Safe to moveFood safety risks are rising, it’s time for action

2    Safe to move

ContentsIntroduction ........................................................... 1

The challenge ........................................................ 2

A basis for action ................................................... 6

Three steps to improvement ................................... 8

1. Assess ....................................................... 10

2. Build ......................................................... 12

3. Monitor .................................................... 14

Getting started ..................................................... 16

Safe to move    1 

Introduction

According to a recent study, 60% of today’s consumers are concerned about the safety of the foods they eat. Less than 20% trust food companies to produce and sell safe foods1. Governments are responding to the problem by enacting new laws. For example, since January 2009, U.S. state legislatures have introduced over 600 bills addressing food safety2. 

These issues are of critical importance to businesses in every part of the food supply chain – from farmers and food producers to distributors, food service companies, product manufacturers and retailers. A company that encounters a significant food safety problem faces potential remediation costs in the tens or hundreds of millions of dollars. It also faces immeasurable – and often irreparable – damage to its reputation and brand. 

Business leaders are clearly getting the message about the rising importance of food safety. In a 2009 survey, global retail and consumer business leaders ranked food safety second, behind the economy, as their companies’ highest priority issue3. 

Of course, the key question is what to do about it. This report takes a closer look at the food safety challenge, and offers practical suggestions to help companies across the food value chain tackle it more effectively.

Figure 1: Food safety is a top business priority

Issues % choosing issue

Ranking2009

Ranking2008

The economy and consumer demand(e.g. energy costs, demographic change, consumer trends)

56 1 4

Food safety(e.g. standards, traceability, consumer confidence)

33.6 2 2

Corporate responsibility(e.g. sustainability, social standards, corporate governance)

33.2 3 1

The competitive landscape(e.g. consolidated, discount, new channels)

29 4 9

Retailer-supplier relations(e.g. trade costs, pricing, collaboration)

20 5 5

The retail/brand offer(e.g. price-points, assortment, format)

28 5 8

Consumer health & nutrition(e.g. product development, labelling, education)

20.3 7 3

Consumer marketing(e.g. loyalty programmes, promotions, advertising)

19.3 8 11

Technology and supply chain(e.g. in-store technology, RFID, out-of-stocks, logistics)

17.6 9 7

Human resources(e.g. staff recruitment and retention, operational performance)

13.4 10 6

Internationalization(e.g. international expansion, global sourcing)

11.7 11 10

Regulations(e.g. store openings, pricing, labelling)

8.1 12 12

Souces: CIES – The Food Business Forum

Food safety has become a top-of-mind issue for consumers,

governments and industry leaders. High profile crises such as

salmonella outbreaks, E. coli deaths and high profile food recalls

have kept food safety in the headlines and fueled public anxiety.

1 IBM Research. June 24, 20092 Ibid3 CIES - The Food Business Forum. Top of Mind 2009

2    Safe to move

The challenge

Globalization Increased globalization multiplies the challenges of food safety. International sourcing introduces new risk points throughout the food supply chain. More and more activities move beyond a company’s direct control, which creates risk. There is also increased risk of fraudulent or questionable activities where products are not what they claim to be. This risk is exacerbated by intense cost pressure and cultural differences that can produce conflicts of interest and varying standards of ethical behavior. The more remote a product’s origin, the greater the potential risk.

The shift from local food production to a global supply chain also means that contaminated food can quickly spread  over a much wider area. For example,  50% of North American spinach now comes from a single region in California. So if a problem should arise in that area, the results are likely to be more far reaching than before. The situation is further complicated by transportation and logistics issues. Each additional hand-off in a food supply chain makes it more difficult to maintain traceability as pallets are broken down into layers, individual cases and single units. Also, it becomes harder to maintain cold chain integrity.

Different geographic markets have different perceptions of acceptable levels of safety and quality, driven by cultural and economic factors, as well as the availability of the latest technology. This is an additional challenge facing companies involved in diverse markets.

Consumer awareness and media scrutinyA seemingly endless stream of food-related crises has led consumers to question the safety of the food they eat, and to mistrust the companies that provide it. 

Since 1986, media coverage of the food safety issue has increased exponentially. Rising consumer awareness and concern puts pressure on governments to pass food safety legislation and enforce safety standards. It also puts pressure on businesses to adopt food safety standards and communicate their efforts to the public.

1986 - 1988 1996 - 1998 2006 - 20090

20,000

60,000

80,000

100,000

40,000

120,000

Figure 2: Average number of news references per year about food safety

Food safety is a complex business challenge with many

interrelated parts. And the challenge grows more complex

all the time.

The challenge

Safe to move    3 

Regulatory pressureGovernments are responding to food safety concerns and consumer protection issues with tougher legislation, increased industry guidance, new food safety initiatives and greater investment in research and education programs. Examples:

United States•  Bioterrorism Act – 2002 requires food 

and beverage companies to provide ‘one back, one forward’ traceability and to make the information available to the authorities on demand

•  Country Of Origin Labeling (COOL) regulation – 2008

•  Proposed Food Safety Enhancement Act – 2009

European Union•  Regulation 178/2002 – i.e. the EU Food 

Law – passed in 2002•  Includes food safety principles, and 

compliance requirements for EU member states i.e. food traceability, labeling, etc.

•  Established the European Food Safety Authority (EFSA) to enforce the law

•  Incorporated the existing Rapid Alert System for Food and Feed by mandating disclosure of information on food safety incidents by member states to the EU Commission 

Canada•  Food and Consumer Safety Action Plan 

and Food Labeling Initiative - 2007•  Proposed New Canadian Food Safety 

Inspection Act (Bill C-80) – 2009•  Canadian Food Safety Program – Federal/

Provincial joint program•  Multiple Provincial Initiatives on Food 

Safety: Ontario, Quebec, Manitoba, Alberta

 

4    Safe to move

Headline news

FDA peanut recall 2009: list expands, criminal probe possible In January 2009, over 500 people in 43 states were infected with Salmonella from peanut butter, with at least nine deaths possibly linked to the outbreak. A Virginia manufacturer issued a recall after being informed Salmonella was found in an open 5-lb tub of its peanut butter. More than 70 companies issued recalls of 900 products in connection with the outbreak. Some retailers are using their discount card data to inform consumers who purchased recalled products. The federal government has begun a criminal investigation, and the company has filed for bankruptcy.(Source: Inquisitr.com)

U.S.D.A. orders recall of 143 million pounds of beef In February 2008, a southern California-based meat company recalled 143 million pounds of beef that reportedly had been used in products made by at least four major food manufacturers. This was the largest recall on record. As part of the follow-up investigation, the company’s CEO was subpoenaed by the House Energy and Commerce Committee.(Source: CNN.com)

More countries ban chinese products amid milk scandal Infant formula contaminated by melamine killed at least 3 babies and sickened more than 50,000. The industrial product melamine had tainted a wide range of products – including liquid milk, yogurt, and candy made by 22 Chinese companies.(Source: WSJ.com)

Listeria death toll grows to 12 and more cases surface, with Ontario being the worst-hit area All 200 meat products made in a Canadian packing plant were recalled in 2008 as a result of a Listeria outbreak. Four separate class-action suits were brought by consumers, with the largest claiming damages as high as $350 million.(Source: CityNews.ca)

E. coli spinach scare increases to 21 states An outbreak of E. coli in packaged spinach in the fall of 2006 resulted in 3 deaths and 31 cases of a type of kidney failure. A recall by the U.S. Food and Drug Administration (FDA) depressed spinach sales nationwide; a year later, sales were still down 30% (approximately $75 Million).(Source: CNN.com)

CEO gets 41% pay cut Salmonella outbreaks traced to a Midwestern firm’s food production facilities forced it to implement massive recalls of peanut butter, turkey and chicken pot pies. In the aftermath of the crisis, the company’s board of directors slashed the CEO’s pay by 41%.(Source: Associated Press)

Although the vast majority of food is safe, a number of high profile problems have kept the issue in the spotlight and highlighted the potential risks. Examples:

Many other countries have recently

launched food safety initiatives –

particularly the UK, Australia and

New Zealand. To succeed, food-

related companies must find ways to

efficiently and effectively comply with

all of these requirements.

Safe to move    5 

6    Safe to move

A basis for action

Food companies have seen this problem coming for a long

time. But in many cases their responses have been limited

by the overwhelming size and scope of the problem – and by

a lack of clear direction. The good news is that the situation

is quickly improving, driven by two key trends.

First, at a high level, is the emergence of food safety guidelines and approaches for food safety management based on universally accepted principles. The Codex Alimentarius Commission – an organization linked to the WHO (World Health Organization) and FAO (Food and Agriculture Organization of the United Nations), with representatives from more than180 countries – has published the HACCP (Hazard Analysis Critical Control Point) approach for managing food safety risks. This approach is being adopted by government agencies and industry organizations globally. 

Although specific regulations in different parts of the world continue to evolve, they typically feature some common elements from HACCP:

•  Establishment, funding and empowerment of inspection agencies

•  Establishment of food safety management standards, policies and practices

•  Labeling and consumer information•  Inspection and testing requirements and 

protocols•  Alert and crisis management•  Traceability and the ability to provide food 

history, tracking and tracing information to authorities on demand

Second, at a more detailed level, is the convergence of food safety standards, certifications, and systems. In the past, companies often faced conflicting standards and requirements from various industry groups and certifying bodies in different jurisdictions. This made it harder for companies to take action. Common food safety standards and transferable certifications give companies clearer direction and a consistent set of requirements to satisfy. 

A basis for action

HACCP principles are being integrated into all major food safety initiatives and food safety standards, including: 

•  The Global Food Safety Initiative (GFSI) of the CIES business forum

•  GlobalGAP•  The British Retail Consortium (BRC)•  The Safe Quality Food Institute (SQFI) in 

the US•  The International Food Standard (IFS) of 

The Chamber of Commerce for German retailers

•  ISO22000 of the International Standards Organization

These two key trends enable companies to move forward on food safety with less risk of heading down the wrong path. 

Another key trend spurring companies to action is increased focus on food safety in manufacturing and retailing (not just in agriculture). A food supply chain is only as strong as its weakest link. To ensure the integrity of the food supply, every link in the chain must do its part. Good agricultural practices (GAPs) were the first food safety standards to appear. 

In fact, Safe Quality Foods Institute (SQF) has been offering pre-farm gate certification since 1994. More recently, standards have been expanded to good manufacturing practices (GMPs). SQF 2000 was developed to certify manufacturing/distribution facilities. The next step will be to publish standards applicable to retailers.

 

 

 

Safe to move    7 

Three       steps to 

improvements

8    Safe to move

Safe to move    9 

1 AssessAssess the company’s capabilities for preventing and responding to food safety threats

2 BuildBuild the governance, skills, processes and systems to improve food safety capabilities

3 MonitorMonitor risks and trends on a regular basis, adjusting the food safety program to address significant changes

The “assess” phase allows a company to benchmark itself against leading practices in food safety. Even companies with mature food safety programs can benefit from  a comprehensive assessment, which identifies capability gaps and helps set priorities for improvement. Once the improvement opportunities have been prioritized, a roadmap for change can be developed. 

During the “build” phase, the company executes the roadmap. Typical improvement activities include: developing appropriate leadership support for food safety, elevating food safety objectives to the corporate level, implementing new processes and systems to align with leading practices, and training key resources  to support these changes. 

In the “monitor” phase, the company assesses and improves the effectiveness of its food safety program on an ongoing basis. As new threats to food safety emerge – and as leading practices, standards, and regulatory requirements evolve – the company adjusts its food safety program to address the changes. 

 

A comprehensive strategy to develop a world-class food safety program involves three discrete activities:

10    Safe to move

Deloitte’s assessment approach is based on the comprehensive framework shown below (see figure 3). By implementing a rigorous assessment, you can identify opportunities to develop or enhance specific areas of your current system. Here are some examples of common problems facing organizations today:

PeopleManagement is not committed to food safety, and food safety is a low priority on the corporate agenda. Unsafe practices have been identified but not corrected. There is poor visibility into food safety issues across the supply chain, and significant hygiene and food safety concerns have gone unreported. Quality Assurance lacks visibility into the supplier selection processes.

Existing training programs are inadequate and lessons learned are not reinforced on the job. Communication about training is poor and systems have not been implemented to keep track of training and training requirements.

The organization structure inhibits implementation of effective food safety programs. Communication protocols and capabilities for monitoring food safety issues are poor. Decision-makers at every level of the supply chain do not have access to timely information about food safety concerns.

Accountability is lacking as are incentives for the right actions and behaviours. The same risks and issues appear over time without a drive for continuous improvement.

Assess1The first step toward a comprehensive food safety program

is establishing whether your current approaches to People,

Process and Technology are adequate to meet the ever

changing requirements. All three of these key areas must be

working in synch to deliver a robust capability.

Figure 3: Food safety assessment framework

People•  Leadership•  Support•  Accountability•  Talent

Process•  Standards•  Policies•  Compliance reviews•  Benchmarks

Technology•  Tools•  Data•  Visibility/ T raceability•  Reporting

• Investment• metrics

Safe to move    11 

ProcessFood quality and safety standards are lacking, and are not being applied consistently across the supply chain. Standards for product labeling and customer information vary widely. There are significant issues with physical security of ingredients, packaging, supplies and equipment.

Parts of the supply chain are not complying with regulations, and are releasing products that do not meet the requirements for quality and safety. Sanitation practices are poor, and illegal food treatments – such as pesticides and banned substances – are being used. Communication with regulators is ineffective.

Procedures have not been adequately defined for detecting, recalling, controlling, and disposing of non-conforming products. Material orders are inadequate, and suppliers are not required to maintain food safety policies and procedures. Known problems have not been corrected.

People do not understand the purpose of the food safety audit. The audit is not independent and authority and responsibility for the audit have not been formally defined. Falsification of food safety documents -- including quality reports – goes undetected. The audit process has not been clearly defined and food safety audit training is poor or non-existent.

The organization maintains a predominantly internal view of food safety issues, risks and solutions and lacks perspective on best practices and benchmarks from around the world. 

TechnologyEnd-to-end traceability is lacking. Supplier sourcing practices are unknown, opening the door to unsafe or contaminated materials. The recall process has not been tested.

Technologies for managing food safety programs have not been appropriately deployed. Communication between departments is poor. Technologies for monitoring food safety issues, keeping records and retaining documentation are inadequate.

Key pointsThe commitment of the organization to the food safety program is indicated by the level of investment made in all three areas of People, Process and Technology. Given that risks are constantly rising, it is to be expected that food and beverage companies will be investing in their food safety capabilities and assets. 

The effectiveness of the food safety program should be tracked and reported using a consistent set of performance metrics that balance leading and lagging indicators and help point the organization to where the opportunities exist in order to drive continuous improvement. 

12    Safe to move

Make food safety a top management priority Most food safety problems stem from conflicting priorities, sloppy practices and lack of focus. Tackling the challenge requires infusing an organization’s culture and management style with an unrelenting focus on quality. Most people can only focus on a few things at a time. Food safety should be one of their top priorities. 

Talk about food safety with the management team. Define clear roles, responsibilities, and expectations – and then hold people accountable. Empower people to make decisions and act in a manner that drives food safety. Raise the visibility of food safety with industry associations, the media and customers.

Define a vision for improving the organization’s food safety capabilitiesFundamental changes in food production and distribution – including increases in globalization, outsourcing, and private labels – require a new approach to food safety. 

Challenge basic assumptions and operating principles, and develop a future vision for food safety. Lay out the what, why, when, where and how. Define a framework and case for change that helps drive the organization in a new direction, with conviction. Clearly explain how food safety benefits employees, customers, consumers and the overall business. 

Hire the right people and leverage leading practicesImplementing and improving the processes and systems for food safety management requires getting the right people with the right skills in the right place. This must be coupled with training and development plans that reflect the organization’s new product strategies and risks of staff turnover. 

Put the best and the brightest in key food safety leadership roles. Leverage insights from organizations such as industry associations, regulatory bodies and academia. Understand the latest technologies for enabling visibility, collaboration and track-and-trace. Keep an eye open for providers of innovative new services related to food safety. Take advantage of ideas and best practices from existing business partners, including packaging suppliers, consultants, and logistics providers.

Build2Moving from a disparate and information-poor supply chain

environment to a more integrated and safer model requires

fundamental cultural change, as well as investments in

enabling technologies and processes. Key activities include:

Improve processes for crisis and incident managementManaging food safety issues starts with an appreciation of risk – both the probability of problems arising, and the potential impact on customers, consumers and the business as a whole. For retailers and food manufacturers, protecting the business goes hand in hand with protecting consumers and supply chain partners. In many cases, limiting the impact through effective crisis and incident management is almost as important as preventing the root cause. 

Implement and test comprehensive procedures for crisis communication, incident response and information management. Establish effective systems for tracing products and ingredients bi-directionally across the supply chain – back to the source of the problem, and forward to their ultimate destination with consumers. Develop quick-response capabilities for identifying and recalling affected products. The ability to reconfigure or reformulate products in a very short time (within days, if possible) is critical to success when facing a health scare. Adequate preparation can require a significant investment of time and money, but the costs are dwarfed by the “risk costs” of a single major incident.

Establish an effective performance measurement frameworkGood analysis and measurement – with international standards for benchmarking and targeting – are important elements of an integrated, fully traceable, end-to-end supply chain. 

Develop a set of critical metrics related to food safety that include both leading and lagging indicators. Integrate these metrics into management’s key performance reports, scorecards and dashboards – giving food safety the same visibility as customer service and financial performance. Assign clear accountability, and create performance targets that help spur continuous improvement.

Safe to move    13 

14    Safe to move

Monitor

An ongoing monitoring process helps ensure a consistent level of performance, and is critical for developing and improving an organization’s food safety capabilities. 

Specific benefits:• Meet regulatory requirements and 

industry standards for transparency and reporting

• Reduce operational risk and annual losses

• Provide a risk framework to support improved decision making

• Benchmark compliance requirements against risks and performance goals

• Provide insight about the true risk profile for individual organizations and functions

• Reduce redundancy in risk management and compliance activities 

• Enhance communication and assurance across the extended enterprise

3The final step is to develop and implement an ongoing

process for food safety monitoring. This enables an

organization to: proactively identify and manage external

risks and trends; improve internal performance and

capabilities; and continuously improve.

Figure 4: Closed loop process for food safety monitoring and risk-intelligent decision making

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ssss

Safe to move    15 

Companies that take a broad approach

to food safety and supply chain integrity

– investing in skills, systems, processes

and technology – can mitigate risk and

improve their competitive advantage.

16    Safe to move

Getting 

Globalization and increased consumer awareness have 

made food safety a critical issue that must be addressed. This is not just a problem for companies in 

the agriculture sector. Business leaders in every part of the food supply chain – particularly in manufacturing and retailing – 

now recognize the significant risk exposure their companies face and are ready to take action on food safety. 

In the past, companies were limited by confusing and conflicting requirements that made it hard to know which way to go. But now the stage is set to move forward. Universal principles – and a high level approach – are emerging that provide a clear and consistent direction for the future. Meanwhile, standards and certifications are converging globally, making it easier and more efficient for companies to comply. 

Companies that take a broad view of food safety and supply chain integrity – and quickly invest in the necessary skills, systems, processes 

and technologies – can get a jump on the competition. They can use food safety to differentiate themselves in the marketplace, 

increase revenue by better meeting customer needs, and reduce long-term costs and risk by avoiding 

problems that could tarnish their reputation and require costly remediation. 

started

Getting Contacts

For further information contact your local Deloitte professional:

Regional LeadersTorontoRajiv MathurRegional Leader rmathur@deloitte.ca416-643-8920

Southwestern OntarioBrad HutchingsRegional Leader bhutchings@deloitte.ca905-323-6007

MontrealMartine LabergeRegional Leader mlaberge@deloitte.ca514-393-5234

AtlanticRob CarruthersRegional Leader rcarruthers@deloitte.ca902-721-5645

VancouverRick KohnRegional Leader rkohn@deloitte.ca604-640-3228

Quebec CentreMarc BeaulieuRegional Leader mabeaulieu@deloitte.ca514-393-6509

PrairiesDave WilsonRegional Leaderdavemwilson@deloitte.ca780-421-3792

National LeadersStephen BrownNational Consumer  Packaged Goods Leaderstephenbrown@deloitte.ca416-874-3154

Peter BarrNational Consumer  Business Leaderpbarr@deloitte.ca519-650-7745

Michael BelzPrivate Company Service Leadermbelz@deloitte.ca416-643-8712

Brent HouldenNational Retail  Leaderbhoulden@deloitte.ca416-643-8788

Service LeadersMark BernardiAudit Leadermabernardi@deloitte.ca416-643-8012

Scott FosterFinancial Advisory Leaderscfoster@deloitte.ca416-775-7030 

Jim KilpatrickConsulting Leaderjimkilpatrick@deloitte.ca416-874-3231

Raj KrishnamoorthyEnterprise Risk Leaderrkrishnamoorthy@deloitte.ca416-601-6245

Tony MaddalenaTax Leadertmaddalena@deloitte.ca416-643-8443

Contributors

Jean-Philippe Vorsangerjvorsanger@deloitte.ca

Cara Hartnettchartnett@deloitte.ca

Rob Bucciarellirbucciarelli@deloitte.ca

Steven Teskeysteskey@deloitte.ca

www.deloitte.ca

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