"Without changing our patterns of thought, we will not be able to solve the problems that we created with our current patterns of thought." - Albert Einstein
The effective management of corrective actions is a critical quality and food safety process that is often tracked on spreadsheets and through email. This approach can result in very high, often unrecoverable costs that jeopardise the food business. This can result in consumer harm and puts jobs at risk. It also has a very real impact on food safety culture. What is the real cost of a manual approach to corrective actions using only spreadsheets and email, and how can we quantify it? These are some of the questions we will address in this article.
Corrective Actions come from Everywhere:
The many sources of corrective actions mean that food manufacturers and food importers can have a major task on their hands when dealing with these issues and staying up to date on progress. The default starting point for managing this is usually a spreadsheet. Here are the most common sources of corrective actions:
- Audits and inspections: Corrective actions often originate from internal and external monitoring. Certification, regulatory and internal audits are designed to check if the food safety and quality management system is working according to the planned, documented system in place. This can result in a long list of corrective actions that require management action and close out, especially given the level of audit and inspection that occurs in some food businesses which supply multiple retailers.
- Processes and Technology: In addition, processes and technology can fail from time to time and corrective and preventive actions result from these events.
- Customers: Customer complaints can occur when production and procurement processes do not go to plan.
- Supply Chain: Corrective actions crop up when things go awry with suppliers and the materials they sell. Problems with suppliers, raw materials and production processes can easily result in an expensive and damaging product recall, therefore addressing these issues effectively should be a 'no brainer'.
- Food Safety Culture: In a food business it is inevitable that things go will wrong. Sometimes this is due to a lack of training or a poor food safety culture, we will look at this in more detail later.
Whatever the reason for a corrective or preventive action, a food company wishing to achieve high standards needs to record and track corrective and preventive actions so that the immediate issues can be dealt with and the root cause(s) eliminated. They must also be able to demonstrate, through subsequent performance data, that the action was effective. These activities are often required by law and by industry global food safety standards.
This means that it is necessary to learn from the corrective action trends that are occurring in any food business, and its supply chain, so that appropriate preventive actions can be taken to stop future recurrence of such issues. Such learning is a core tenet of a food safety culture.
"Problems with suppliers, raw materials and production processes can easily result in an expensive and damaging product recall."
The Relationship between Corrective Actions and Food Safety Culture:
Food safety culture is very topical at present, having been introduced as a requirement in BRC Global Food Standard Issue 8 and driven by the Global Food Safety Initiative (GFSI). What is food safety culture, in the context of corrective and preventive actions? It is certainly a positive mindset, adopted by everyone in a food business, that grows over time and results in food safety improvement.
- Demonstrating Food Safety Culture: I would argue that you cannot have a food safety culture if you do not have an effective corrective action management system in place. My primary reason for this argument is that culture is directly related to behaviour, especially from those at the top in a food business, and their ability to lead and change the behaviour of others. How many senior managers in food businesses get involved with the detail of day to day corrective actions, and how easily is this demonstrated?
- Corrective Action Management is Critical: If you cannot demonstrate positive changes in food safety behaviour then it is clear that a very poor food safety culture exists. The corrective and preventive action management system is therefore a critical component of a food safety culture. This begs the question; Can a food business really learn lessons when they have incomplete, inaccurate or out of date information in an intermittently used spreadsheet that only a select few have access to?
- Does Spreadsheet use = Poor Food Safety Culture? At Primority we know from talking with prospective customers that as many as 80% of food businesses manage corrective action information in an excel spreadsheet or similar. We understand why. It's familiar and people know how to use them. The high number of food companies using spreadsheets for corrective action management tells us a lot about general attitudes towards food safety and the likelihood of being able to achieve a good food safety culture. It's hard to build anything great without the correct tools.
- Disconnected Management Systems: We also know that many of those who do have a software system often track corrective and preventive actions in a stand-alone software system that is not connected with up to date supplier and raw material information, documented procedures, or the key people across the business that need to know before making purchasing or other decisions.
- Fragmentation and Demonstrating Lessons Learned: The problem is that the generally fragmented approach to corrective action management, and food safety and quality in general, can lead to costly mistakes when recurring issues are not identified, and are therefore not dealt with effectively. In this situation there is often no learning from corrective actions demonstrated, and therefore no improvement is evident.
- Severe and Costly Consequences: The consequences of the above can range from delays in production to product rejection by the customer, product recall and prosecution by the authorities in severe cases. The reality is that spreadsheets allow only the tip of the information iceberg to be shown, obscuring the vast bulk of the really valuable and critical information that highlights risks and unnecessary recurring costs. They also fail to adequately demonstrate improvement without large amounts of manual effort as data needs to be merged from various sources, re-formatted, manipulated and compared to do this.
Spreadsheet based corrective actions are therefore a one dimensional solution to a multi-dimensional problem and they can be dangerous. The only conclusion is that having a good food safety culture is extremely difficult, if not impossible, without an effective monitoring and corrective action system in place.
An effective monitoring and corrective action management system must therefore be a pre-requisite to food safety culture.
"Having a good food safety culture is extremely difficult, if not impossible, without an effective monitoring and corrective action system in place."
Collaboration on Corrective Actions is Key:
The most important aspect of corrective action management that escapes most is that they require a collaborative approach by many different people in a food business.
- The Collaborators: Corrective actions will need to involve suppliers, engineers, managers, supervisors, production staff and customers to work together to solve key issues that may otherwise cost a food business significant amounts of money and result in brand damage, loss of business or even closure.
- Role of Senior Management: Corrective actions should be owned by senior management, as key investment decisions as changes to practices, processes, business models and justification for these changes will be required along the way.
"Effective corrective and preventive actions require a collaborative approach by many different people in a food business."
Multi-Perspective Risk Assessment and Prioritisation:
A good corrective and preventive action system will allow people to review documentation, carry out risk assessments, assign tasks and create and execute improvement projects. Most importantly, it will track management actions and expected outcomes, successful or otherwise. Without this approach, underlying problems cannot be solved permanently.
Having visibility of all corrective actions and being able to risk assess and prioritise them in a collaborative way ensures that the business can focus on the most important and highest risk issues first. Such risk assessments may be food safety related or they may be financial. There may be multiple risk perspectives to be assessed. Without assessing the impact of action and non action how can good decisions be made?
Carrying out multi-perspective risk assessments helps identify the real priorities and make the best use of the resources they have available to them to resolve these issues in a proactive manner.
"Having visibility of all corrective actions and being able to risk assess and prioritise them in a collaborative way ensures that the business can focus on the most important and highest risk issues first."
The Problem with EMail:
Few of us could live without email these days, but the volume of email people have to deal with on a daily basis is at unprecedented levels. This means that using email to manage and track corrective actions can be a recipe for disaster. Important issues can easily disappear down the long daily list of emails and be forgotten, until serious consequences come home to roost at a later stage.
When this happens, a reactive ‘fire fighting’ mentality sets in and then people struggle to deal with one problem after another, often making the situation worse. Proactive prioritisation and visibility of the most important corrective actions by the entire team in a food business is required to be able deal with the main risks to the product and the business.
"Using email to manage and track corrective actions can be a recipe for disaster."
Quantifying the Costs of Poor Corrective Action Management:
One method of quantifying the cost of poor corrective action management is by looking at the probability and cost of product recall. In the USA, and in the UK, the rate of regulatory product recall in the food sector has been increasing in recent years.
A study by Rentokil noted that in 2016 US product recalls increased by 24%, whilst in the UK they increased by 29%. The top three root causes of product recall, accounting for 80-90% of all regulatory food product recalls, were identified as microbiological contamination (around 44-46%), product mislabelling (13-25%) and physical contamination (10-27%).
There is no doubt that an effective monitoring and corrective action management system could significantly reduce these issues and therefore the risk of product recall in any food business. The most effective way to impact this problem is to ditch single owner spreadsheets in favour of an integrated tool set that ensures corrective actions take place and risks and trends are identified quickly and easily.
"The top three root causes of product recall, accounting for 80-90% of all regulatory food product recalls, were identified as microbiological contamination, product mislabelling and physical contamination."
The Damaging Effects of Product Recall:
The cost to industry of regulatory food product recalls is significant. A report by the GMA (Grocery Manufacturers Association), Deloitte, the FMI (Food Marketing Institute) and GS1 looked at product recalls. The average cost of a product recall in the USA was found to be $10m per recall and resulted in an average of a 22% reduction in share price, for public companies, within 2 weeks. The effects are long lasting and some businesses never recover. In the UK and EU the average cost of a product recall was reported at approximately £1.3m per recall by insurance giant Allianz, who process many product recall insurance claims
42% of the USA recalls analysed in the report were due to issues with raw materials, 17% were manufacturing errors and 19% were labelling errors.
All of these issues can be dealt with through an effective corrective action management system.
"The average cost of a product recall in the USA was found to be $10m per recall."
"In the UK and EU the average cost of a product recall was reported at approximately £1.3m per recall."
The Hidden Cost and Impacts of Product Recall:
In another report by the GMA, 58% of the food companies surveyed experienced at least one product recall in the past three years with 81% of the businesses surveyed stating that the consequences of a product recall were financially “significant to catastrophic”.
A recent report by Lockton showed that 88% of companies saw a reduction in gross margin following a product recall and that the effect was sustained. It was discovered that companies lose a critical volume of business when sales are negatively impacted. This affected the economies of scale and buying power that are crucial for a profitable food business operating on thin profit margins. The consequences mean companies often need to increase marketing spend to bolster their brand and reach new customers to replace the lost business.
Again, these are all hidden costs that can be reduced by an effective corrective action management system.
"58% of the food companies surveyed experienced at least one product recall in the past three years with 81% of the businesses surveyed stating that the consequences of a product recall were financially “significant to catastrophic”."
Why Spreadsheet Action Tracking is So Ineffective:
An effective corrective action management program, that reduces the above risks, requires a level of teamwork and coordination which cannot be achieved without clear, real time visibility on who is responsible for actions and tasks. Here are some of the weaknesses of spreadsheets:
- Spreadsheets are Inanimate: Companies need to monitor when critical tasks are being completed, but they also need to monitor when they are not. A spreadsheet system cannot send alerts when key developments on corrective and preventive actions occur or raise escalations when corrective actions, and the tasks that they require, are not being completed. Spreadsheets are simply not good at assigning and tracking tasks in a way that is visible to everyone.
- Cloud Spreadsheets Require 'Check In': Of course, you could use tools like Google Docs and share your spreadsheet with your team, but let's be honest, that is a very weak solution as you still have to 'check in' regularly with your shared spreadsheet to know what the status is, or attend regular meetings to ensure that everyone updates it.
- Document Audit Trail is Poor: Documentary evidence cannot be uploaded into a spreadsheet. Creating links is a poor substitute as the linked document may be changed without notice or even deleted.
- Emailing Updates: Emailing a spreadsheet for others to update results in multiple versions of inaccurate and out of date information and it can take an extended time period, and much time spent chasing, to get people to respond.
- A Good Memory and Hard Work: Using spreadsheets to report to the management team, and everyone involved in resolving internal and external technical, quality and food safety problems, requires a lot of manual intervention, a very good memory and a large amount of extra and unnecessary work.
- Silo Risks: The disconnected, silo'ed nature of spreadsheet based corrective action tracking is a disaster waiting to happen. It can destroy an otherwise good food business by allowing it to drift into an unorganised, inefficient, ineffective and dangerous state that result in major costs over the course of a year simply because there are too many important things that have not been actioned. Such costs often go unnoticed because they become part of the fabric of doing business, obscured by a haze of occupational myopia and complacency.
- The Multiplication Effect: Imagine a corrective action scenario involving just a handful of people and then multiply this by just five corrective actions being dealt with. In this situation we have a major coordination problem and keeping things up to date requires aligning diaries for meetings to discuss progress and problems encountered. In the real world there can be dozens of open corrective actions at any time. It is not difficult to see the scale of the management disruption and how, across a business, this can result in major problems.
Excel spreadsheets are simply not an effective or efficient way to facilitate collaboration on corrective actions and their use for this important management task can result in hidden damage to food businesses, their customers and consumers. They are a tool that was designed in the 70's for silo'ed number crunching and have since been adapted for other uses.
"The disconnected, silo'ed nature of spreadsheet based corrective action tracking is a disaster waiting to happen. It can destroy an otherwise good food business by allowing it to drift into inefficient, ineffective and dangerous practices that result in major costs over the course of a year."
An integrated food safety and quality management system must have the following attributes as a minimum:
- Single, Accessible 'Source of Truth': Documentation, processes and records for food safety and quality that all exist in a single system that everyone agrees on and is updated in real time.
- Accessibility: Information is available for people across the business to use and collaborate on. This removes the need for meetings simply to get progress updates.
- Corrective Actions Linked to Relevant Entities: Corrective and preventive action management should be linked to all relevant records, e.g. documents, processes, suppliers, products, raw materials, customers. This makes finding information fast and results in easy, automated and accurate reporting.
- Clear Accountability: An integrated management system should clearly define responsibility, placing a focus on prioritised actions and tasks and delivering clarity of purpose through a socially visible incentive to ensure important tasks are completed on time e.g. 'the boss is watching'. There should be 'no hiding place' for anyone when it comes to corrective and preventive actions.
- Alerting and Social Following: Social 'following' of actions is a useful way to keep tabs on progress with important corrective and preventive actions. This helps keep people up to date with actions that they have an interest in.
- Escalations: When actions are not being completed, management need to know. This is achieved through management escalations which highlight ineffectiveness and allow intervention to ensure progression.
- Centralised Convenience: A central, easy to use system saves time, speeds up action resolution and helps preventing recurring problems from arising by driving increased effectiveness.
- Food Safety Culture: A good corrective action management system will enable the production of reports and evidence that clearly demonstrate improvement.
An effective, integrated food safety and quality management system includes corrective and preventive actions. This helps drive accountability, efficiency, transparency and most important of all, improvement. These are the reasons that an integrated approach to food safety and quality management helps reduce the costs and risks of inefficient and ineffective processes and behaviours.
A Production Example:
"In many cases the real root cause will be an information disconnect between all the people involved in a production scenario like that above."
A Procurement Example:
In a further example; The procurement team in a food business have a very important job to do. They are responsible for purchasing sufficient raw materials and ingredients from approved suppliers to meet production demands at the best possible price / quality point.
In this scenario there may be issues with suppliers, or raw materials, which the quality department are aware of, but the buying team are not. Thus, it is easy to see how raw materials that do not meet the required specification may be purchased in error, resulting in a lack of inventory to meet production schedules. The issue may be discovered too late by the quality team for procurement to be able to purchase replacement inventory. The commercial pressure can result in the quality team being over-ruled and being forced to accept the risk.
In this example, the procurement team may have to purchase raw materials at a higher cost from an alternative source to be able to fulfil customer orders. These additional costs are normally caused by a lack of communication between the buying team and the quality department due to the separate spreadsheet systems they have that do not ‘talk to each other’.
Where a hold is placed on the production run, customer deliveries may be short or late, leading to charge backs and fines, lost sales and lost business for repeat offences. This has been a growing trend of this behaviour in recent years and is it a very large cost placed on food supply chains that consumers end up footing the bill for. It makes food companies less competitive and reduces operating profits which leads to stifled growth and a lack of investment in the business.
These industry practices, in turn, can lead to a long term death spiral for businesses that fail to address these issues.
"These additional costs are normally caused by a lack of communication between the buying team and the quality department due to the separate spreadsheet systems they have that do not ‘talk to each other’."
"An integrated, collaborative corrective action management system is critical to quality and food safety standards and also for effective and efficient communication and the ongoing profitability of a food business."
At Primority, our 3iVerify solution is an integrated food safety and quality management system. It can be applied to all of the above scenarios and provides an affordable way to realise maximum efficiencies in food safety and quality processes.
Contact us today to discuss how we can help you take an integrated approach to food safety and quality.
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