Is Your Supply Chain Broken? 5 Questions CEOs Should Ask

Is your supply chain broken or about to break?

Is your supply chain broken or about to break?

A recent story in Industry Week reiterates the importance that C-level executives need to monitor and manage their supply chains.  The story, written by two supply chain experts at Wipro Consulting, details five questions that CEOs should be asking about the condition and status of their supply chains – especially in light of recent news items such as the “horsegate” problem in Europe relating to horsemeat being included in beef products. The authors raise the question of whether or not the scale of the supply chain might in and of itself have been a contributing factor in quality control failures.

One key point they make: if you think quality in a supply chain is just having the right materials in the right place at the right time, you’re not thinking broadly enough. Supply chain management must also focus on the quality of the materials, the accuracy and content value in the information shared between supplier and customer, and the accuracy and timeliness in the financial transactions.

They suggest that it makes financial sense to proactively manage your supply chain to make sure it is designed to be successful and propose five questions that every CEO should ask:

1. Is quality built into your supply chain, or do inspection and correction occur after the fact?

2. Is supply chain management a strategic senior level position in your organization or is it a part of an operations activity?

3. Is the movement of information and money as critical in your supply chain as the movement of materials? In other words, does it take longer to create paperwork and process payments than it takes to deliver the goods?

4. Do you have a built-in change management process that constantly reviews the elements of your supply chain and looks for opportunities to improve quality and operational efficiency—or do your systems, policies and procedures block improvement?

5. Does your supply chain minimize the amount of touches and the touch time in supply chain transactions, so as to reduce the number of potential failure points?

All too often, we at Intelleflex see supply chains (especially cold chains) that are primarily reactive. Information about the condition of a product that has spoiled or been exposed to adverse conditions is available only after-the-fact when it is too late to take corrective action. Additionally, information is not typically easily shared between supply chain partners and too much of the record keeping is paper-based which slows down supply chain operations and can introduce costly errors.

The article proposes some answers to these questions stating that the issues relate to culture, capability, flexibility, capacity and technology, systems and processes, repeatability and reliability, and collaboration.

Solutions that provide the ability to automatically capture and collect information electronically about products as they move through the supply chain is essential.  But, equally important is the ability to access, share and act upon that data. RFID and cloud-based data services (such as ZEST Data Services) can help make this happen and not only improve supply chain operations but provide valuable information to supply chain executives that provides the ability to proactively manage an intelligent supply chain.

The article concludes with some wise advice: It shouldn’t take a high-profile quality control failure for CEOs to take a fresh look at what’s happening in their own organization since a supply chain failure of any kind could devastate or destroy profitability. Start being proactive by asking the five key questions and ensuring that your supply chain organization has a culture of collaboration, responsiveness and constant improvement.

You can read the entire Industry Week article here.

Kevin Payne
Senior Director of Marketing

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Invisible Shrink: Better Check that Fuel Gauge!

Shipping produce without knowing its relative remaining shelf life is like flying a plane without a fuel gauge

Shipping produce without knowing its relative remaining shelf life is like flying a plane without a fuel gauge

Ron Pelger, a former director of produce operations in retail grocery, recently wrote an article in The Produce News titled In the Trenches: Are you overlooking invisible shrink?  I’ve commented on this issue of identifying where shrink or waste occurs in the cold chain before but Ron, as a former “trench worker” brings a fresh perspective on the subject.

He writes: Whenever a produce manager was questioned about his or her shrink, the response usually was, “I don’t know where our shrink is occurring. I have a good staff and we faithfully follow all the company shrink programs. The numbers have to be wrong.

Well, the numbers probably aren’t wrong and there may be great shrink control programs in place.  The problem lies in that too many people think that shrink begins at the store.

Ron raises some key points:

  1. The produce industry is muddled in its means of arriving at where exactly shrink originates.
  2. Retail companies are still measuring produce shrink in the same store-level manner.
  3. Retailers focus on produce managers for shrink in the store while it also develops in other exterior areas. (And ones that are completely outside the control of the produce manager!)

He suggests that we considered another reason which he terms “invisible shrink” that results from a myriad of variations in cut-to-cool and pre-cooling that impact produce shelf life and that retail produce managers shouldn’t be held to blame for in-store waste.

Mike Nicometo, cool-chain expert and president of EmpowerTech Inc. says that we shouldn’t discipline the produce manager for problems that they didn’t cause. Mike says that advanced shelf life loss is simply not visible until much later in the supply chain and that, in order to manage shrink and quality, we need to realize that putting product into the cool chain logistics process without knowing how much shelf life it has to start out.  He likens this to sending a fleet of planes to random destinations without knowing how much fuel they have at take-off.

What a great analogy!

Mike explains: When comparing the temperature of each pallet on a load versus the commonly monitored ambient air of the trailer for thousands of pallets during three to five day trucking from Mexico to the U.S., I found over 30 percent of individual pallets were running very warm, causing high levels of advanced shelf life loss. Typically, the advanced shelf life loss was invisible at receiving QR inspections, resulting in product being considered equal. In reality, many pallets were over four days older in terms of shelf life than were the others.

The article goes on to discuss how new software and temperature monitoring technologies can be employed at the pallet-level to help gauge the actual relative remaining shelf life, making the “invisible” data visible and enabling better decision making that can reduce shrink and improve quality.

We’d better start checking that fuel gauge!

Kevin Payne
Senior Director of Marketing

FSMA Makes the Front Page

We’ve been waiting and wondering if the Food Safety Modernization Act was ever going to make it out of the gates.  Now, two years to the day after President Obama signed the FSMA into law, the FDA has announced the release of the proposed rules for the law.  Heck, it even made the front page of our local paper over the weekend!  Those of us in the industry have certainly been aware of the implications of the law but, by and large, the public hasn’t heard much about it. The fact that this is front page news is significant as increased public awareness will also put pressure in the industry to take action.

Front Page News for the FSMA

Front Page News for the FSMA

According to United Fresh, two proposed rules will be released:

The Preventive Controls for Human Food rule would require food companies—whether they manufacture, process, pack or store food—to put in place better controls to minimize and reduce the risk of contamination.

The Produce Safety rule would require farms that grow, harvest, pack or hold fruits and vegetables to follow standards that are aimed at preventing contamination.

FDA Commissioner Margaret A. Hamburg said that “The FDA knows that food safety, from farm to fork, requires partnership with industry, consumers, local, state and tribal governments, and our international trading partners. Our proposed rules reflect the input we have received from these stakeholders and we look forward to working with the public as they review the proposed rules.”

The FSMA should motivate the food industry to fundamentally rethink their cold chains.  It’s not a simple feat to move from a reactive methodology that’s been in place for decades to a proactive one but the benefits to consumers – and to the industry – can be immense. It’s important to note that Hamburg specifically mentioned “farm to fork” and “international trading partners”.

Also interesting is commentary (Fresh Plaza and elsewhere) that the expected cost to large farms is estimated by the FDA to be roughly $30,000, and the cost for small farms is expected to reach $13,000. But, when traceability is done in conjunction with temperature monitoring to reduce waste, enough savings can be found to more than pay for the cost of traceability. In effect, the additional revenues by being able to sell more of the produce cover the cost of implementing traceability and then some!

Much has changed in the industry over the years due to globalized and elongated cold chains.  I expect retailer grocers will take the lead on this and begin to mandate electronic temperature and traceability solutions for their suppliers starting in the field, whether that field is in California or Chile.

(You can learn how Intelleflex can help address FSMA requirements here.)

It’s a nice way to start what should be a very interesting – and busy – year.

Kevin Payne

Senior Director of Marketing

Food Safety Audits – Impacts on Traceability

Lara Sowinski of Food Logistics magazine wrote a great article on Food Safety Audits that’s well worth the read.  In the article, she discusses how the impacts of the Food Safety Modernization Act (FSMA), increasing imports, growing recalls and supply chain complexity are pressuring the industry to maintain and improve food safety.

Food safety audits will impact traceability requirements – RFID can help

The article quotes Melanie J. Neuman, an advisory manager who specializes in food safety issues for PricewaterhouseCooper’s retail and consumer practice who says that, when it comes to the impact of the FSMA, “companies are facing the most sweeping changes in food regulations in over 70 years.”

Neuman explains that the role of PwC is to advise its clients on best practices to meet and comply with regulations, not only for the FSMA, but for a host of food safety laws and regulations that are governed by the U.S. Department of Agriculture (USDA) and U.S. Food and Drug Administration (FDA).

“We really help clients integrate food safety into their culture and their daily operations,” says Neuman.  This is the first stage, she explains in the interview, but then they drill deeper with their clients.  Neuman continues that “The next step of the assessment starts to drill deeper into other categories, such as whether or not the company’s electronic traceability systems are robust enough to comply with the current regulations and their customers’ expectations for producing reports. We look at the company’s ability to track and trace products accurately and quickly, including the ability to identify all ingredients, including raw materials, all production and inventory records, and all distribution on an outbound basis, in order to quickly track product in the event of a food borne illness or other food safety risk.”

Neuman states that tracking and tracing capabilities are high on the list of items that an auditor will examine during an inspection and adds that “record keeping practices go hand in hand with tracking and tracing.”

RFID and intelligent pallets and returnable transport items can help deal with the complexities of the modern supply chain.  With all of the hand offs and issues associated with increasingly diverse and extensive supply chains, making it easier to capture, store and share electronic traceability information every step of the way will be critical.  To learn how, click here.

Kevin Payne

Senior Director of Marketing