COOL Affects Continuous Supplier Performance

Increasingly, some larger retailers are mandating that suppliers adhere to specific certifications. “Many of our customers were forced to have their business practices approved from external auditors in order to maintain relationships with their largest customers,” King said. “The most prevalent of these certifications that comes to mind is SQF [Safe Quality Food]. Although we were well-equipped to handle many of the SQF requirements from the get-go, some of the requirements around communication inspired changes around document management and accessibility to key traceability records from remote locations.”

Food businesses often find it challenging to make the changes necessary to adhere to COOL requirements. More data entry is required, leaving more room for error and bringing with it an undeniable increase in procedural cost that the small or mid-sized food manufacturers are not always willing to accept. Technology providers have done their best to minimize the pain by making it easy to get the necessary data where it belongs and by introducing error proofing to ensure that the data is entered correctly.

CF Chefs in Dallas, a custom liquid and dry sauce manufacturer that receives spices from vendors with the country of origin on the ingredients listed, wanted tools to capture COOL data at receiving for informational purposes.

Supplier Risk, Performance

Vendor or supplier performance is a key indicator that may fall outside the scope of COOL, but it is all integrated because food companies must automatically track late deliveries, short shipments, pricing discrepancies, and even quality audit results on every receipt. Every food company needs continuous records of the effectiveness—or ineffectiveness—of its vendors.

“There is value in bringing in additional data,” said Gary Nowacki, CEO of TraceGains, “such as in-house or third-party lab results or receiving dock feedback to get a holistic view of the supplier and its impact on a food business. We look at this as holistic supplier management.” TraceGains produces online applications that help companies manage suppliers, ingredients, and other variables.

Too often, food businesses have risks in their supply chain that they are unaware of. Risk trending shows how individual suppliers are performing, allowing companies to predict risk and take corrective action.

“The focus must be on reducing ingredient/raw material variability to help create a more consistent product that’s easier and more economical to produce,” Nowacki said. “The result is lowering costs while raising quality—we’re looking at the supply chain, not the books of the company. While increasing procurement efficiency is an aspect of spend management, we’re not looking for lower bids but greater adherence to quality specifications. Efficiencies are realized in multiple areas: quality, risk, purchasing, and strategic sourcing.”

A supply chain is a concept, and a supplier is a vendor and a business relationship with mutual responsibilities. But suppliers need management. This continuous need for supplier management necessitates a continuous, rather than a point-in-time, audit. Each inbound supplier shipment and certificate of authenticity (COA) must be checked against quality specification without increasing the workload or requiring additional full-time equivalents. Few systems achieve 100% visibility on all inbound shipments. Some systems reject a COA, while some simply have a static record and neither accept nor reject.

Systems must keep track of key supplier-dependent expiration dates, like audit expirations—such as SQF or certification expiration (often detailed in hazard analysis and critical control points)—and insurance expiration, and automatically reject shipments whenever any condition is no longer compliant.

COAs, whether in paper or digital format, contain a wealth of information. When all COAs are automatically digitized and analyzed, the data becomes actionable intelligence that helps lower costs and risk, while increasing quality and profitability. Also, for companies that must undergo British Retail Consortium audits, which are required by companies such as Wal-Mart, comparing 100% of all shipment COAs against quality specifications is a key requirement.