Effective communication is critical for success in managing the supply chain. Communications indicate that the supplier knows and understands the intended and implied requirements for the product. For critical ingredients, this is effectively accomplished through personal, face-to-face discussions between the supplier and the customer. This allows the supplier to understand current and future requirements.
This strategy is not intended to eliminate the potential use of third-party audits and/or certification. The audits augment the efficacy of supplier visits; they also provide a general picture of the status of a number of systems. They are not intended to transfer to a third party the risk of verifying that the supplier is meeting specifications. Customer visits can provide an assessment of a supplier’s current ability to handle the process, including the supplier’s use of systems like statistical process control (SPC) to improve quality while reducing process and product variation.
Supplier visits get more difficult when products are sourced internationally, because international travel is costly and time consuming. International supplier visits are critical, however, because of the need to communicate across language and cultural barriers. Most international suppliers want to do the correct job, but they need to know and understand the requirements.
Visits to the customer by the supplier can be equally important in ensuring effective communication in the supply chain. The visits allow the supplier to understand how the product can become familiar to the customer. Many times, quick service restaurants source the same product from multiple contract packagers. One challenge that arises for the restaurant is to ensure that the product has the same sensory characteristics regardless of the supplier or the plant. Periodic meetings with all suppliers present an effective strategy to communicate the intended requirements for a product and to provide feedback to a supplier on the product’s performance. In addition, these meetings provide a forum to discuss future changes in requirements.
A recurring challenge is selecting a supplier that can provide product that meets specification not just initially but also on a long-term basis. Over time, the relationship changes. Enforced specifications can broaden, or changes in QA methods can lead to disputes as to whether a specific lot of product is in or out of specification. If business opportunity grows, the supplier may not have the capacity to meet the new market demands, and product quality may decline.
Another problem may be the slow deterioration of mandated QA systems. A customer may require that a supplier implement SPC. The initial system is implemented, with resources spent on training, software, and hardware. If the SPC is not sustained by linking to continuous improvement, the SPC may become a system to provide “parts with the charts” or the means to fulfill a customer documentation requirement. As a result, the supplier is reluctant to provide the resources needed to maintain the system at a high degree of efficiency. If the SPC system is linked to continuous improvement, the supplier will realize numerous benefits, including improved quality and reduced operation costs through elimination of waste.
In a critical part of supply chain management, the customer develops a system that accurately monitors critical parameters of the suppliers’ processes and/or products. This can be done using the tools of SPC. The Agricultural Marketing Service (AMS) of the USDA developed this type of program to purchase ground beef for the school food lunch program. The AMS program is linked to an accountability system. When the control charts indicate negative trends, the meat grinder must submit a corrective action plan that identifies the root cause of the problem and a strategy to prevent recurrence. If the problems are not resolved, the grinder can be placed on conditional or even suspended status. The final step makes the grinder ineligible to sell ground beef to the government program. This overall supply chain management system improved the quality and safety of the ground beef that is provided to the United States school system.
Don’t Manage by Crisis
Food processors should consider making food safety and quality a strategic issue rather than managing by crisis. Managing strategically creates the correct culture for the food processor. One potential option requires that suppliers implement a formal food safety management system. There are a number of descriptions of the requirements for management systems, including the International Organization for Standardization 22000 requirements for any organization in the food chain. There are also private standards such as the Grocery Manufacturers Association SAFE audits, the Food Marketing Institute’s Safe Quality Food 2000 audits, and British Retail Consortium audits.