How does the saying go again? Oh yes—the customer is always right. Sometimes this means going above and beyond to discover what it is the customer really wants. One company that insists on going that extra mile for its customers is Nestlé—who did not just snap its metaphorical fingers and remove all artificial flavors from its candy on a whim. In fact, well before it made its announcement in February, Nestlé had been monitoring consumer trends and preferences to create new products and ultimately answer this unmet need in the marketplace.
Findings from the Nielsen 2014 Global Health and Wellness Survey showed that more than 60 percent of Americans prefer products without artificial colors or flavors. To reaffirm these findings, Nestlé conducted its own research that confirmed this data, concluding that consumers in the U.S. tend to prefer candy brands that are free of artificial flavors and colors.
While Nestlé has been featured as one of the World’s Most Admired Food Companies by Fortune magazine for 17 consecutive years, its success has not been easy to achieve nor to maintain. Running 447 factories, operating in 194 countries, and working with 165,000 direct suppliers and 680,000 individual farmers can create quite the challenge.
Customer happiness comes down to this question: How can global companies like Nestlé make a smooth transition to an effective supplier program with the outcome equaling a happy consumer?
Hindsight shows us that pleasing customers is much easier said than done. In 2009, for example, Necco Wafers attempted to make the bold move to natural ingredients. This move was met with utter outrage from its devoted customers. Sales fell 35 percent, and less than two years after the au naturale movement, Necco was forced to return to its old artificial ways.
Nestlé on the other hand, has managed to adapt to this new trend while still maintaining quality and taste at the same affordable price.
How have they made this possible? Necco showed us that a drastic change in formula is not an easy transition as it affects several different areas of the organization. But Nestle seems to have the right recipe.
Nestlé’s enthusiasm for pleasing customers and attention to supply chain development has landed the company on Gartner’s Supply Chain Top 25 list for over a decade. So how can companies follow suite?
The challenge begins internally. Product management and regulatory affairs folks are tasked with updating packaging and labeling accordingly to comply with evolving regulations (this may require declaration of ingredients, nutritional facts and allergen risks). In order to support this process, the marketing team must create packaging needs to meet brand guidelines while also highlighting the change in ingredients to increase awareness.
Next, the operations team must define and document the new standard operating procedures for production processes, sanitation requirements, and hazard analysis to ensure safety, quality, and consistency in the finished products.
The purchasing and product management teams come together to configure demand forecasts for the suppliers as well as update contract pricing in an enterprise resource planning, or ERP, system to ensure the “Perfect Order.” Essentially, they are in charge of the product, making sure it has the right quantity, price, and time. The purchasing team is dually responsible for handling new suppliers, vendors, and information on the company, including products sourced, lead times, and country of origin. And finally, the quality team needs to agree on details such as product specifications, documentation, and certificates, testing requirements and the supplier’s quality processes. More recently, companies are looking for ways to connect to tier two and three suppliers, and even their supplier’s suppliers. But this has been made easier with new cloud technologies that enable greater transparency across the entire value chain, allowing for faster issue resolution to reduce costs and inefficiency within the partner network.
But the challenges don’t stop there.
Companies also face external challenges as they need to ensure they are maintaining compliance as well as company standards in order to have a close-loop quality process. More and more, organizations are relying on quality management software to automate and manage processes such as complaints, internal audits, hazard analysis and critical control points (HACCP), corrective actions, and change management across all suppliers and partners.
Of course, the next step is picking the right partners. The leading manufacturers establish proactive supplier management programs through the same automated software solutions that include supplier scorecards, risk-based audits, and complaint resolution procedures to resolve issues quickly and ultimately protect consumers and their brands. This process is imperative to guarantee quality, safety, and compliance.
By testing incoming material, manufacturers can contain a contaminated ingredient before it is used in production, and therefore expedite replacement material to stay on schedule with production. Organizations can also leverage their hazard analysis plans and internal shop floor audits to identify and manage critical control areas and equipment to prevent biologic, chemical, or physical hazards from harming the product at any stage of the production process.
The last crucial step is determining if your suppliers or contract manufacturers are compliant with ISO, Global Food Safety Initiative, and Food Safety Modernization Act requirements. Enterprise quality management solutions are used to perform site audits and review HACCP plans, providing transparency into processes and how incidents and corrective actions can be rightfully managed.
The solution to having it all—customer satisfaction and a quality product—comes down to automation. Food manufacturers need to look at the benefits of implementing an automated solution, such as enterprise quality management software, that can enable companies to streamline their processes of quality, supplier management, operations, and regulatory compliance to create a continuous improvement process that is sustainable and protects product quality, safety, and brand reputation. Information can be easily integrated with data from existing disparate IT systems to finally create a single version of the truth for better business decisions.
Kuchinski is VP of product marketing for Sparta Systems. Reach her at [email protected].