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TRANSCRIPT
In partnership with
MITIGATING RISK
IN THE FOOD SUPPLY CHAIN
6th IFC International Food Safety Forum
Kyiv, Ukraine, March 15, 2017
BARRY LEE,
Principal Industry Specialist
IFC Manufacturing, Agribusiness & Services
ON SAFARI… THE ANTICIPATION!
Will we see the Big Five?
Ready and Waiting…
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THE ‘INFAMOUS’ WHITE ELEPHANT …
Unwanted Plant, Machines and Gifts!
• Obvious, Known and Unwanted
• Of No Value
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THE BLACK SWAN EVENT …
Feeling of Helplessness
• Highly Improbable, Unknown High Impact
• Difficult to Understand the Total Impact
• Eg, 9/11 2001, Russian Ruble Collapse 2014
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THE GREY RHINO EVENT …
Feeling of Power to Respond
• Highly Probable
and High Impact
• Eg, Flood, Fire or
Storm events
• Asian and Global
Financial Crises
(1997, 2008)
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CONTENTS
1. FOOD SAFETY: THE LANGUAGE OF BUSINESS
2. GLOBAL TRENDS DRIVING GLOBAL FOOD SUPPLY CHAINS
3. RESILIENT SUPPLY CHAINS
• THE FOUR PILLARS
• THE THREE ENABLERS
4. WHAT DO WE MEAN BY A ‘FOOD SAFETY CULTURE’?
5. CLOSE: TAKE-AWAY MESSAGES
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1. FOOD SAFETY:
THE LANGUAGE OF BUSINESS
‘THE PROFIT AND LOSS’ (P&L)
THE BUSINESS CASE FOR BETTER FOOD SAFETY
Save on
costs
Increase
sales/profits
Reduce risks
• Improved access to major retailers and
multinational restaurant chains
• Improved export potential
• Reduced production losses
• Lower costs on recalls, withdrawals, and audits
• Higher worker productivity and retention
• Protects your brand
• Builds consumer trust
• Ensure more efficient, sustainable suppliers
Source: client surveys; Investing Wisely in Food Safety: How to maximize the benefits and reduce costs
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2. GLOBAL TRENDS DRIVING CHANGES
IN GLOBAL FOOD SUPPLY CHAINS
“Amidst the predominant attitude that
building trust is a necessary goal, the top
two areas of importance for building
consumer trust for both retailers and
manufacturers were consumer health and
wellness and food and product safety.”
-- KPMG Global Consumer Executive Top of Mind Survey 2015
FOOD SYSTEM TODAY
Source: John Floros, 2012
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MAIN DRIVERS
URBANISATION
and CONSUMERS
• Growth of discerning middle class
• Health-conscious consumers
• Empowered and educated
consumers
REGULATION
• Scandals and increasing scrutiny
• Rising regulatory standards eg FSMA
• International Trade Agreements (aka. market access)
GLOBALIZATION
•Global supply chains across national
borders
•Technology and science to detect hazards and identify risks
•Resource scarcity and minimisation of food waste
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3. A FRAMEWORK FOR
RESILIENT SUPPLY CHAINS*
• THE FOUR PILLARS
• THE THREE ENABLERS
* Source: Deloitte 2013
RESILIENT SUPPLY CHAIN FRAMEWORK*
VISIBILITY FLEXIBILITY COLLABORATION CONTROL
PEOPLE PROCESS TECHNOLOGY
* Source: Deloitte 2013
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RESILIENT SUPPLY CHAIN FRAMEWORK:
VISIBILITY
Map, track and monitor supply chain processes in REAL time
• Capability to address supply chain issues before they become problems
VISIBILITY FLEXIBILITY COLLABORATION CONTROL
PEOPLE PROCESS TECHNOLOGY
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IS THIS VISIBILITY?
• Mandated reporting for
radioactivity (Caesium-137, Sr90)
• Labelling law requirements for
irradiated foods
Was it a Black Swan or Grey Rhino Event?
(But now a White Elephant…)
CHERNOBYL, 1986
Need for Traceability and Accountability of Food Supply
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IS THIS VISIBILITY?
• Supply Chain Processes? Farmers or Distributors?
• Melamine and/or Urea contamination
• Infant deaths: 6, Reported 300,000 victims
Was it a Black Swan or Grey Rhino Event?
THE CHINA MILK SCANDAL, 2008
Need for Traceability and Accountability of Farmer Supply
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IS THIS VISIBILITY?
• UNKNOWN causes of E.coli, norovirus, salmonella issues
• YoY2016/15 sales down $600 million
• Market capitalization loss $11 billion (!)
Was it a Black Swan or Grey Rhino Event?
CHIPOTLE MEXICAN GRILL (CMG), 2015
460.140
Large US Mexican restaurant chain
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MOMENT OF TRUTH QUESTION?
Have you got real time
VISIBILITY
in your supply chains?
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Adapt quickly in response to problems
without significantly increasing operational costs
• Mitigates impact of business interruption
VISIBILITY FLEXIBILITY COLLABORATION CONTROL
PEOPLE PROCESS TECHNOLOGY
RESILIENT SUPPLY CHAIN FRAMEWORK:
FLEXIBILITY
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IS THIS FLEXIBILITY?
• Potential adulteration of product with lead oxide
• Unable to identify source of contamination
• Alternate supply from new farmers in a new region
Was it a Black Swan or Grey Rhino Event?
BANGLADESH TURMERIC RECALL, 2014
Product recall in the USA
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IS THIS FLEXIBILITY?
• Largest agri-business
insurance payment in
Russian history
• Electrical fault and plant
off-line for 2 years
• Alternate supply required
for processed meat
products 60,000 tons per
annum
Was it a Black Swan or Grey Rhino Event?
PLANT FIRE IN RUSSIA, 2010
Plant Fire resulted in $83 million insurance payment
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IS THIS FLEXIBILITY?
• Total Cost of Recall
and Fines ca. $200
million
• Concerns about
Lead and MSG by
Indian Regulators
Was it a Black Swan or Grey Rhino Event?
MAGGI NOODLE PRODUCTS INDIA, 2015
Maggi Noodles Banned
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MOMENT OF TRUTH QUESTION?
Have you got real time
FLEXIBILITY
in your supply chains?
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Work effectively with supply chain partners
through symbiotic, trust-based relationships
• Avoid business interruptions for ALL PARTIES and
achieve common goals
VISIBILITY FLEXIBILITY COLLABORATION CONTROL
PEOPLE PROCESS TECHNOLOGY
RESILIENT SUPPLY CHAIN FRAMEWORK:
COLLABORATION
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• Common and Shared goals
• Demand Planning and Profitability
IS THIS COLLABORATION?
The ‘Shared-Expectations’ Approach
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Company
Suppliers
Franchisees /
Distributors
IS THIS COLLABORATION?
• Common and Shared goals
• Demand Planning and
Profitability
BIDCO KENYA:
WORKING WITH FARMERS,
DISTRIBUTORS AND
CONSUMERS, 2013
Provides farmer training (GAP) and distributors with
‘business management’ systems (SAP) for sales &
inventory
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IS THIS COLLABORATION?
Braliwra increased maize sourcing from
300 farmers to ca. 5,000 farmers
BRALIWRA RWANDA:
WORKING WITH MAIZE FARMERS, 2015
• Common and
Shared goals
• GAP, Supply
Management,
Traceability
and
Profitability
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MOMENT OF TRUTH QUESTION?
Have you got real time
COLLABORATION
in your supply chains?
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Robust policies, monitoring and control mechanisms
• Procedures and processes which are IN PRACTICE and NOT IN
THEORY
VISIBILITY FLEXIBILITY COLLABORATION CONTROL
PEOPLE PROCESS TECHNOLOGY
RESILIENT SUPPLY CHAIN FRAMEWORK:
CONTROL
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IS THIS CONTROL?
• Illegal, Unreported,
Unregulated (IUU)
fishing?
• Yellow Card – Threat
of tuna export ban to
EU from Solomon
Islands
Was it a Black Swan or Grey Rhino Event?
THREAT OF LOSS OF EXPORT LICENCE
TO EU, SOLOMON ISLANDS, 2013
Weak fisheries management by Solomon Islands
Government
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Container Packed in India Found to Container Rodents
Was it a Black Swan or Grey Rhino Event?
IS THIS CONTROL? WHO’S LIABILITY?
QUARANTINED CONTAINER IN ITALY, 2014
• Third Party ‘Packing’ of
the Container
• Product Quarantined and
Destroyed
• Can You ‘Contract’ Out
your Responsibilities?
• Lesson: ‘Duty of Care’
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• Annual audits of
rice farms in Asia
eg Cambodia,
Thailand
• Traders are
licensed to supply
from audited farms
only
POLAND HEALTHY GRAINS COMPANY, 2016IS THIS CONTROL?
A large EU importer of rice for snack-breads
and rice-cakes
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MOMENT OF TRUTH QUESTION?
Have you got real time
CONTROL
in your supply chains?
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The FOUR PILLARS are Thought, Word and Deed for people
• A Food Safety Culture … Do you need a Psychologists View?
VISIBILITY FLEXIBILITY COLLABORATION CONTROL
PEOPLE PROCESS TECHNOLOGY
RESILIENT SUPPLY CHAIN FRAMEWORK:
PEOPLE
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4. WHAT DO WE MEAN
BY A ‘FOOD SAFETY CULTURE’?
CHANGING ‘PEOPLE’ BEHAVIOUR
THREE REASONS
1. The workplace
culture does not
encourage compliance
2. They don’t have the
knowledge
3. They do not have the
proper motivation
Source: Food Safety Culture: Creating a
Behavior-Based Food Safety Management
System by Frank Yiannas, 2010
https://www.youtube.com/watch?v=yAgf4MyOb9w
Was it a Black Swan
or Grey Rhino Event?
Why people do not follow procedures:
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THERE HAS BEEN AN EVOLUTION IN FOOD SAFETY
HACCP
COMPLIANCE
CAPACITY
BUILDING
FOOD SAFETY CULTURE
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PROFIT
• Award incentives
• Share of profits and benefits
PROCESS
• Food safety process KPI’s
• HR workforce planning
PEOPLE &
CULTURE
• Staff talks
• Team
recognition
• Staff loyalty
• ‘Body & Mind’
THE BUSINESS OF FOOD SAFETY CULTURE
DO YOU KNOW WHAT YOUR STAFF THINK?
DO THEY HAVE THE SAME ‘SHARED-EXPECTATIONS’?
INDUSTRIAL PSYCHOLOGISTS CAN BE CATALYSTS
FOR A FOOD SAFETY CULTURE
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5. TAKE-AWAY MESSAGES
TO CLOSE
Messages From Today’s Forum:
Mitigate Risks: Resilient Supply Chain Framework
More Grey Rhino Events than Black Swans
…Plan to Respond to the Grey Rhino’s today!
DON’T BE AN OSTRICH…
WITH YOUR HEAD IN THE SAND!
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