Current supplier evaluation using GFSI benchmarked schemes no longer provide consumer confidence & brand protection. A risk based approach with AI is how MS can lead the way

About

Marks and Spencer, like other retailers, rely heavily on food factories to be certified to a GFSI benchmarked scheme to protect their brand and ensure their private-labelled products manufactured are safe, and meet the agreed quality specifications. These co-packers have now been certified for over three years, and it can be expected that a mature system is in place that would guarantee safety food and conformity to specifications. Yet, consumer satisfaction has not increased, complaints have not been significantly reduced, and recalls continue to impact your brand as a retailer. The intent of GFSI schemes was well suited, but they no longer meet the needs of the food industry, or add value to their operations. Most of your co-packers are small to medium enterprises, which now perceive these standards to be a burden to innovation and continual improvement. What went wrong? 1. Suppliers assessments are focused on score instead of improvement: Certification companies are in the business of issuing certificates, and the process is skewed right from the start. The expectation of their customers (i.e food factories) is to obtain an “excellent” audit score, since this is part of the retailer’s score card for their suppliers. If the audit fails to meet that expectation, factories would switch auditors and certification bodies the following year to improve their score. Data analysis from several scheme owners confirm that the distribution curve of audit results is skewed towards an “Excellent” grade. 2. Supplier assessment duration & criteria: It is expected that more time be spent during an audit to evaluate the facility and practices, instead of review of procedures and records. This is not practical due to the prescriptive nature of these standards, and the need for detailed reporting by certification bodies in case of litigation. In the best-case scenario, only 30% of the time is being spent in the facility, which provide a snapshot inspection of building & equipment condition, housekeeping, personal hygiene & implementation of food safety programs. Adequate time is not spent to assess whether likely risks that impact the business (food safety & specification compliance) are being effectively prevented or managed. Other intrinsic criteria impacting quality are not evaluated, such as innovation initiatives, continual improvement, process efficiency, waste reduction, communication, promotion of a positive organisational quality culture. 3. Audit findings do not add value: Most of the improvements identified from these audits are documents update, or cosmetic improvements (such as building and equipment repair), which might not improve food safety, quality or process efficiency. Consequently, resources are not being efficiently allocated: A significant portion of the company’s limited capital expenditure goes towards these repairs, instead of innovating, preventing or mitigating risks, and improving quality and process efficiency through proper usage of resources. Innovative solutions needed: • Redesign supplier audits and criteria used to assess food manufacturers so that the focus is shifted to risk management, and validation of control measures, rather than prescriptive measures identified in GFSI schemes or regulation: o Risk identification: Evaluating whether the company has properly identified likely risks in their materials and processing environment. The company is expected to review regulatory requirements and use a GFSI benchmark standard as standard practice. However, the factory needs to research what are likely risks from their operations based on materials used and supplier controls, history of process deviations, complaints, industry recalls, scientific literature, etc. o Risk management: Factories should be assessed whether the controls effectively manage the risks identified. Controls established should go beyond regulatory and GFSI requirements, and include industry best practices. o Assessment methodology: The assessment criteria should be less focused on review of document/ records review and facility inspections that provide a snap shot in time. Instead more efficient use of time should be spent in evaluating effectiveness of programs, established management systems, practices and behaviours that would lead to sustainable results, through review of data, trends and behaviours. This holistic approach would provide a better understanding of the organisational culture, quantitative evaluation of management engagement, efficient allocations of resources in controlling risks, effectiveness of corrective actions in reducing trends, etc. • Audit results: The outcome of the assessment should not be a mere audit report that is judged by a score, but provide a holistic representation of the factory’s performance in controlling risks, state of the organisation’s culture, underlying root causes, and prioritization of improvements. • Use of smart tools by the food manufacturers, such as Artificial intelligence for data analysis from records completed, performing root cause analyses, identifying appropriate corrective actions, planning effective environmental monitoring • Monitoring of supplier performance beyond a score card. This can be achieved by using Artificial intelligence to analyse of data collected from manufacturing sites, such as review of supplier audits to identify negative trends; commitment level & organisational culture; resource availability for R&D, innovation, quality assurance, food safety improvements; root causes of deviations, etc. The data would be used to identify meaningful KPIs for the co-packer, and predict likelihood of a recall.

Key Benefits

M&S will have the competitive advantage in the retail industry: brand protection by preventing recalls and litigation, efficient suppliers that result in to higher quality products at a more affordable price for the consumer, less complaints, and hence increased customer satisfaction & retention

Applications

Assessment of risk in food factories

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