Ensuring supply chain safety is critical for food manufacturers, but many companies continue to utilize the same outdated processes despite increased pressure from regulatory entities and consumers.
Food manufacturers are not in complete control of the ingredients that suppliers send to them. However, they’re expected to use only quality ingredients that match the promises being made on consumer packaging.
So how can food manufacturers mitigate their own risk from customer complaints and regulation fines?
That’s what we’re exploring in this post. Food manufacturers that continue to rely on manual processes like back-and-forth emails, spreadsheets, and Word documents for contracts put themselves at a greater risk.
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An introduction to supply chain safety and risk management
Risk management is something that all companies need to take seriously. But in the highly regulated food industry, risk comes from all sides:
- Consumer lawsuits for allergic reactions or other issues
- Governmental regulation failures for accurate documentation and certification
- Recalls for certain ingredients
In order to mitigate this risk, food manufacturers essentially need to prove that they are not at fault with any issues with ingredients, and that they have done their due diligence to source quality ingredients according to the promises made on their packaging.
There are a few key actions that manufacturers need to take:
- Collecting signed agreements from suppliers about ingredient specifications
- Accepting only real ingredient certificates, such as fair trade, organic, etc.
- Following up with suppliers when their certifications expire
- Securely storing all necessary food data in preparation of audits or issues
What all of this means essentially is that food manufacturers need to have expert processes in place for tracking food data, pulling it up when needed, and automatically reaching out to suppliers for updates.
Unfortunately though, most food manufacturers simply don’t give food data management much forethought, and they continue managing supply chain safety in efficient ways. We’re all guilty of just staring at the work that’s right in front of us.
How supply chain management is typically handled
Before we dive into a more time efficient way to handle supply chain safety, let’s first explore how most food manufacturers are handling this today.
These are the primary methods behind used for supply chain safety and risk management:
- Emails and email attachments – Questions and contracts are sent back and forth via email, meaning that product manufacturers have to remember to follow up with suppliers for information.
- Word documents – Suppliers with contracts are written up in Word docs, which get edited by both parties in ways that are sometimes hard to track.
- Microsoft spreadsheets – Typically used for tracking supplier data and ingredient certifications and deadlines.
While other industries have a cloud-based software adoption rate of 80% or higher, the percentage of food manufacturers utilizing SaaS PLM isn’t even at 50%.
The problems with manual processes
All of those manual processes cause a ton of different problems for food manufacturers.
With 69% of companies reporting that they don’t have visibility into their supply chains, it’s clear that these manual processes are removing accurate traceability and empowered decision making.
Let’s take a deeper look at the problems caused by using hard-to-trace methods for managing supply chain safety:
- Prone to lapse in collecting current certifications – When employees are in charge of getting in touch with suppliers to collect updated certifications upon expiry, then you’re leaving yourself prone to human error. Will employees remember to contact suppliers? Are they really keeping track of certification expiry dates?
- No safeguards in place for false certifications – When a supplier sends you a falsified certification, who’s to blame? Who’s liable? You don’t want to have to answer these questions. It’s better to just not put your company in this predicament. The manual processes that food manufacturers use do not have software which works to validate authenticity of certifications.
- Hard to manage version control – When you’re sourcing a new ingredient from a supplier, you need to go back and forth on the specifications. There might be dozens or hundreds of unique requirements for just one ingredient. As the contract gets passed back and forth via email attachments, it gets very confusing to keep track of changes and come to a final agreement.
- Time consuming when coming to an agreement on ingredient specifications – Downloading, modifying, and uploading documents is extraordinarily time consuming. There’s some level of back and forth that is inevitable when you’re working on a contract. But you don’t want to make this more time consuming than it has to be by collaborating in files that are stored on individual hard drives and need to be continually downloaded, uploaded, reshared, etc.
- Time consuming when updating contracts – When it comes time to make amendments to contracts, you’re stuck in the same time consuming processes. Lots of back and forth attachments and changes that are difficult to track.
- Gaps in communication and traceability that increase liability – Worst of all is the enormous amount of liability that companies leave themselves vulnerable to when they allow less-than-optimal processes to continue. If you’re already aware that supplier information and ingredient specifications are hard to track with your current processes, then just imagine what is falling through the cracks.
All of these things are indeed unnecessarily dangerous and time consuming. Let’s explore better options for food manufacturers that are ready to make their supply chain safety processes far more…safe!
How to update your own processes
In order to move from a manual, outdated way of handling supply chain safety, you need to embrace software, more specifically SaaS that is always available in the cloud, so your employees can collaborate with suppliers even when working remotely.
Look for the following features in the SaaS product you’ll use to manage supply chain safety:
- Includes editable workflows and questionnaires – Rather than going back and forth with Word documents, you’ll be asking suppliers questions about the ingredients and getting their sign off and agreement. There might be dozens or hundreds of questions you ask, everything from where the product originated to how the product was grown to where it was grown and more.
- Designed for the needs of the food manufacturing industry – When you choose a PLM system that is built for the food industry, there should already be workflows and ingredient questionnaires that fit your needs. Of course, you’ll need to make some edits, but nearly as many as you would if using a PLM with no manufacturing specialty or one that was created for a different industry, such as fast-moving consumer goods.
- Automatically follows up with suppliers for updated certifications – The system you choose should include automated email notifications to request new certifications from suppliers in advance of their expiration.
- Proactively mitigates risk of falsified certifications – A smart SaaS solution for supply chain safety includes features to verify the authenticity of certification attachments, so that you’re not just accepting anything given to you.
- Makes it easy to directly collaborate on specifications – No version control issues. No uploading and downloading. You and your suppliers should be able to collaborate on requirements and track each other’s comments and questions easily.
- Includes legal digital signatures – The product should of course include features for fully legal digital signing, so that once agreement is reached, signing can happen digitally inside of the SaaS product.
- Allows you to easily and automatically manage traceability – The system you choose needs to securely store all of the product specifications for you, so that in the event of an issue of fault and liability, you can quickly pull up the appropriate supplier contracts.
The benefits of using SaaS technology for supply chain safety and risk management
There are so many benefits to using a modern SaaS platform for supply chain safety and ditching back and forth emails and Word doc attachments.
The most important of these is of course better risk management. When you can accurately trace what suppliers promised to you, then you can shift liability away from your company. You’ll also be able to prove that you’re always doing everything in your power to proactively collect accurate certifications and store ingredient specifications.
On top of the enormous benefit of improved risk management, you also experience time savings for your product teams that must interface with suppliers regularly. Going back and forth with suppliers will always be time consuming, but you can cut the time by anywhere from 10 to 30% by using software that was built for collaboration.
Plus, you can save time throughout other stages of the food product development process, because you can transfer that food data to the next phase. Once it’s in your SaaS PLM system, you won’t need to enter it again. Contrast that with a Word document contract, which would need to have ingredient specifications manually entered to send to the innovation team members that need the data.
To save time and mitigate risk on supplier chain data management, learn more about SpecPage’s Supplier’s Guide.