More on "The High Cost of Saving Money"

On February 17, 2009, we published an article by food safety expert David Troster entitled "The High Cost of Saving Money". We received the following comment from a concerned buyer.

L.M said...
"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?"

David Troster responded with further clarification on why it is so important that high standards be maintained at each processing step, and how this saves both money and reduces risk to buyer and seller alike.

Here is David's response:

"Dear LM,

Thanks for your comment.

What I am arguing for is actually a reduction in expensive post production testing: "Quality Control" as it is known. Rather, we should be using systems of "Quality Assurance".

Quality Control vs. Quality Assurance

Quality Control by its nature is expensive and not very accurate. Example, in a container we may have 1600 x 12.5kg cartons. Let's say that one of those cartons contains a defect that would cause a recall. The only way to find that carton is to test all 1600 cartons. Result: You find the problem carton but you have probably lost the entire load – Wonderful? Sampling say five or ten cartons would probably not find the defect, so do you use that lot and risk your reputation? Of course not!

In Quality Assurance we look to:

• The systems of production;
• Identify real potential hazards;
• Make sure that proper preventative measures are implemented.

The way that you as a buyer would understand that these proper preventative measures are in place is to have your supplier(s) audited and to have a targeted regime of testing as verification that the systems are working.

Quality Assurance through Third Party Auditing

Your real problem is that without a third party audit you really have no way of knowing who are the good shippers in terms of food safety. I know many factories that are owned and operated by very good and honourable people. They never default, test result are always excellent. They are top packers, but their products still cause product recalls. Why? They may be good at business , but with regards to food safety they are only beginners.

Proper third party, independent auditing and the help and advice that can go with it can give both sides confidence. For the seller, they have increased confidence that their product is the right product for the buyer, and the buyer can understand that they have purchased the right product for them.

In many cases if I can get the factory 'sorted' the risk and therefore the associated higher costs can be eliminated without detriment to anybody's bottom line. So if we get it right, profits can be maintained or improved, costs lowered and that is a great help to sales. Not to mention happier consumers!

____________________________________________________________

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

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!
____________________________________________

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