Tag Archives: recalls

No recall

Top 3 Reasons For Food Recalls

By Chris Bekermeier
4 Comments
No recall

Recalls are an inevitable reality of working in the food industry. Indeed, hardly a day goes by without one food company or another announcing a recall. According to the USDA, 150 food products were recalled in 2015. From large national brands like Tyson Foods and McCormick to smaller local manufacturers, no food company is immune from recalls.

Recovering from the sometimes devastatingly expensive recall process can be difficult, so it’s obviously best to avoid problems whenever possible. Understanding the top three reasons for food recalls is the first step toward greatly reducing how frequently they affect your food company.

1. Cross Contamination

Many food manufacturers process multiple products in a single factory. This can lead to cross-contamination issues involving foods to which people are commonly allergic, namely milk, wheat, soy and peanuts. Because cross contamination is sometimes unavoidable, manufacturers are permitted to sell cross-contaminated food, provided the potential contaminants are declared as allergens on the label. According to the USDA’s report, undeclared allergens accounted for 58 of the 150 food recalls in 2015, and milk has been identified as the number one offender.

How to Prevent Cross Contamination. Food is often contaminated because machinery isn’t properly cleaned between uses. Therefore, the most effective way to prevent it is to thoroughly clean equipment after processing food that contains common allergens. Visually inspecting the equipment following cleaning is important, but unseen residue can linger.

To overcome this, in-plant allergen testing of equipment, post cleaning, is recommended. Some tests utilize quick, non-allergen-specific colorimetric tests to identify sugars, proteins and other indicators that an allergen is present. More expensive enzyme-linked immunosorbent assay (ELISA) kits are more sophisticated and may be a better choice if cross contamination plagues your food manufacturing plant.

  • Other tips to prevent a recall caused by allergen contamination include:
  • Establishing spill-cleanup protocols
  • Training personnel on allergen management
  • Designing equipment with sanitary principles in mind, including self-draining equipment, smooth edges and rounded corners
  • Carefully inspecting product labels for accuracy

2. Pathogens

Recalls from pathogen-contaminated products are highly damaging because they affect all consumers, not just those with specific allergies. Listeria, E. coli and Salmonella are the most common—resulting in a combined 17 food recalls in 2015, according to the USDA’s report. Several foods have been identified as being most at risk for carrying these pathogens:

  • Deli meats, soft cheeses and other foods that usually aren’t cooked
  • Poultry, eggs, undercooked beef, and unpasteurized milk or juice
  • Raw fruits and vegetables
  • Raw or undercooked shellfish
  • Home-canned foods with low-acid content — including asparagus, corn, green beans and beets

How to Prevent Pathogens. As with avoiding cross contamination, the best way to prevent a pathogen outbreak is to implement hygienic manufacturing practices. Four specific techniques apply here:

  • Separate raw products from cooked/ready-to-eat products. Your efforts should even go as far as separating employees who work in each area. They should use divided washing facilities, locker rooms and cafeterias.
  • Control the temperature and moisture level to reduce bacteria and mold growth. Anywhere condensation forms or moisture is left to pool, micro-organisms can potentially grow and create a contamination issue. Ventilation and air conditioning can help tremendously with this, as can air dryers used to sap moisture from steamy air.
  • Implement pest-control techniques. Rats, flies and cockroaches are significant carriers of Listeria, Salmonella, Vibrio cholera and other bacteria. Effective pest-control techniques include disposing of garbage properly, sealing pest entry points, and using air curtains and screens to keep flies out.
  • Choose durable, easily cleanable equipment for your manufacturing plant and wash all surfaces regularly. Mold and bacteria can start growing within a matter of hours, so keeping surfaces clean is essential. Proper hygiene among plant personnel is critical as well.

3. Physical Contamination

When non-food items are found in food products, a recall is inevitable. Metal, plastic, wood and even insect body parts are examples of physical contaminants. Food is also considered physically contaminated if it’s chemically or biologically tainted. According to a Food Standards Agency report, of the 107 physical contamination incidents in 2012, the most common malefactors were metal (37), pests (23) and plastic/glass (10 each).

How to Prevent Physical Contamination. Foreign objects often enter food products when malfunctioning equipment or human error breaks down the production process. Safeguards such as X-ray scanning, metal detection and filtration/sieving processes help catch foreign objects before they’re shipped, but these aren’t foolproof methods. You should also only work with trustworthy suppliers and take the time to examine raw materials before using them.

The general public expects food manufacturers to produce safe, untainted food. By following these tips, you help uphold your brand and avoid the expensive, reputation-damaging effects of food recalls.

Katy Jones, Foodlogiq
FST Soapbox

The Clock is Ticking: Technology to Effectively Manage Recalls

By Katy Jones
3 Comments
Katy Jones, Foodlogiq

It seems there isn’t a day that goes by without a food recall being announced. National brands like General Mills, Kellogg’s and Kraft alone have all experienced major recalls over products contaminated with such hazards as E. coli or undeclared allergens in the last few months. Food recalls are incredibly costly to a company, but can be handled effectively and efficiently with good planning, proper execution and the right technology to back it up.

Fortunately, the food industry is moving in the right direction to encourage better recall management by way of regulations under FSMA. Underscored by these federal mandates, the industry as a whole is moving away from a reactive approach to quality and safety issues within the supply chain, instead adopting a preventative plan of action.

The Multiplier Effect: How One Ingredient Can Lead To Multiple Recalls | Learn more at the 2016 Food Safety Consortium | December 7-8 | Schuamburg, ILRecalls are inevitable in the food industry, and in reality every company has, or will, experience one at some point. What sets a company apart essentially boils down to how they prepare for and react to a recall situation. If a company has done its due diligence to prepare for the inevitable (i.e. putting a recall team in place and implementing the right traceability technology), dealing with a quality or contamination issue can be less painful. Additionally, taking the right preventative steps can ensure a recall situation is proactively handled, rather than leading to a brand’s nightmarish public meltdown.

Getting Beyond “One-up and One-Back”

The industry has relied on a more linear approach to supply chain transparency—the “one-up and one-back” method (OUOB). Knowing where a product has come from one step back in the chain and where it is being sent or sold one step forward is no longer enough. To properly prepare for a recall, and manage product quality, it is imperative that a company employ whole chain traceability software, rather than relying solely on the movement of product within its own four walls.

The OUOB traceability approach is especially dangerous when handling high-risk, perishable foods, like produce or meat—which are often the culprit for recalls. According to a recent study in the Journal of Business Logistics titled, “Tracing Bad Products in Supply Chains” by Kaitlin Wowak, assistant professor of management at Notre Dame, “perishable products, like fresh produce and meats, flow through the supply chain very quickly. And while federal regulations mandate that firms have traceability one step up and down the chain, this may not be sufficient for these perishable products. In those situations, there is often a gap in the information received about the product, say a positive Listeria test, and where that product went in the supply chain.”

Root Cause Analysis is Key

When faced with a recall situation, time is of the essence. The time it takes for the recall team to identify the root cause of an issue and remove it from the supply chain could be the difference between sick consumers and serious brand implications. Being fully cognizant of the entire supply chain via a whole-chain traceability solution allows you to visualize a contaminant’s exact location; this information ultimately helps a brand streamline and manage the issue quickly and effectively.

Wowak’s research profiles a series of recall scenarios. One that was studied found that 50% of the food removed from the supply chain during that recall was actually affected—the other half was perfectly fine. Take the example of a batch of tainted tomatoes in your supply chain. Without being able to identify the root cause at the lot level, a company might be forced to remove all of the tomatoes from its supply chain.

Rather, by utilizing end-to-end traceability software, they can identify the specific farm, pack date and lot from which the produce originated. Tracing that information through each step in the supply chain—hether the tomatoes ended up on a pizza, in a can of salsa, or in a farmer’s market—allows the brand to manage the bad products without disrupting their entire chain or wasting perfectly good produce.

Unfortunately, without the visibility of whole-chain traceability, companies do not have the option to cherry pick tainted vs. untainted food from their chain. This is especially relevant as up to 40% of food in the United States goes to waste, according to the NRDC.1

Centralized Recordkeeping

When faced with a safety or quality issue, communicating information to relevant parties is necessary throughout the process. Especially with FSMA coming into play, if a company experiences a quality issue, they must promptly notify regulatory establishments and be sure to submit documentation and data in an immediate manner for investigative purposes. This can be hindered if a brand does not have a good handle on their supply chain data and must spend hours sorting through file cabinets, emails, or Excel sheets for proper documentation, or coordinating with suppliers for records. The longer it takes to comply with federal regulations and submit data around a recall, the more likely consumers, and the brand, are at risk.

The industry’s shift towards a preventative approach to safety is hitting a milestone as FSMA compliance periods have already taken effect. With this change, the FDA will no longer tolerate poor handling of contamination or quality issues. A company cannot get away with blaming a partner’s lack of transparency, or a supplier’s inconsistent records— the brand is now always accountable. In the coming months, we can anticipate added scrutiny from auditors, more mandatory recalls, even the shutting down of facilities due to noncompliance or negligence around safety concerns.

Having a robust supplier management system in place enables a company to be prepared for a recall situation. With all of your product and supplier data in one place, companies can quickly gather and allocate necessary data like audits and assessments to the appropriate officials, complying with the new required recordkeeping rules. By streamlining the availability of key information, and supporting seamless communication, a brand can be empowered to navigate a quality or safety issue.

As testing across the supply chain increases and the demand for fresh food rises, recalls are not going away. Fortunately, the move to a preventative approach to safety comes at a time where traceability technology is more comprehensive than ever. Food companies have the opportunity to invest in themselves with end-to-end traceability, arming the brand for the inevitable occurrence of a safety or quality issue. By enhancing visibility of the supply chain via an all-encompassing whole-chain platform, it is possible to track a product through each stopover to the consumer, from farm to fork. At the same time, housing all data in one efficient platform can ease the pressure of liaising with supply chain partners and regulatory bodies and streamline communications when faced with a safety situation.

While recalls are an inescapable part of the food industry, what sets a brand apart is how well they prepare and arm themselves with the technology to stay ahead. Implementing supplier management and whole-chain traceability software can help a company stay one step ahead of a recall, which makes all the difference when consumer wellness and brand reputation are on the line.

Reference

  1. Gunders, D. (August 2012). “Wasted: How America Is Losing up to 40 Percent of Its Food from Farm to Fork in Landfill”. NRDC Issue Paper. Retrieved from https://www.nrdc.org/sites/default/files/wasted-food-IP.pdf

New Whole Genome Sequencing Test Monitors Threat of Pathogens

By Maria Fontanazza
3 Comments

Today food companies will have access to a new whole genome sequencing (WGS) test that could help them prevent dangerous pathogens from getting into their products. Released by Clear Labs, the test takes a detailed approach to identifying pathogen strains in samples, providing information about their geography and from which food groups they originate.

In an exclusive interview with Food Safety Tech, Mahni Ghorashi, co-founder of Clear Labs, explains how he expects the company’s new test, which has a five- to seven-day turnaround time, will offer companies with a more accurate yet less expensive alternative to protecting consumers by actively monitoring their supply chain for emerging pathogens.

Food Safety Tech: What differentiates this WGS test from current available solutions?

Mahni Ghorashi: No one has been able to provide the food industry with modern whole genome sequencing techniques for food safety. What we’re releasing is a quantum leap in terms of what’s been available on the market today. Whole genome sequencing has been largely siloed to regulatory bodies like FDA and CDC to trace outbreaks and inform investigations—the technologies and techniques that they’re using are actually fairly old; they’re some of the original WGS techniques that emerged on the next-gen sequencing platform. We’ve taken the most advanced techniques on the NGS platform for human disease exploration and personalized medicine and adapted them for food industry.

What gives our WGS test a competitive advantage over legacy-based methods is two fold:

1. Clear Labs has a 2-million+ entry-curated database of genomic information and sequences for the accurate ID of food ingredients (pathogenic organisms and microbiomes). Its accuracy and the confidence level that comes behind our matching is a huge step above anything that’s available in the public domain today.

2. Being able to place pathogenic strain information in the context of overall food ingredients and samples. The whole genome sequencing test we developed has been specifically catered for the food industry, and for food samples in particular, [versus] FDA’s GenomeTrakr, CDC’s PulseNet, or other food safety labs that are offering full genomic sequencing of pathogen strains—they’re using some of the earliest methods to do this. On the NGS platform, we’re able to put those strains in the context of food ingredients and suppliers: Specifically, [matching] bacterial strains with food ingredients [and] suppliers.

Clear Labs, whole genome sequencing

FST: Does this test target specific foods?

Ghorashi: Our platform particularly shines in complex foods. The value of next-gen sequencing and DNA barcoding over PCR-based technologies, which is the gold standard in food safety, is its stability to break down complex food ingredients into all of their known parts, and to look in a universal and unbiased way into food samples. It’s untargeted, so you don’t have know what it is that you’re looking for—and that’s the real power.

FST: What impact do you anticipate for this test, especially in the context of FSMA?

Ghorashi: Our customers are using [the test] for monitoring ingredient supplies and the effectiveness of preventive and sanitary controls [and] to match specific pathogen strains to specific food ingredients. They are using it for proactive testing for FSMA compliance—there’s a lot of movement in this direction and hefty budgets are being allocated to put new preventive controls in place in response to FSMA; whole-genome sequencing will play a big role, and we anticipate large-scale partnerships with agencies and private industry on that front. And the most obvious use case is that it’s being used for techniques to mitigate or reduce the risk of product recall and outbreak.

We’ve been able to significantly reduce the price point on whole-genome sequencing, and all of our tests across the board, because we’re intimately familiar with how the inner workings of these platforms and how to best optimize them for scale and cost efficiency. We think the test will be more accurate and leaps and bounds ahead of what’s available, as well as cost competitive. We’re excited about the work we’re doing and its impact on food safety. I don’t think the food industry—retailers and manufacturers—have ever had access to these kind of tools and they’re being made available just in time for FSMA, as the industry moves towards a more proactive approach to food safety and [takes] preventive measures in their supply chains.  Hopefully we’ll soon be living in a world where outbreaks, illness and the financial toll are a thing of a past.

Clear Labs also just released a microbiome test that helps companies associate microbiomes with specific food ingredients.

Mahni Ghorashi: The microbiome test we’ve developed is able to sequence samples from the human gut and from food, and look at how the microorganisms are interacting. Our customers for this test have been large brands that have advanced R&D departments and academic research centers that are looking for how diet research and the microbiome interact together and how new product development can help us move toward personalized diets when it comes to prebiotic and probiotic diets.”

The impact of the microbiome and the correlations between bacteria of the human gut and the bacteria in the food we eat. The prevailing thesis at the moment is that the microbiome has a significant impact on our health when it comes to disease risk and diet, inflammation and mood disorders. We’re seeing very forward thinking brands like Nestle, ConAgra and Mars putting a lot of attention on the impact of the microbiome when it comes the development of new products, [such as] prebiotics and probiotics, or even specific food products as it pertains to the microbiome. We believe that this intersection— nutrigenomics and the personalized diet—is going to be a massive market, and we’re at the early stages of that.
Food Safety Tech

What’s Hot in Food Safety This Summer

By Food Safety Tech Staff
No Comments
Food Safety Tech

With summer feeling like it’s almost over, here’s a look at the stories that have been heating up the food safety space.

 

5: The Senate Agriculture Committee praises the bill as a “win for consumers”, but there are industry folks who disagree.

Senate Deal Requires Nationwide GMO Labeling

 

4: Don’t overlook the basics—especially when it comes to document control.

Five Errors That Impact GFSI Compliance

 

3. Determining whether to initiate a market withdrawal or recall procedure depends on the situation and unfortunately, is not always a clear-cut decision.

Market Withdrawal Vs. Recall: What’s the Difference?

 

2. According to the CDC, the multi-state outbreak of Shiga toxin-producing E. Coli O121 has sickened at least 42 consumers (with 11 hospitalizations) across 21 states.

More E. Coli Illnesses, General Mills Expands Flour Recall

 

1. A look at a recently released test that aims to provide more accurate and affordable GMO testing.

Next-Generation Sequencing Targets GMOs

OIG Says FDA Recall Initiation Process Not Efficient or Effective

By Food Safety Tech Staff
No Comments

As a result of an ongoing audit of FDA’s food recall program, the Office of Inspector General (OIG) has concluded that FDA does not have the policies and procedures in place to ensure that voluntary food recalls are initiated in a prompt manner.

“This issue is a significant matter and requires FDA’s immediate attention,” the letter stated. “We suggest that FDA update its policies and procedures to instruct its recall staff to establish set timeframes for (1) FDA to request that firms voluntarily recall their products and (2) firms to initiate voluntary food recalls.”

The audit follows a report from June 2011 that reviewed FDA’s monitoring of imported food recalls. That particular report also found the agency’s food recall program to be inadequate due to the fact that FDA did not have the authority to require companies to recall certain foods. FSMA has changed this aspect of recall authority.

The OIG’s letter, addressed to FDA Commissioner Robert Califf, M.D., specifically calls out two recall cases:

  • A nut butter recall due to Salmonella in which 14 people became ill. According to the OIG, 165 days passed from the time FDA identified the adulterated product to the time the company initiated a recall.
  • Several recalls of cheese products due to Listeria monocytogenes in which 9 people became ill and one infant died. In this situation, 81 days passed from the time FDA was aware of adulterated product to the time the company recalled the products.

The OIG issued the letter to Califf as an early alert. The audit of FDA’s food recall process is continuing and the OIG will be issuing a draft report at the conclusion of the audit.

Shawn K. Stevens, Food Industry Counsel
Food Safety Attorney

FDA’s Tactics to Reduce Outbreaks and Recalls

By Shawn K. Stevens
1 Comment
Shawn K. Stevens, Food Industry Counsel

The advent of PulseNet in the late 1990s enabled more effective identification of outbreaks, even as many of them overlapped. The database brought to light the fact that many of the products sold in commerce nationwide contained ingredients that were at risk of contamination with dangerous pathogens. In many instances, these ingredients were in products from a single lot or batch and then sold by a single supplier to dozens of customers. From there, they were used in hundreds of products that would be distributed into thousands of retail locations.

Attend Food Safety Tech‘s Listeria Detection & Control Workshop | May 31–June 1 in St. Paul, MN | LEARN MOREFDA created the Reportable Food Registry (RFR) as a way to prevent the shipment of contaminated ingredients into the food supply. If received ingredients or products test positive for contaminants, the RFR requires that the company inform FDA. The agency uses the reports to take regulatory action against the original supplier and requires that all ingredients or products from all potentially affected lots be recalled from commerce. Because the RFR allows FDA to immediately begin tracking and containing ingredients testing positive for pathogens, its introduction in 2009 resulted in a significant spike in recalls.

Driven by the recalls triggered by PulseNet and the RFR, a national perception about an extremely unsafe U.S. food supply began to emerge. The public and media demanded that Congress take action, and so FSMA was born. The regulations require all FDA-regulated food companies to develop and implement written preventative control programs designed to control pathogens and other hazards in food. As a result, food companies will face heightened regulatory risk, scrutiny and exposure.

To further decrease the incidence of outbreaks and recalls, FDA is implementing regulatory enforcement initiatives that include sampling food products at retail for the presence of pathogens; conducting microbiological profiling of food processing facilities during routine inspections; and exploring criminal sanctions against companies that have been linked to positive samples in food products or production facilities associated with an outbreak or foodborne illness.

Microbiological Sampling in Retail

FDA is sampling products intended for human consumption as well as those for animal consumption. As testing continues at the retail level, the likelihood of more food products testing positive for the presence of pathogens is much higher. When positive product samples are found, FDA will take immediate action against the company that processed the product and require the company to recall all affected product. The agency will also demand access to the production facility at issue and conduct extensive environmental sampling, including from drains, floors, walls, production equipment, and finished products, in an effort to find the same strain as the sample testing positive at retail.  If product or environmental samples test positive, FDA will perform genetic DNA testing on the isolates and compare the DNA fingerprints against those of the isolates collected from sick case patients in PulseNet over the past 15 years. If a match between the DNA fingerprint and an illness(es) in PulseNet is found, the agency will presume that these illnesses were caused by product originating from that particular facility. FDA will also demand access to all food production and microbiological testing records from previous months, or years, and critique those records.

Microbiological Sampling in Food Production Facilities

In accordance with FSMA, FDA will inspect all food production facilities (drains, floors, walls, food processing equipment, and finished products) that process high-risk ingredients or food products within the next three years (lower risk facilities will be inspected within the next five years). The agency is also performing extensive microbiological profiling of the food processing environment in all production facilities during routine inspections. If a positive sample is found, FDA may require the company to recall the affected product. It is expected that the level of sampling will intensity in the coming months and years as a result of FSMA mandates. And as the extensive microbiological sampling in food production facilities continues, FDA will perform genetic DNA testing on any positive samples collected, once again comparing the DNA fingerprints of samples against those of sick case patients over the last two decades. If a match is found, FDA will take the same course of action as in retail and presume all illnesses were caused by a food product originating from that specific facility. When that occurs, in addition to the potential recalls that may be required, the food companies at issue may become the target of a criminal investigation as well.

My next column will cite recent examples of FDA’s criminal offensive against food companies.

FDA

No FDA Mandatory Recall Activity in 2015

By Food Safety Tech Staff
No Comments
FDA

On Friday FDA released its 2015 Annual Report to Congress on the Use of Mandatory Recall Authority and there was not much news to report.  According to the agency: “In FY 2015, FDA had no mandatory recall activity to report under section 423 of the FD&C Act. As a result, FDA did not issue any public health advisories as described in section 206(f) of FSMA.”

This is the third report of its kind since FSMA was enacted. It is worthy to not that it only deals with recalls themselves, not other agency communication efforts such as public health advisories, which include consumer advisories, warning letters and reports of outbreak investigations.

Huisken Meat, beef patty recall

More Than 89,000 Pounds of Beef Recalled Over Fear of Wood Contamination

By Food Safety Tech Staff
No Comments
Huisken Meat, beef patty recall

After uncovering foreign material in an incoming ingredient during the production process, Huisken Meat Company has recalled 89,568 pounds of beef patties. According to the USDA, the recall is due to concern that the products may be contaminated with “extraneous wood materials”. The Sam’s Choice Black Angus Vidalia Onion patties come in 2-lb boxes and were shipped to retailers across the country, including Walmart.

There have been no reports of adverse reactions, and the USDA is advising that consumers throw out the items or return them to the retailer.  

Beyond incidental contamination, are food companies prepared for intentional contamination?

Jacob Bowland, Heateflex
In the Food Lab

FSMA to Increase Role for Food Microbiology Testing Laboratories

By Jacob Bowland
No Comments
Jacob Bowland, Heateflex

As a result of the finalization of FSMA regulations on September 10, 2015, increasing requirements for procedures, documentation and testing will soon be impacting the food industry. The major effects on the food microbiology testing market will come in the form of an increase in the volume of samples that must be processed in accordance with the new FSMA rules, along with an improved emphasis on accurate and complete record keeping. The goals of FSMA are to create a new safety standard across the entire food chain. Increasing food pathogen testing will minimize possible recalls and the probability that dangerous food outbreaks occur.

Food manufacturers’ testing labs and third-party accredited testing labs can meet the demand for increased testing and improved record keeping in one of two ways: Via facility expansion or via implementing new technologies into the laboratory. While facility expansion might be an ideal long-term solution, it will not address the immediate surge in lab demand brought on by the new FSMA requirements, as it takes time to build new laboratories and hire employees. Implementing new technologies in the lab, then, makes the most sense, and where automation can be introduced into traditionally-manual processes, higher throughput may be realized using existing personnel and facilities.  Automation further removes human error and improves the quality of the test being performed. The challenge for lab managers will be to objectively look at the current production bottlenecks in their testing operations and determine where technology may be introduced to increase throughput.

In addition to mandating additional testing, the FSMA regulations will require improved lab record keeping, as well as a new accreditation process that FDA will implement. The food testing industry faces the same dilemma that the healthcare industry faced some years ago in migrating from manual files to electronic health records.  Lab notebooks have a real purpose in the lab, but their purpose should be more as a backup system to information that is gathered and stored electronically. While Laboratory Information Management Systems (LIMS) have been around for many years, their full potential in pathogen testing has yet to be realized. A properly designed LIMS provides an electronic database that not only aids in the accreditation process, but also allows samples to be traced throughout the testing facility.  This allows positive test results to be screened from false positives or false negatives, and points to which equipment or procedures in the testing process need to be improved upon.  LIMS technology for recording digital information can also trace user, operation time and performance specifications more accurately than lab notebook-based processes.

In summary, many changes are coming to the food industry as a result of increased regulations, presenting exciting opportunities to develop new products and technologies to alleviate the pain points within testing labs.  The industry of food pathogen testing must change alongside the regulatory atmosphere in order to be competitive in a post-FSMA era.

Cristin Singer, assurance partner at McGladrey LLP

Security Risks, Protecting Reputation Among Concerns of Food & Beverage Companies

By Maria Fontanazza
No Comments
Cristin Singer, assurance partner at McGladrey LLP

In a recent survey of food and beverage executives, nearly half of respondents named product quality as a major risk area and cited product recall capabilities as a priority. However, only about one-third of executives expressed confidence in their companies’ current safety and recall strategies.

Cristin Singer, assurance partner at McGladrey LLP
Cristin Singer, assurance partner at McGladrey LLP

“Mitigating [product] risks starts with tone at the top and leadership within a company,” says Cristin Singer, assurance partner with McGladrey, LLP. “Companies have a strong focus on the diligence associated with quality (especially among employees involved in testing) and building long-standing, trusted relationships with suppliers and vendors.”  Many companies are also increasing their testing of imported products and making sure that their partners are familiar with the cultures of the regions from which they import goods as part of their risk mitigation strategy.

The Food and Beverage Industry survey, conducted by McGladrey, involved 179 executives, owners, and decision makers from food and beverage companies with annual revenues between $10 million and $1 billion.

Respondents consisted of retailers (51.1%), manufacturers and processors (34.8%), distributors (26.4%) and growers (6.7%). Figure courtesy of McGladrey.
Respondents consisted of retailers (51.1%), manufacturers and processors (34.8%), distributors (26.4%) and growers (6.7%). Figure courtesy of McGladrey.

Product Recalls. Some companies are basing their product recall strategy on where they actually fall within the supply chain. “I’ve found that when a company feels that they serve as a middle-man distributor, and depending on the contractual relationship with the co-packer, they look to the processor or co-packer to manage the recall process,” says Singer, who is also a member of McGladrey’s national consumer products team.  In addition, Singer sees a focus on due diligence related to co-packers and suppliers to ensure they have proper certification, and processes and procedures in place to manage risks and recalls.

Ability to respond to reputation risks

Wage and Labor. Food and beverage companies are also facing a variety of wage and labor issues. Larger companies expressed concern with increased labor costs and attracting technical talent; smaller companies are more worried about minimum wage legislation labor costs, and retaining skilled labor workers on the shop floor. Executives also cited that minimum wage legislation and the Affordable Care Act could pose challenges over the next year.

Data Security. As more companies adopt platforms that store sensitive data, the security of these systems is important. Yet only about 42% of executives are very confident that their data and systems are secure from authorized access (about 50% are “somewhat confident”). Improving employee security protocols and providing training, involving data security consultants, and conducting due diligence on vendor data security are among the actions that companies are taking to enhance the security of their platforms. “If there’s a data breach, a lot of sensitive information could be put out there, including product formulations, intellectual property, and employee data (social security numbers or healthcare data),” says Singer.  “Initially a lot of companies on the retail side were focusing on data security. Now we’re educating our clients, especially those on the distribution, processing or manufacturing side. All levels of the supply chain are at risk.”