Executive Briefings

Food Safety: It's All About the Supply Chain

As tainted-food scandals go, it wasn't so bad. The discovery early this year of unlabeled horse meat in European food products wasn't for the most part a safety issue. It was a violation of cultural norms, to be sure, as well as a truth-in-packaging problem. Most of all, it was a supply-chain failure.

Food Safety: It’s All About the Supply Chain

The crisis touched many retailers and suppliers. Traces of horse meat showed up in all or part of Swedish meatballs from IKEA, frozen spaghetti Bolognese from Tesco PLC, hamburgers from Irish and U.K. outlets of Burger King, and frozen burgers from food wholesaler Makro, to name a few.

The culprits included entities from across Europe, all part of complex supply chains consisting of multiple suppliers and hand-offs. In some cases, the failure was chalked up to human error; in others it was the result of outright fraud. As always, however, the ultimate responsibility was that of the retailer or merchandiser who presents a product to the public.

"At the base level, it was [about] knowing with whom you are dealing in your food supply chain," says attorney John T. Shapiro, a partner in the Food Industry Team of Freeborn & Peters LLP. "Somewhere along the way in that complex European supply chain, somebody did not pay attention to what they were doing."

Given the huge number of similar incidents to have occurred over the decades, one might be shocked by the failure of suppliers and retailers to learn from the past. In truth, though, it's not that easy to control the content of product that passes through many hands. Most companies lack transparency across multiple tiers of suppliers. The key, says Shapiro, lies in "coming up with an accountable relationship that sets clear expectations, and taking steps to monitor that relationship."

Even if proper controls appear to be in place, sudden disruptions or stress factors can cause a supplier to alter its practices for the worse. The dream of control "from farm to fork" is rarely achieved with any consistency.

As if food supply chains weren't complex enough, industry now must deal with the Food Safety Modernization Act of 2010, enforced by the U.S. Food and Drug Administration. Signed into law in January 2011, FMSA is "the most substantial change in the food laws for 70 years," says Shapiro. For the first time, it gives FDA the power to order recalls of contaminated food products. U.S. importers must comply with a whole new set of certification and compliance requirements.

The law is of further significance because it shifts the role of FDA from one of reacting to the outbreak of food-borne illnesses to preventing them. The primary method, of course, is supply-chain transparency. Importers are now expected to "take sufficient steps to make sure that farmers are complying with U.S. standards, even if local governments don't require that level of compliance," Shapiro says.

FMSA wouldn't be an act of Congress if it didn't come with numerous vagaries and unanswered questions. In fact, two major rules were issued for public comment in January of this year - one year late - addressing the guidelines for coming up with workable hazard analyses and preventive controls. Among the points yet to be clarified include the exact nature of a new Foreign Supplier Verification Program, intended to mandate compliance with the Hazard Analysis and Critical Control Points (HAACP) system, or science-based standards for produce safety. (You can take a breath here.) It's likely, says Shapiro, that these new requirements will lead to some kind of accredited third-party auditors. FDA's comment period will remain open until Sept. 16, 2013.

Don't expect total clarity as of that date. Also uncertain, given the current chaos surrounding the debate over the federal budget, is whether FDA will ever have enough funding to fully implement the act.

Industry isn't allowed to stand by idly while FDA figures out what it's supposed to be doing. Shapiro says every food supplier or seller should be undertaking an internal assessment of its business, with an eye toward identifying the weak links in the chain. They should be examining all supply contracts, to ensure there are adequate protections in the event of a incident. They need to know which steps will be taken to resolve any disputes with supply-chain partners. Finally, each company should identify a high-level executive who is responsible for coordinating all response efforts.

"Often these factors don't come up if there's no problem,"Shapiro says. "You need a really good supply contract." (That's assuming you have one - he notes that many companies lack even the most basic legal protections.)

Obviously, the issue of food safety extends well beyond the undisclosed presence of horse meat. Over the years, we've seen issues related to tainted or counterfeit cheese, lettuce, olive oil, soy sauce and truffles, among others. Donkey, goat and water buffalo meat were discovered in product sold in South Africa.

Seafood is an especially hazardous area for food safety and reliability. Recent DNA research by the non-profit conservation group Oceana found that a third of the samples tested from retail outlets around the world were mislabeled. Some of those cases are harmless incidents of fraud; others are far from it. According to estimates by the Centers for Disease Control and Prevention, 3,000 people die from food-borne diseases each year, while another 128,000 are hospitalized.

Don't wait for FDA to get its act together before taking steps to ensure that your food supply chain is safe, reliable and honest. "The buck stops with you," says Shapiro. "Ultimately, you have to assure that you have had in place sufficient preventive controls."

Next: What else does the food industry need to worry about?

Comment on This Article


Keywords: supply chain, supply chain management, food supply chain, food safety, international trade, inventory control, inventory management, supply chain planning, retail supply chain, sourcing solutions, supply chain risk management

The crisis touched many retailers and suppliers. Traces of horse meat showed up in all or part of Swedish meatballs from IKEA, frozen spaghetti Bolognese from Tesco PLC, hamburgers from Irish and U.K. outlets of Burger King, and frozen burgers from food wholesaler Makro, to name a few.

The culprits included entities from across Europe, all part of complex supply chains consisting of multiple suppliers and hand-offs. In some cases, the failure was chalked up to human error; in others it was the result of outright fraud. As always, however, the ultimate responsibility was that of the retailer or merchandiser who presents a product to the public.

"At the base level, it was [about] knowing with whom you are dealing in your food supply chain," says attorney John T. Shapiro, a partner in the Food Industry Team of Freeborn & Peters LLP. "Somewhere along the way in that complex European supply chain, somebody did not pay attention to what they were doing."

Given the huge number of similar incidents to have occurred over the decades, one might be shocked by the failure of suppliers and retailers to learn from the past. In truth, though, it's not that easy to control the content of product that passes through many hands. Most companies lack transparency across multiple tiers of suppliers. The key, says Shapiro, lies in "coming up with an accountable relationship that sets clear expectations, and taking steps to monitor that relationship."

Even if proper controls appear to be in place, sudden disruptions or stress factors can cause a supplier to alter its practices for the worse. The dream of control "from farm to fork" is rarely achieved with any consistency.

As if food supply chains weren't complex enough, industry now must deal with the Food Safety Modernization Act of 2010, enforced by the U.S. Food and Drug Administration. Signed into law in January 2011, FMSA is "the most substantial change in the food laws for 70 years," says Shapiro. For the first time, it gives FDA the power to order recalls of contaminated food products. U.S. importers must comply with a whole new set of certification and compliance requirements.

The law is of further significance because it shifts the role of FDA from one of reacting to the outbreak of food-borne illnesses to preventing them. The primary method, of course, is supply-chain transparency. Importers are now expected to "take sufficient steps to make sure that farmers are complying with U.S. standards, even if local governments don't require that level of compliance," Shapiro says.

FMSA wouldn't be an act of Congress if it didn't come with numerous vagaries and unanswered questions. In fact, two major rules were issued for public comment in January of this year - one year late - addressing the guidelines for coming up with workable hazard analyses and preventive controls. Among the points yet to be clarified include the exact nature of a new Foreign Supplier Verification Program, intended to mandate compliance with the Hazard Analysis and Critical Control Points (HAACP) system, or science-based standards for produce safety. (You can take a breath here.) It's likely, says Shapiro, that these new requirements will lead to some kind of accredited third-party auditors. FDA's comment period will remain open until Sept. 16, 2013.

Don't expect total clarity as of that date. Also uncertain, given the current chaos surrounding the debate over the federal budget, is whether FDA will ever have enough funding to fully implement the act.

Industry isn't allowed to stand by idly while FDA figures out what it's supposed to be doing. Shapiro says every food supplier or seller should be undertaking an internal assessment of its business, with an eye toward identifying the weak links in the chain. They should be examining all supply contracts, to ensure there are adequate protections in the event of a incident. They need to know which steps will be taken to resolve any disputes with supply-chain partners. Finally, each company should identify a high-level executive who is responsible for coordinating all response efforts.

"Often these factors don't come up if there's no problem,"Shapiro says. "You need a really good supply contract." (That's assuming you have one - he notes that many companies lack even the most basic legal protections.)

Obviously, the issue of food safety extends well beyond the undisclosed presence of horse meat. Over the years, we've seen issues related to tainted or counterfeit cheese, lettuce, olive oil, soy sauce and truffles, among others. Donkey, goat and water buffalo meat were discovered in product sold in South Africa.

Seafood is an especially hazardous area for food safety and reliability. Recent DNA research by the non-profit conservation group Oceana found that a third of the samples tested from retail outlets around the world were mislabeled. Some of those cases are harmless incidents of fraud; others are far from it. According to estimates by the Centers for Disease Control and Prevention, 3,000 people die from food-borne diseases each year, while another 128,000 are hospitalized.

Don't wait for FDA to get its act together before taking steps to ensure that your food supply chain is safe, reliable and honest. "The buck stops with you," says Shapiro. "Ultimately, you have to assure that you have had in place sufficient preventive controls."

Next: What else does the food industry need to worry about?

Comment on This Article


Keywords: supply chain, supply chain management, food supply chain, food safety, international trade, inventory control, inventory management, supply chain planning, retail supply chain, sourcing solutions, supply chain risk management

Food Safety: It’s All About the Supply Chain