Careers Business Ownership Food Supply Chain – Optimizing This Important Supply Chain Share PINTEREST Email Print Alistair Berg / Getty Images Business Ownership Operations & Success Supply Chain Management Sustainable Businesses Operations & Technology Marketing Market Research Business Law & Taxes Business Insurance Business Finance Accounting Industries Becoming an Owner By Martin Murray Martin Murray Twitter Martin Murray is a former writer for The Balance Small Business, and the author of eight books on supply chain management and enterprise resource planning. Learn about our Editorial Process Updated on 12/11/19 The food supply chain is garnishing more attention as consumers are concerned about outbreaks of foodborne diseases as well as issues such as the horse meat being identified in packaged foods in Europe. As with other industries, food retailers and manufacturers have to be more knowledgeable about the suppliers they use and where their product originates. If retailers are found to be negligent and allow issues to arise, consumers will favor a different brand. It is better for a retailer to prevent the production and shipment of contaminated food than have to spend significant resources in recalling the items and triggering negative publicity. Suppliers For any company in the food supply chain, it is important to understand how your suppliers are building in food safety into their processes. For many retailers, as highlighted by the horse meat issues in Europe, cannot trace back the product to the beginning of their supply chain. They were very reliant on the assurance of their primary vendors that the product was safe and labeled correctly. In those instances, the supplier did not perform due diligence on their suppliers, and thus, the issue arose. Many issues can occur when the food supply chain is very complex, and many suppliers are involved in getting a primary product to the retailer. The more complex the supply chain, the more difficult it is for retailers to be able to trace an end product back to the original source. Many retailers have adopted a position where they control all aspects of their food supply chain by either owning the farms that supply their food or work with local vendors where they can guarantee the safety and quality of the product. Supplier Evaluation If retailers cannot own their own farms or have local supply, then they will need to work with suppliers they can trust. There should be a vendor evaluation or assessment that a supplier would need to pass before working with a retailer. It would include food safety criteria, sanitation procedures, environmental monitoring, recall programs, food defense programs, and excellent record-keeping processes. Supplier Auditing If a supplier has passed the requirements of a retailer and a contract is negotiated, it is in the best interest of the retailer to require some form of auditing arrangement. It may be an internal audit performed by the supplier themselves, or an audit performed by a third party. If the audit is internal, then the retailer should clearly specify what is required as part of the audit, and the documentation that is needed to validate the result. If the internal audit does not meet the retailer's requirements, then corrective action can be insisted upon or termination of the relationship. Third-party audits can be performed by an independent company who can review supplier's business processes, such as quality programs, employee training, manufacturing processes, etc. It is often the best option as it removes any bias from the evaluation. Subcontracting Some suppliers will subcontract work on occasion, and this can cause issues in the food supply chain. When a vendor has been evaluated, and a retailer has a contract for food items, they expect that the goods supplied to them to be produced by the vendor using the criteria written into the contract. However, due to financial constraints or production problems, vendors may subcontract work to vendors who may not have the same quality or sanitation required by the retailer. A vendor offering cheap products may do this on a regular basis, and retailers may realize this is happening until an incident occurs. Importing In many instances, food items can be significantly cheaper when they are imported. Vendors in many countries can offer cheap foodstuff due to cheaper labor and fewer regulatory requirements. It can lead to the consumer receiving cheaper food, and the retailer higher profits, but this can also lead to food safety issues. Inspectors at the Food and Drug Administration (FDA) only test a small percentage of food being imported into the US. It means that vast amounts of food items enter the domestic food supply chain without inspection. It is very difficult for retailers and food manufacturers to check the conditions where food is being produced overseas. Retailers must be cognizant that quality checks of the imported food they purchase must be performed to mitigate the risk of any safety issues. This article has been updated by Gary Marion, Logistics, and Supply Chain Expert.