What's in a name? Indeed, brand names are not what Shakespeare had in mind. In fact, in the wake of recent global food safety issues, consumers have quickly discovered that a "rose" marketed under the brand name they so long trusted may not smell as sweet now. For many companies, this disturbing trend may impact profitability, and potentially, long-term viability.
With the news on product recalls occurring seemingly every week, manufacturers are now facing increasing pressure from the market to demonstrate the processes they are implementing not only assures consumer safety but also protects a brand owner's reputation.
Before a brand-conscious retailer stocks a particular manufacturer's product, there must be confidence that in the event of a crisis, such as a recall, the manufacturer can respond with the utmost efficiency to minimize any damage to the retailer's reputation. In fact, I recently spoke with an executive from Wal-Mart who said that if price, quality and customer service are equal among suppliers, then brand assurance can become the ultimate differentiator.
Achieving Brand Assurance
So how can a manufacturer provide this brand assurance? Many are turning to technology such as an enterprise resource planning applications that act as the company's operational system of record. This system of record should include bidirectional traceability which tracks all the ingredients that go into a product, the source of those ingredients and all distribution destinations for the product. With this information at their fingertips in the event of a recall, manufacturers can quickly and thoroughly contain the scope of a recall in minutes, rather than days, avoiding the costly degradation of brand and mitigating potential risks for themselves and their partners in the supply chain.
In fact, many retailers require their suppliers to prove their track and trace capability by conducting mock recalls. However, the stakes are high since failing a mock recall can result in losing a customer.
For example, Berner Foods, a manufacturer and supplier of natural cheese, specialty performance cheese, processed cheese and soy beverages, conducts regular mock recalls. Berner's customers include Kroger, Safeway and Albertson's. Using its operational system of record, Berner Foods has been able reduce its recall time from 12 to 20 hours to under an hour.
As a private-label manufacturer, Berner's customers are entrusting their brand to Berner and they take this commitment very seriously. They are also keenly aware that in the event of a real recall, the more time that passes the more lives that can be endangered.
Using ERP to Enhance Your Brand
Another example is a contract manufacturer and packager of custom nutritional supplements. This manufacturer's customers are branded distributors in the nutritional supplements industry.
The manufacturer has found that having a proven ERP system in place -- one that enables accurate inventory control, efficient bidirectional traceability and the implementation of best practices -- makes them a much more attractive vendor to bigger national brands than other comparably sized competitors.
If this manufacturer were unable to demonstrate competence in accurate and timely lot traceability and inventory control to their customers' audit committees, it would be increasingly difficult to do business with the bigger national brands. Those big national brands understand their business and know exactly the areas in which they need their manufacturing partners to be competent. So they ask tough questions. Providing the right answers and showing them their system capabilities often makes them a much more attractive partner.
Another example illustrates how a leading manufacturer of fresh juices, cut fruit and vegetables for the nation's leading food retailers, implemented a new ERP system that has completely automated their mock recalls.
Previously the manufacturer conducted mock recalls manually. With their new system, a single person performs mock recalls in less than one hour where the previous manual system required five to seven senior managers and almost an entire work-day. This manufacturer can now respond to the customers' audit teams with confidence, knowing its ERP system can enable the process excellence their customers expect. They were recently audited by a firm, who conducts fresh produce audits for well known food retailers, and received a 98% score, which is considered outstanding.
FDA is Watching
However, not only do manufacturers have to prove to their customers that they can conduct quick and efficient mock recalls, but they also have to prove it to the FDA as well. Following the terrorist attacks on 9/11, the FDA passed the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. After saying there was a "high likelihood" within the coming year of a deliberate attack or accidental outbreak in the U.S. food supply, the FDA Bioterrorism Act mandated that all food processing companies in the U.S. be able to provide the FDA with ingredient source data, including immediate previous source and immediate subsequent recipient for every component used in the manufacturing process. This is intended to ensure that food companies can account for every link in their supply chain.
Despite the rapidly growing demand for brand assurance, increasing government regulations, and consumer concerns, many food manufacturers still rely on slow, error-prone paper records and spreadsheets as their method of tracking and tracing their products. While software systems which incorporate sophisticated track and trace capabilities require an investment and true commitment to food safety, the alternative can be failed mock recalls, lost customers or even an unmanaged recall that can irreparably damage a company's brand and put consumers at risk. While an operational system of record requires an upfront investment, most food processors ultimately discover, through increased operating visibility, significant opportunities for improvements in efficiency. Manufacturers very often find that these systems ultimately pay for themselves in a matter of months, leading to increased profits, in addition to providing the brand protection that food manufactures need.
Scot McLeod is senior vice president of CDC Software, The Customer-Driven Company. The company provides enterprise software applications including ERP, SCM, and CRM as well as other solutions. www.cdcsoftware.com