Protecting the Brand
THE IMPACT OF FOOD CONTAMINATION and recalls on human health must always remain the top concern in terms of mitigation when a food-safety issue arises. But companies also have to be cognizant of the longer-term impact on their product category generally and on their brand specifically. For example, sales of bulk and bagged spinach have yet to recover from the impact of the E. coli outbreak that occurred in August and September of 2006. The spinach recall cost California growers an estimated $177 million. Similarly, a brand of peanut butter that was pulled from the shelves in February of 2007, due to a recall, took months to return. Likewise, a meat company recently closed after 67 years due to a recall of potentially contaminated meat.
Adulteration and contamination aren’t the only threat to a company’s good name. Supply-chain interruptions can affect quality and even the ability to produce a given product. Manufacturers suffered significantly by supplier outages in flood-ravaged New Orleans following Hurricane Katrina and in Indonesia following the tsunami.
Given these risk factors, it is crucial for companies to develop strategies to protect and defend their brands. Among the measures to consider are best practices, supplier certification, product traceability, employee training, crisis communications, and continuity plans.
In the United States, a body of regulations helps to ensure product safety. For example, the Hazard Analysis and Critical Control Points (HACCP) program, implemented by the Food and Drug Administration, was established in 1998 and updated in 2001. HACCP sets out best practices and offers core principles to help companies mitigate dangers to the food supply.
Under HACCP, manufacturers institute food-safety programs. Support programs address maintenance, proper food handling practices, cleaning and sanitation, pest control, personal hygiene, product recall, staff training, calibration, internal audits, and document and data control.
These regulations and best practices work well in local, vertically integrated supply chains where control is easily applied. But they are less effective in today’s environment where economic pressures have greatly broadened the constituency of suppliers. While approved supplier programs are often part of the overall food-safety program, the supplier-approval processes may not have kept pace with the demands of multitiered supply chains of contract manufacturers that include greater numbers of suppliers and broader global supply chains. Companies need to deal with such complexity by screening and monitoring suppliers more vigorously and by holding them accountable for standards consistent with safe food manufacturing practices.
Supplier certification. Key to protecting a company’s brand is instituting a formalized certification program for suppliers. Certification programs set guidelines and provide detailed instructions regarding quality. They set forth audit, inspection, and testing parameters. In addition, they identify checks and balances to ensure that specifications are met.
Supplier certification in the United States should include company compliance with all applicable government regulations. In addition, industry standards and best practices also play a critical role in developing effective supplier certification programs, especially when suppliers are located outside the United States and not subject to HACCP and other food-safety regulations.
For example, AIB International, an association of 900 food manufacturers, has prepared industry-specific programs that include threat and vulnerability analysis. AIB has also developed written food-defense policies and programs, and it has issued guidelines on establishing a food-defense team.
AIB also offers information on securing food industry facilities and grounds, including access controls and inspections. Other programs are designed to help companies prepare for a recall, develop crisis management programs, implement emergency response plans, and conduct employee security and awareness training. Supplier certification programs should require that suppliers meet any applicable industry-specific policies and guidelines that improve food defense and reduce the likelihood of adulteration and recall.
Because HACCP is a regulation, all U.S. companies are required to follow it. However, adoption of best practices issued by nongovernmental bodies is voluntary. As a result, guidance from groups like AIB is not universally followed.
Despite the frequency of food recall incidents, there is no systemic mitigation strategy either in the United States or in other countries. The lack of a strategy creates a vulnerability that would exacerbate harm if someone purposefully adulterated the food supply on a grand scale.
An essential element of a mitigation strategy is being able to trace the origin of food items in a crisis. Traceability ensures that problems with a particular supplier are identified early and can be resolved more quickly. Coupled with robust testing and laboratory analysis, traceability also facilitates expedited recall measures.
Achieving traceability is a challenge, however, given today’s global supply chain. The current pace of tracing, validating, and mitigating pathogens in food products once they have entered the supply chain is far too slow. In the event of a significant terrorist incident or pandemic, current practices would likely fail to minimize morbidity and mortality.
It is important that industry and government work together to improve traceability using common databases for registration and systems to isolate affected supply chains. Achieving this objective requires open sharing of data among manufacturers and suppliers as well as government agencies. Unfortunately, some governments have been reluctant to implement traceability initiatives because of a perceived increase in liability among growers, ranchers, and manufacturers. This resistance has slowed progress.
Tools. Supply-chain management must facilitate tracking of all products and ingredients multidirectionally through the manufacturing and transportation process. Tools that can be used to give products unique identifiers and trace them throughout the supply chain are available; they include bar codes, numbering systems, and RFID tags as well as software packages, some of which provide relatively low-cost, real-time tracking.
Applying a traceability system and giving each item a unique number will allow site-specific tracking and provide insight as to where problems may have occurred. It is important to note, however, that the tools are only effective if they are part of an overall supply-chain management program. Management diligence and commitment to implement tracing programs are crucial to their success. Ultimately, people performing the correct tasks at the right time are critical to mitigating issues in the food chain.
In the case of accidental contamination, most problems can be addressed through batch isolation or supplier isolation. In the case of intentional introduction of an agent or product adulteration, expediting identification of a problem also allows law enforcement to investigate more quickly and to identify suspects, increasing the likelihood that those responsible will be apprehended.
Successful brand protection and defense strategies also depend largely on the cooperation of employees at every level. They are critical stakeholders and an atmosphere of pride regarding their brand will facilitate quality and ensure compliance with policies and procedures.
Through training, employees should learn not only specific protocols but also the rationale for them. If employees understand how their own behaviors help to ensure food safety and security, they will be more likely to follow procedures and to report violations and potential problems.
Communications take on a greater level of importance in a crisis. Among the information that must be conveyed to employees is any news regarding a change of location or procedures in the event of a product problem or production disruption. Appropriate information must also be conveyed quickly and clearly to relevant government officials.
Equally important are communications with the public. A recent survey conducted by IBM indicated that 39 percent of consumers do not trust consumer product companies to have their best interests in mind during a recall. Thus, it is vitally important that when recall plans are developed, they cover how public information about the recall will be provided. The process should be premised on the need for a timely response that addresses consumer-safety concerns.
The concept sounds simple, but there are many examples of crisis communications concerning adulterated foods that cost the industry millions of dollars and damaged consumer confidence because they were handled poorly. During the recent pet food recall, for example, poorly devised public communications made it difficult for many consumers to determine whether the product they had purchased was contaminated.
Conversely, Johnson & Johnson’s handling of the Tylenol recall in the early 1990s serves as the textbook example of how to make the best of a bad situation. More recently, ConAgra successfully dealt with food recall issues and maintained consumer confidence in its brands. Clear information regarding affected products allowed ConAgra to move past the recall with little impact to consumer confidence.
In addition to having emergency response procedures, companies must have continuity plans for reducing the supply-chain impact of any incident. A comprehensive continuity plan is designed to mitigate three types of disruptions: denial of access to a facility that might result from damage; denial of service due to a reduced work force, such as might be caused by a communicable disease; and denial of service due to equipment or systems failure.
The focus of continuity planning should be to identify and prioritize coreoperation processes; to protect essential facilities, equipment, records, and other resources required to perform those processes; and to develop communication plans to facilitate a timely and orderly recovery from an emergency.
Key factors that must be addressed include order of succession and delegation of authority; preservation of vital records such as applications, documents, databases, systems, and equipment; and identification of adequate alternative locations, meeting the physical space, telecommunications infrastructure, security, and public-access requirements. A properly developed continuity plan will support expedited recovery, minimize losses in productivity, and protect the product line.
The contingency plan must encompass suppliers. Raw material supplier contingency plans will ensure that breaks in vendor service will not impact productivity and the ability to serve the market.
No company can categorically guarantee that a product problem won’t occur. But by implementing best practices and making sure that suppliers do so as well, companies can minimize both the likelihood of an incident and the ramifications if one does occur, thereby protecting both the public welfare and their own good name.
Michael Steinle is manager of public health programs for Beck Disaster Recovery, Inc., in Orlando, Florida. He is also the chairman of the ASIS International Council on Agriculture and Food Security. The council is supporting the Federal Bureau of Investigation’s International Symposium on Agroterrorism (ISA) to be held in April in Kansas City, Missouri. The symposium will feature an in-depth discussion of the topics presented here.