Tuesday, February 17, 2009

The High Cost of Saving Money

Food safety expert David Troster contributed the following article, which illustrates a common scenario - what initially looks to be a cheap price turns out to be an expensive problem.

Cutting Costs the Right Way

The Buyer's Dilema - Keeping Costs Down

"Stop the line, there's glass in the product!"
Production, Quality Control and Factory Manager all run to the line to see what's happened. There it is,a piece of glass, colorless, hard to spot in the fruit, with sharp chipped edges.
Where'd that come from?" They all ask. Everyone was sure it was not their factory. They had glass control systems in place. "It's in the raw material so it's a buying problem." The buyer was shown the glass and he shrugged. The story unfolded: Always under pressure to keep costs down he'd done just that and purchased a cheap lot from a trader. The information he had was that the fruit was the right size and color, plus QC had received a sample case and approved it. All in all it looked OK and the price was right.

Factory Manager's Dilema - Cleaning up the Buyer's Bargain

The Factory Manager then started to put the buyer right. "First thing to remember is that testing is just part of a verification process where we make sure that the people before us in the food chain have got it right. Testing cannot and never will tell you the complete story. With the cheap price we saved $100/tonne but what of the costs of using that material? The whole lot is suspect so it can't be used in case there's a product recall. It will have to be dumped and that will cost money. We need a replacement lot and buying spot is not going to make the Directors happy. The line is stopped till the replacement stock comes, so who pays the wages while we wait for it? Then there's the loss of profit on top of it all. Cheap lots can be very expensive and high risk."

"If the primary processor has problems then we all do"

It's happened like this many times before, but the clever ones learn. In today's high speed manufacture one must understand in detail the whole of the food chain, and that starts with the farmer or grower, who needs to provide quality produce. Primary processors are very important since it's their task to clean up and pack the product. Unfortunately this is where foreign bodies sometimes slip in. Fruit on trees does not have mineral stones embedded in its surface, nor are there glass windows in a commercial orchard. If the primary processor has problems then we all do.
The solution is very simple. In addition to product testing, audit the supplier and identify the potential hazards, then work with that supplier to eliminate or reduce those hazards. In many instances what is needed is common sense, and it need not be costly. For example to keep out flying insects along with cats, dogs, and rodents - close the doors and screen the open windows. To prevent glass shards, replace glass windows with plastic, cover lights and only allow essential glass on site. The cost of these sorts of controls are nothing when compared to having to pay for a line being idle because bad product was supplied, or being faced with the costs of a product recall. The price of a product recall is your reputation and your business.

The True Cheap Option

Prevention is always the cheaper option. There may be costs involved in setting up the system, but long term customer relationships with happy satisfied shoppers make it worthwhile to start your preventive works today. The peace of mind alone is worth it!
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David Troster is a Food Safety Consultant with thirty years experience in many areas of the food and hospitality industries. David's areas of work include:

  • A practical approach to developing working HACCP systems integrated into your operating system.

  • Training Directors and Managers in Food Safety.

  • Supply chain auditing, identifying the hazards and helping you eliminate them.
    Factory design.

  • Advice on European legal requirements.

If you need more details or have a specific question then please e-mail David at troster@netone.com.tr

2 comments:

  1. What happens when you pay extra and are assured that product is inspected multiple times? Is that still the buyers fault? Going to the top packers paying extra and still having a problem?

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  2. I take comments like this very seriously and over the years have posed the same questions myself. What I have learned is that these assurances have very little merit unless a legitimate comprehensive third party inspection validates the claims. Historically buyers have relied solely on the claims made by commodity traders as to the caliber of shippers they are buying from. The reason I developed the CCC was to address the very statement that you are making since there has never been any way for a buyer to truly know the manufacturing practices of overseas suppliers.

    Feridies company in Courtland Virginia has given consideration to the CCC and has had no problems with any of the cashews they purchased under the program. They are very happy with the CCC system and I'm sure they would talk to you about their experience. The CCC was designed to ensure the Good Manufacturing Practices of the facility, and work in concert with a quality assurance program that would be established by the Association of Food Industries. Unfortunately resistance by importers has kept this initiative from taking place. Last year I brought up at the AFI meeting consideration of standardized microbial specifications for imported agricultural products. My suggestion was not given consideration. Given the fact that other agricultural commodity imports are vulnerable to microbial contaminants, now more than ever it is imperative to have a program in place to conduct comprehensive audits of overseas food manufacturing facilities by industry experts. Having these programs conducted by an organization like the CCC offers an un-biased third party evaluation by auditors that know our industry. This is a great benefit to the buyer to not only reduce the incidents of production line problems. It also offers the industry a system of tracking and self regulation that is so desperately needed in the event of government, consumer and media scrutiny.

    Stewart Parnell, of Peanut Corporation of America, is taking the heat for practices that are commonplace in the industry. It is time to turn things around!! However change will not take place until companies with power and influence take a stand and demand increased due diligence by the importing segment of the industry.

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