How to Minimize Exposure Risk in a Global Food Supply Chain

Spend Matters welcomes this guest post from Megan Ray Nichols, a freelance writer covering STEM topics.

We all live in a global society now — a reality that includes, to a greater extent each year, our entire world’s food supply chains.

If you and your business represent some of the critical pieces in this vast and interconnected ecosystem, you need to know you’re doing everything possible to insulate yourself, your product and, perhaps most critically of all, your end users from all types of risk that may introduce themselves along the way.

You might never hit upon a perfectly ideal solution that eliminates risk entirely, but read on for a look at why this kind of diligence is necessary now more than ever — and how our institutions are ramping up the fight for secure and healthful food.

What Types of Risk Are There — and Why Worry?

Exposure risk in the global food supply chain is a real as well as a perceived pain point among manufacturing actors in the industry. And, when polled, 77 percent of manufacturers cited globalization itself as a source of risk.

But what does that mean, really? It means a vastly multiplied number of places and instances where something might go wrong as a food product makes its way from point “A” to point “F” or “G.” Your outfit might get involved somewhere around point “C” or “D,” or perhaps you oversee several steps yourself. Regardless, you’re likely familiar with these and several other types of exposure risk:

• Natural disasters
• Contamination by microbial agents
• Spoilage
• Errors in labeling
• Damage sustained while product is in transit

There are many other possible eventualities, needless to say. Let’s conclude with the obvious: The food supply chain is inherently unpredictable. But, of course, the integrity of our products is far from the chief concern when the unexpected happens.

Some Numbers on Recall Events and What’s at Stake

There are clearly a dizzying number of things that can go awry in the food supply chain, but to help keep ourselves grounded, let’s look at a now-infamous event that might help drive this important lesson home.

You may recall the Blue Bell Ice Cream listeria outbreak that made multi-state headline news in the U.S. in 2015. The company recalled most of its products, closed several facilities and laid off a third of its workforce. Only a last-ditch business loan kept them afloat.

So the possible financial loss is clear.

What’s easy to forget, however, once the headlines have made the problem a little more faceless, is that the human cost is a little harder to see and calculate. Before the recall was successfully completed, four states reported a total of 10 cases of listeriosis and three deaths. Although the outbreak eventually became a huge problem that easily and quickly crossed state lines, the CDC traced the listeriosis to just a handful of facilities.

Imagine being the owner of one of those facilities. Where did the corner-cutting happen? And how can you make sure it doesn’t happen again?

Another point where safety and mindfulness seem to fail is in product packaging — including both transport packing and the consumer-facing retail variety. If you haven’t taken a serious look at the containers you rely on to move your products, you should make sure they can resist corrosion, damage and other environmental factors.

Finally, here’s another source of risk few people seem to be concerned enough about to study in greater detail: Very highly paid CEOs compensated in company stock options tend to preside over more product recalls than chief executives with more traditional compensation packages.

The point is, as we scale our operations to supply a globalized world’s demand, we don’t merely multiply the ways in which accidents, the environment or invisible microbes might complicate our lives and introduce waste, harm or other roadblocks into the mix. You also multiply the human element, and along with it a certain tendency to cut corners, which frequently has nothing to do with immediate monetary gain.

A point worth making here is that a globalized supply chain inevitably sees companies doing business together that might not see eye-to-eye on the finer points of ethics. This doesn’t mean we race each other to the bottom: It means remaining cognizant of the potential risks, minimizing them and otherwise leading by example within your industry.

Regulations Can Help Save Lives

There’s a seemingly Orwellian campaign underway to convince middle America regulation is an inconvenience or even morally wrong, but the truth is, state and local governments have, are and will likely continue to protect public health as best they know how. The solution is enacting sensible regulations.

It is true, however, friction between business and government sometimes slows the process. There are many other factors at work, too. But signs of progress do appear.

Beginning in 2017, the Food and Drug Administration committed itself to actively enforcing compliance guidelines as described in 2011’s Food Safety Modernization Act. Until then, the agency would only respond after an incident had already been reported. And not every incident gets reported, as we know only too well. As many as one-fifth of food safety incidents might be ignored, according to research.

And that means government oversight — including appropriately stringent regulations — will probably always be necessary. The FDA is likely correct to transition its reactionary enforcement of food safety laws into a more proactive stance.

How Can You Minimize Risk in Your Organization?

Like the FDA, you must become proactive, rather than reactive. By maintaining integrity in these ways and others, you can stay ahead of emerging regulations.

• If you trade in goods imported from other countries, you need to remain especially mindful that those products were produced in a way that’s consistent with domestic laws and regulations in the country in which you intend for them to be used. We don’t need any more baby products with arsenic and lead in them.
• Spoilage is a significant concern, as you likely know. If you’re not already doing so, you should govern your production output by insightful sales forecasts, rather than relying on past figures. Suffice it to say, the world changes, and so do customer habits. Producing too much of a perishable food product is a bottom-line killer, as well as a possible source of public harm.
• If your company is part of a mobile supply chain — involving motor, air or rail vehicles — note that 18 percent of fruits and vegetables get wasted during transport to their final sales destination. Take a leaf from India’s book and study up on chiller truck cooperatives and similar initiatives that could help iron out some of the kinks in how you transport your goods.

There are lots of places you can look for inspiration, too, plus insight from the official regulatory bodies on best practices in your field. With the right attitude and a culture that emphasizes staying proactive, you can find peace of mind, keep your customers safe and protect your profitability — all without the regulators paying you a visit first.