Compliance is escalating
PwC has identified 10 global trends that are driving change in the food industry. Most of these will lead to increasingly complex compliance requirements across the value chain.
One driver is the continuing globalisation of food supply chains, requiring greater visibility of safety, integrity and quality standards.
“Globalisation is increasing food safety and quality risks and is making traceability and control over supply chains more challenging.”
At the same time, global communications - such as the internet - mean that bad news travels faster than ever before.
The reputation and capital value of a retailer or manufacturer can plummet very quickly if a negative story - about a workplace or environmental practices - goes viral.
A supplier market can suffer significantly.
“High-profile food safety and fraud scandals are triggering public health concerns and damaging trust in the industry and in governments around the world. With the ubiquity of social media and increasing public interest, a single lapse in quality control can quickly become a scandal that makes international headlines.”
Does the Food Compliance Industry have a Problem?
An analysis of horticulture sectors in NZ shows that compliance and quality auditing is complex and disconnected:
Audit is required at SIX different stages in the value chain: 1) Grower, 2) the packhouse, 3) labour contractors, 4) transport and storage handling, 5) distributor, and 6) retailer.
There are at least 12 different audit schemes carried-out across these stages from a combination of global regulatory bodies, local government regulatory bodies and individual retailers. The packhouse, for instance, has to deal with 10 standard regimes as well we individual assessments from specific retail chains.
Audits are carried out by at least EIGHT different internal and external (3rd party) audit teams. And that’s not to mention the auditors who audit the auditors; for verification and accreditation.
The cost to the industry is significant and disruptive, to the extent that the small farmer cannot survive.
The Audit Delivers Little Value
Because audits are typically carried-out independently using paper templates or spreadsheets, aggregating the data across the supply chain - or across the audit - is difficult, sometimes impossible.
Compliance across the whole ecosystem becomes a series of disconnected activities providing little value to the grower, the sector, or the retailer.
The industry cannot manage compliance across the value chain, and wholistic programs of continuous improvement become difficult.
The Buyer - the Food Retailer - wants Visibility
The retailer is looking for assurance across the supply chain to ensure stakeholders’ interests are catered for. Providing a dashboard view of compliance and action-status, with authentic evidence, will establish NZ as 'most trusted supplier'. In addition, by demonstrating a continuous ‘quality’ improvement program, retailers will develop confidence in long term relationships.
What’s the Solution?
All auditors, whether through self-assessment or an external certifying body, should be using a single cloud platform and database. This would enable multi-user, multi-assessment, multi-level auditing, using shared tools that would reduce the cost of audit and increase its value.
All compliance schemes should be on one platform.
Anyone, anywhere - with the right qualifications and authorisation - would have access to the tools they need to conduct their audit.
They should be able to:
Offer self-assessment or pre-assessment
Conduct professional audits online and offline using tablet, stylus and voice
Share the audit with team members and the client
Gather and attach evidence to support compliance by criteria
Develop, agree and monitor actions
Obtain standard reports automatically
Gain insights through benchmarking and dashboards:
By individual farmer
By region or type/size of farm
By compliance scheme
By year
Provide multi-level views of the data: from farm to retail:
By farm type
By labour contractor
By packhouse
By transport and storage organisation
By distributor/marketing agent
From Compliance to Competitive Advantage
New Zealand can become the ‘smart producer’ that uses technology to ensure compliance across the value chain, and to continuously improve the excellence of its producers.
To do this, the platform should enable:
Measuring and monitoring for continuous improvement
Measurement schemes that evolve from compliance to quality to better business
Data analytics to guide the industry in what it takes to be the best farmer, packhouse, marketing body and export distributor.
The working groups examined how New Zealand horticulture can become a ‘smart’ producer, providing assurance and trust across the whole sector.
Unsplash image by Hanson Lu