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: The Movie

Leavitt Partners' Jennifer McEntire explains the recent FDA report on FSMA pilots in a short video...well worth the watch!

Leavitt Partners’ Jennifer McEntire explains the recent FDA report on FSMA pilots in a short video

Yesterday I blogged about the FDA’s new 334 page Food Safety Modernization Act Pilot Study Report that was written by the Institute of Food Technologists and Leavitt Partners.  After I published the blog post, I was corresponding with the very helpful Jennifer McEntire of Leavitt Partners who co-authored this report.  I was complimenting her on the report but said I would probably wait “until the movie version came out” (parroting the modern student’s refrain of “why read ‘Gone with the Wind’ when you can watch the movie much more quickly).

Much to my surprise, Jennifer immediately sent me back a link to a three and a half minute video she recorded explaining the report.  Sure, it doesn’t have all of the detail covered in the 334 page document but, for most of us, it’s a great “Cliff Notes” version.  You can watch the video here.

Thanks to Jennifer and Leavitt Partners for sharing this information with all of us.

PS: On March 7, Jennifer McEntire published another excellent newsletter/article on this topic which can be found here.  It also includes a link to an upcoming webinar on the topic.

Kevin Payne
Senior Director of Marketing

FDA Publishes Report on Product Traceability Pilots

Earlier today, the FDA issued a report on two product traceability pilot projects that were undertaken as a part of the Food Safety Modernization Act (FSMA), signed into law in January, 2011.  This milestone demonstrates further progress in moving FSMA forward.

Report on Pilot Studies

Report on Pilot Studies

You can download the entire 334 page document titled Pilot Projects for Improving Product Tracing along the Food Supply System – Final Report here. It was prepared by Jennifer McEntire of Leavitt Partners and Tejas Bhatt of the Institute of Food Technologists. According to the executive summary of the report (which is three pages long):

In September 2011, the U.S. Food and Drug Administration (FDA) asked the Institute of Food Technologists (IFT) to execute product tracing pilots as described in Section 204 of the FDA Food Safety Modernization Act (FSMA). IFT collaborated with representatives from more than 100 organizations—including the U.S. Department of Agriculture, state departments of agriculture and public health, industry, consumer groups, and not-for-profit organizations—to implement the pilots. To complete the task, IFT conducted two product tracing pilots of foods (including ingredients) that had been implicated in food-borne illness outbreaks between 2005 and 2010, assessed the costs and benefits of efficient and effective methods for tracking the designated foods, and determined the feasibility of such methodologies (including the use of technology) being adopted by different sectors of the food industry. One food pilot focused on the tracing of chicken, peanuts, and spices in processed foods; the other pilot focused on the tracing of tomatoes.

The objectives of the pilot projects were 1) to identify and gather information on methods to improve product tracing of foods in the supply chain, and 2) to explore and evaluate methods to rapidly and effectively identify the recipient of food to prevent or mitigate a food-borne illness outbreak and to address credible threats of serious adverse health consequences or death to humans or animals as a result of such food being adulterated or mis-branded.

The recommendations that the report makes are as follows:

  1. From an overarching perspective, IFT recommends that FDA establish a uniform set of record keeping requirements for all FDA-regulated foods and not permit exemptions to record keeping requirements based on risk classification.
  2. FDA should require firms that manufacture, process, pack, transport, distribute, receive, hold, or import food to identify and maintain records of CTEs and KDEs as determined by FDA.
  3. Each member of the food supply chain should be required to develop, document, and exercise a product tracing plan.
  4. FDA should encourage current industry-led initiatives and issue an Advance Notice of Proposed Rulemaking or use other similar mechanisms to seek stakeholder input.
  5. FDA should clearly and more consistently articulate and communicate to industry the information it needs to conduct product tracing investigations.
  6. FDA should develop standardized electronic mechanisms for the reporting and acquiring of CTEs and KDEs during product tracing investigations.
  7. FDA should accept summarized CTE and KDE data that are submitted through standardized reporting mechanisms and initiate investigations based on such data.
  8. If available, FDA should request more than one level of tracing data.
  9. FDA should consider adopting a technology platform that would allow efficient aggregation and analysis of data submitted in response to a request from regulatory officials. The technology platform should be accessible to other regulatory entities
  10. FDA should coordinate trace-back investigations and develop response protocols between state and local health and regulatory agencies, using existing commissioning and credentialing processes. In addition, FDA should formalize the use of industry subject matter experts in product tracing investigations.

Conclusion
In summary, IFT found that there are several areas (such as uniformity and standardization, improved record keeping, enhanced planning and preparedness, better coordination and communication, and the use of technology) in which industry improvements and enhancements to FDA’s processes would enable trace-backs and trace-forwards to occur more rapidly. There was a range of costs associated with improving product tracing capabilities for certain sectors of the industry based on the specific technologies used to achieve the data capture and communication objectives. Case studies demonstrated the range of public health benefits from reduction in illnesses from improved product tracing. The recommendations outlined in this final report will enable FDA to conduct more rapid and effective investigations during food-borne illness outbreaks and other product tracing investigations, significantly enhancing protection of public health.

No doubt, it will take some time for the industry to digest the entire document but it’s good progress that the FDA, under FSMA guidelines, is moving the process forward and that track-and-trace will now get more focus and attention.

Kevin Payne
Senior Director of Marketing

Monetizing the Risks of Food Safety and Traceability

Before you eat that...

Before you eat that…

Yum! Brands, owners of KFC, Taco Bell and Pizza Hut is suffering a significant brand hit due to issues associated with chicken suppliers in China who delivered product to local KFC restaurants that was apparently tainted with too much antibiotics. According to Yum! Brands, it has terminated its relationship with the supplier (Liuhe Group) and will work with others to phase out smaller suppliers and put a more stringent emphasis on food safety. The damage, however, was done…to the bottom line.

We’ve talked frequently with prospective customers, journalists and analysts about the potential costs of a food safety/recall issue on a major global brand.  This story that appeared on the Bloomberg website on February 25 documents some of those costs:

  • Sales at locations in China open at least 12 months fell 6% in the fourth quarter, the first quarterly drop in three years.
  • Comparable store sales in China may decline 25% in the first quarter.
  • Yum stock on the New York Stock Exchange fell after the news from  $66.32 to $64.35 before rebounding slightly.
  • The stock value has dropped 2.5% this year while the S&P Restaurants index gained 4.2%.

It’s hard to say what the long term impact will be for KFC in China and the Yum! Brands family of companies worldwide but the point is clear: Sure, this happened in China but the news is now global. Would you think twice about going into a KFC in California or New York? I admit, I would wonder. If you’re a global, national or even regional brand, you simply must think about this because it could happen to you.

This is yet another example of the critical importance of being able to monitor and manage the cold supply chain. In this case, the product was apparently adulterated with antibiotics. What if it had been salmonella? Listeria?  There are simply too many suppliers, too many linkages from production to retail to rely on antiquated monitoring systems and an incomplete view of your supply chain. You need the data to protect yourself, your reputation and your customers.  Electronic data records captured by tracking the product from the supplier through every leg of the supply chain provides not only information about the supplier but also about proper handling that helps ensure food safety.

It will be interested to see what the long term impacts are…not only on Yum but for the other major global brands who, hopefully, look at this news and take measures to ensure that the next story isn’t about them.

PS: On February 27, World Poultry announced that KFC has cut more than 1,000 farms from its supplier network in China in a measure to ensure food safety following the recent tainted chicken scandal.

Kevin Payne
Senior Director of Marketing

 

Consumers Are Willing to Pay More for Fresh, Sustainable Packaging But…

Packaging is only one component of ensuring freshness and quality

Packaging is only one component of ensuring freshness and quality

Consumers are interested in fresher, higher quality produce. According to an article in Progressive Grocer: consumers are likely to pay more for value-added features that relate to freshness and sustainability, according to a global study conducted by Ipsos InnoQuest. When asked which potential packaging features would motivate them to spend more, consumers indicated they would be inclined to pay more for packaging that:

  • Keeps food fresh longer (55 percent)
  • Is environmentally friendly (55 percent)
  • Is re-usable (42 percent)
  • Is easier to use (39 percent)

In the article, Lauren Demar, Global CEO of Ipsos Innoquest says: Packaging plays a key role in consumer packaged goods innovation, whether marketers are introducing new products or trying to invigorate existing brands. As a key driver in the consumer’s decision to buy, packaging features can often be leveraged to charge a premium. Demar then goes on to suggest that, because consumers place a higher value on packaging that preserves freshness and provides environmental benefits, marketers may have the opportunity “to win over consumers and increase revenues through innovative package designs that deliver sustainability of freshness as well as sustainability of the planet.”

Improving packaging is important but it is only one factor in ensuring that perishable foods are kept fresh. Simply having a super package with lining materials that reduce ethylene (for example) doesn’t do anything to reduce or eliminate issues related to temperature mishandling that can dramatically impact freshness, quality and food safety. While it’s great to see that consumers say that they are willing to spend a bit more for the benefits above, it’s not reasonable for the consumer to understand all of the elements that go into delivering fresh, high quality food.  That’s up to the industry to manage and the consumers look to retailers and brand owners to deliver on this promise.  Learn more about the impact of temperature on quality here.

Kevin Payne
Senior Director of Marketing

Recalls, Grocers, FSMA and the Guilty Parties

Earlier this week, several publications including The USA Today and The Wall Street Journal reported on findings from the Centers for Disease Control relating to food safety which detailed that leafy greens such as lettuce, spinach and kale accounted are the guiltiest parties a caused the most food-borne illnesses nationwide from 1998 through 2008. Dairy products accounted for the most hospitalizations. The most deaths were linked to poultry. The study looked at 4,887 outbreaks that caused 128,269 illnesses, hospitalizations and deaths when the food that caused them was known or suspected.

Sure, shopping for lettuce can be fun, but is it safe?

Sure, shopping for lettuce can be fun,
but is it safe?

According to Patricia Griffin a food-borne disease expert at the CDC who was the senior author of the report the “The study isn’t meant to be a “risk of illness per serving” list for consumers. The statistics are meant to help regulators and the food industry target efforts to improve the safety of food.” She adds that “The vast majority of meals are safe, so don’t let the numbers for leafy greens keep you from eating vegetables.”

What does this have to do with retail grocers and the pending Food Safety Modernization Act (FSMA) regulations?

Well, most of us purchase these products at our favorite grocery store. Simply put, we trust that our local grocer has taken good care to ensure that the food he or she is selling to us has been properly washed, dried, packaged, handled and stored and that it is safe to eat and of good quality. We, as consumers, have no way of ensuring this ourselves. This trust relationship is critical.  It’s why we chose a grocery store.

But retail grocers, according to Deloitte, executed an average of 117 recalls PER YEAR!

In addition to complying with the 2005 Bioterrorism Act which relates to recalls, grocers need to understand the potential impacts of the FSMA as well. On January 24, I blogged about a white paper from Food Safety expert Dr. John Ryan about what grocers should be doing today with regards to the FSMA.  You can find his article here.  I subsequently came across this excellent, brief Retail Impact of the FSMA summary by Leavitt Partners. It’s well worth the five minutes or less it takes to read.

I asked Jennifer McEntire, Senior Director, Food and Import Safety, how she would summarize what retailers should be thinking about the FSMA at this point.  She said, “From a practical standpoint, knowing who is in your supply chain, in this case, looking forward toward retail, and having confidence that they are following the rules is paramount.”As consumers, we want to maintain that trust relationship with our food providers. There are new tools and methodologies available to the industry to help further the cause of food safety and quality.  And, while the FSMA may not be primarily directed to retailers, as Jennifer points out, from a practical standpoint it’s essential for grocers to have complete confidence in their suppliers and confirm that they’re following the rules.As grocers are the captains of the cold chain, let’s encourage them to lead the way in addressing and implementing the rules.Kevin Payne
Senior Director of Marketing

Our First Ever Superbowl Commercial

Today Intelleflex is introducing our first ever Superbowl commercial.  The beauty of it is that we didn’t have to pay CBS almost $4 million to air it and the actual production costs were very low ($0).  All you have to do is click on this link sometime during Sunday’s game between our hometown San Francisco 49ers and the Baltimore Ravens and, voila!, Superbowl commercial.  In about 30 seconds, you can learn what the new 49ers stadium (being constructed about a mile from our office here in Santa Clara) and Intelleflex XC3 Technology RFID tags and readers have in common.  (OK, you can watch it ahead of time too if you want.)

Watch Our First Ever Superbowl Commmercial!

Watch Our First Ever Superbowl Commercial!

Then you can sit back, relax and enjoy the game with friends, family and lots of snacks.  And, as a bonus, here’s some Superbowl related trivia.  The top two Superbowl snacks are:

  • Salsas and dips (with chips or fresh veggies of course)
  • Chicken wings

Be sure to practice good food safety and wash your celery and carrot sticks thoroughly and make sure those chicken wings are thoroughly cooked.  Hopefully all of the ingredients were properly managed and temperature monitored along the supply chain!

And, with deference and respect to our friends who are Ravens’ fans, from those of us in Santa Clara: GO NINERS!

Kevin Payne
Senior Director of Marketing

Does the FSMA Have a Direct Impact on Retail Grocers?

Will the Food Safety Modernization Act (FSMA) have direct impact on the retail grocery industry? According to industry food safety expert Dr. John Ryan, the answer is an emphatic YES!  The FDA published the first two sets of proposed rules under the FSMA on January 4 of this year and the rules are available for public and industry review for 120 days.  At first glance, the two proposed rules would appear to focus on the grower and the supply chain, sparing the retail grocery industry the task of having to do anything.

FSMA Retail Ryan Thumbnail

But, in his new whitepaper, Dr. Ryan points out that there are three things that retail grocery executives should consider:

  1. Changes to one end of the food supply chain impacts the entire supply chain.
  2. The model the FDA will follow for subsequent rules has been established.
  3. Retailers have vicarious liability.

Because traceability and food safety are connected throughout the cold chain, what impacts one segment has implications for all of the other segments and vicarious liability represents a potentially huge risk for major brands. Dr. Ryan concludes his paper by making three recommendations that retailers should consider today:

  1. Be proactive.  Preventive planning is the name of the game.
  2. Consult with inspection agencies to determine how FSMA changes will impact retail inspection procedures.
  3. Consider there may be additional benefits, such as insurance reductions, that can result from addressing FSMA regulations.

FSMA is sure to be a complicated beast and, while it may take 1-3 years or more for it to be implemented in entirety, there are actions that retailers should take now.  You can download Dr. Ryan’s white paper here.

I would also add that the one step forward, one step back traceability requirements are part of FSMA. This is not a simple task and many retailers may find that their current monitoring and paper traceability tools aren’t up to the task.  Getting a holistic view of your cold chain as it relates to all of these issues sooner rather than later can provide the ability to turn potential liabilities into potential opportunities and advantages.

You can learn more about what Intelleflex can offer retail grocers and food service providers by clicking here.

Kevin Payne
Senior Director of Marketing

FORBES: Interested in Food + Technology? Five Opportunities You Shouldn’t Miss

I devote a log of our blog ink to issues relating to food safety, quality and reducing the amount of food wasted. A recent article in Forbes talks about five areas where technology can make a difference including temperature monitoring to enable First Expired, First Out inventory to help ensure that more food is delivered fresh.  It’s nice when the business press starts to pick up on ideas that are too often stuck within the food industry.

We All Need to Get on the Bus to Improve Food Safety and Quality

We All Need to Get on the Bus to Improve Food Safety and Quality

For us to make improvements in the food cold chain, everyone’s going to have to get on the bus: producers, packers, shippers, retailers, consumers and government.  I’m hopeful that the attention currently being given to the FSMA in the mainstream media will translate into more attention about what we can collectively do to improve the cold chain.

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