How to Control those Raw Materials!?

Food supply chain disruptions are in the news, so I thought I would share my view on the complex world of raw material and supply chain quality assurance (QA). You see, a few years back, I developed a raw material QA management tool for a medium sized food business that could be useful during these disruptive times.

The dilemma:

The business is quite complex, very innovative and makes lots of yummy products. However as a result, they are managing a very large number of raw materials. They're also required to meet numerous food safety & quality standards, and, as in every food business, there is a limited QA budget. Auditing all their raw material suppliers and testing all their ingredients is plainly cost-prohibitive.

Some of the questions they asked me were: "Jack, how do we optimise our raw material QA budget and look at the right things?"; "How do we know, which supplier to audit,and which raw materials to inspect or test?". Valid questions that most food companies will be struggling with.

As you may know, I like to simplify; so when it comes to raw materials, I think we are dealing with two distinct risks to our product: the raw material risk and the supply chain risk.

The risk of a raw material to our finished product should be considered as part of our HACCP. They are the microbiological, chemical, physical and allergen hazards of the actual raw material itself. Depending on our process, these hazards turn into a high, medium or low risk to our finished good.

For example:

If we add nuts to our ice cream post pasteurisation, some of the microbiological, chemical and physical hazards of these nuts become a high risk to our final product. So, the raw material risk of our nuts is high (and they are an allergen as well).

What about supply chain risk!? Well, it has become very apparent over recent years that the global ingredient supply chain is full of potential pitfalls. There's fraud, tampering, disruptions and the list goes on. How do we translate all these supply chain hazards into a risk to our product? One way of looking at this, is to establish a supply risk rating, where we feed all our supply chain information for the ingredient (like VACCP, TACCP, audit scores etc) into a high, medium or low risk score.

Example:

If we purchase our nuts from a reputable, long-standing, certified and trusted supplier, our supply chain risk is probably low. However, if we need to urgently buy our nuts from a trader we know nothing about, in a country far, far, away; it's fair to assume our supply chain risk increases.

And here's the thing:

Buying a high risk raw material from a high risk supply chain is somewhat asking for trouble; whereas a high risk ingredient from a trusted, low risk supplier is less risky for our business.

Furthermore, if I buy my high risk nuts from a trusted, low risk supply, I would spent my money on a verification testing program of the incoming nuts instead of a supplier audit. However, if I buy low or medium risk ingredients from an unproven source, an audit would become my first priority.

Finally, if for whatever reason, we have to buy a high risk ingredient from a high risk supply chain, we should of course do both; and ask ourselves the hard question:

How did we get here in the first place?

Jack

Disclaimer: this post is my personal opinion and does not reflect, in any way, the position and opinions of my employer(s).