceability into their enterprise resource planning (ERP) systems. Consumers can scan the food code using a smart mobile device and retrieve information on the origins of their food products, right down to the type of farming and harvest date. Similarly, through the use of Quick Response (QR) codes, information on ingredients can be made available to consumers.
Reviewing supply chain risks
Proactively identifying and managing potential threats in food safety go a long way in promoting improved product integrity, reducing compliance costs and building greater consumer confidence. Active supplier management and regular evaluation of the quality of supplies is crucial.
For instance, a number of food retailers in Australia require their suppliers to meet their Quality Assurance Standards and have regular audits conducted by accredited organisations such as Telarc. For some of these companies, at the end of the audits, a certificate is issued to their suppliers to endorse that the supply meets their requirements, as well as all applicable laws and regulations.
A drinks manufacturer in Australia has a Quality Management System, which defines the specifications for their suppliers’ traceability systems and processes.
In this regard, do you or your supplier have the right systems and processes to check incoming products from suppliers? Could your system make up for instances when your suppliers might not be able to track their products? If you don’t, perhaps this might make a good business case for a more rigorous testing regime and a food safety and quality process to mitigate supplier risk.
In short, the nature of today’s supply chains demands a more strategic approach. A strategic approach — what PwC calls food trust — will deliver on the brand promise, protect reputation, improve efficiency, reduce costs, limit disruptions and enable a more effective response to crises.
Nothing can be more disruptive for food companies than a food trust failure. It causes reputational damage and in the worst case scenario, even threatens a company’s existence. Clearly, companies that aspire to be market leaders must move beyond compliance to a higher bar of self-regulation for greater resilience and differentiation in the marketplace. There are no two ways about it. It’s a core component of competitiveness. So, it isn’t quite true that you are what you eat. At a time when public trust is at an all-time low, you are what your consumers eat.
Josephine Phan is a senior executive director with PwC Malaysia’s risk assurance services practice. This article is the third of the four-part Trust in Resilience series. The next article explores the implications of hedging in a volatile financial climate.
This article first appeared in Opinion, digitaledge Weekly, on Aug 3 - 9, 2015.