Did you hear about the poisoning outbreak from a sushi restaurant in Montana in mid-April 2023 that resulted in 2 deaths and 41 infected customers and is believed to be associated with morel mushrooms cultivated in China and distributed from California?

Even though the concept of an efficient supplier qualification process to guarantee the safety of food ingredients has aged like fine wine, countless outbreaks and recalls still originate from contamination in sourced ingredients. It is high time for food industry stakeholders to look into ways to remediate this issue and formulate strategies to understand what can be done differently to ensure that each ingredient used in food production is of the utmost quality and meets the necessary safety standards and regulations. This is where tech-enabled supplier management outcomes can pave the way to unlock the full potential of a supplier ecosystem for mitigating quality and food safety risks.

A supplier ecosystem refers to the interconnected network of suppliers, vendors, and partners that a company collaborates with to source materials, products, and services. By strategically selecting and partnering with reliable and high-performing suppliers, businesses can tap into their expertise, leverage their capabilities, and foster sustainable business growth to secure product quality and safety.

10 Essential Factors for Successful Supplier Qualification & Assessment

Procurement procedures aim to optimize the utilization of resources, which necessitates a competent evaluation of suppliers for the identification and selection of reliable, high-quality suppliers who consistently meet the organization’s needs and expectations. Considering the existing supplier base to measure their performance is also vital to comprehend prospects for cost reduction, risk mitigation, and continuous improvement of the supplier ecosystem.

An organization establishes clear criteria and standards for supplier qualification, including product quality, safety, dependability, pricing, delivery times, financial stability, and compliance with regulatory requirements. It involves gathering relevant data, conducting assessments, and analyzing suppliers’ abilities and suitability in a transparent and fair manner.

Let us briefly discuss 10 essential factors that are to be taken into account for implementing successful supplier qualification and assessment.

• Risk Assessment: A supplier risk assessment recognizes, examines, and resolves potential risks associated with each supplier. It involves evaluating characteristics, including chemical, physical, or biological hazards that may lead to contamination. Determining the level of risk associated with an ingredient can be aided by reviewing regulations and historical data. For instance, ingredients that are allergens, used in large quantities, or prone to bio, physical, or chemical contamination are considered high risk.
• Approval Requirements: Creating a supplier approval checklist containing approval requirements is fundamental to standardizing your supplier evaluation and making your decisions better, faster, and more strategic. Supplier approval checklists serve the purpose of ensuring consistency, accountability, and thoroughness in supplier qualification, fostering improved overall supplier performance.
• Objective Approval: Procurement managers need to establish scoring criteria to evaluate and select suitable suppliers and maintain them in the approved vendors’ list. This leads to an objective approval process, offering a systematic framework to evaluate suppliers and allowing businesses to compare suppliers based on predefined criteria, leading to more informed and objective supplier approval decisions.
• Material Specifications: A good supplier relationship starts with evidently defining the material specifications you expect from the supplier. The initial phase is specification management, involving generating precise and comprehensive specifications in collaboration with the supplier. Presently, many companies fail to fully engage suppliers in this process.
• Qualitative Aspects: Some criteria are difficult to measure quantitatively and require a more subjective assessment. Assessing the supplier’s quality management systems, certifications, track record, and adherence to industry standards is essential. This assures that the products or services provided meet the business’ quality requirements and avoid any potential risks or issues down the line.
• Weighted Evaluation: In cases where selection criteria may conflict, such as cost versus quality, it is necessary to assign weights to each criterion. This facilitates to determine which supplier provides the best trade-off among the selected criteria. It is advisable to focus on a few key criteria rather than a lengthy list to ensure each criterion carries significant weight in the overall scoring process.
• Timeframe: Setting a clear timeframe is an adequate way to ensure a smooth supplier approval process. Appointing deadlines and time-to-time supplier compliance verification helps keep the evaluation process on track and ensures timely decision-making.
• Responsible Evaluators: Designating a responsible individual or team for supplier evaluation is important. Typically, an employee within the procurement department takes on this role. However, for high-stake scenarios in complex supply chains, it may be advisable to hire an analyst or consultant who can assist with various aspects of the evaluation process or employ an alternate supplier management mechanism, such as digital tools for the vendor selection process.
• Centralized Supplier Database: Managing a large number of suppliers across different functions can be challenging. It is recommended to create and maintain a centralized database of all suppliers. Supplier management software solutions incorporating a supplier database can be capable of automating and consolidating supplier data and insights, making it easier to track and manage supplier information effectively.
• Supplier Relationship Management: Effective communication and a strong working relationship with suppliers are paramount for successful collaboration. Devising a robust communication channel such as a supplier portal can be instrumental in being a central hub to streamline various elements of supplier assessment, leading to improved efficiency, transparency, and staying updated on supplier requirements.

A Quick Glance at FDA Foreign Supplier Verification Program (FSVP)

Safe sourcing of the ingredients is a top priority, and a supplier verification program is the key. It enacts as a safety net that protects consumers from probable risks. By rigorously assessing and validating suppliers through audits, inspections, and quality checks, every ingredient meets the highest standards, and only trustworthy partners make it to the consumer’s table.

The Foreign Supplier Verification Program (FSVP) is a transformative supplier verification tool set forth by the U.S. Food and Drug Administration (FDA) under the Food Safety Modernization Act (FSMA). It was introduced by FDA as a benchmarking tool for an effective supplier management program on 16th November 2015 for Importers of Food for Humans and Animals, with an initial compliance date of 30th May 2017. Here is a brief overview of the FSVP requirements:

An FSVP importer refers to the U.S. owner or consignee of a food offered for import into the United States. FDA FSVP requirements apply to importers of food into the U.S., and the FSVP holds importers accountable for verifying that the products they bring into the U.S. meet the same stringent safety standards as domestically produced foods to ensure the safety and compliance of imported food products. FSVP should be carried out by importers via the following steps:

• Hazard Analysis: Importers must conduct a thorough assessment of potential food safety hazards associated with the imported products.
• Supplier Evaluation: Importers need to evaluate their foreign suppliers to ensure their compliance with FDA regulations and food safety standards.
• Verification Activities: Importers are responsible for implementing appropriate verification activities to confirm that the imported food meets U.S. safety requirements. This may involve on-site audits, sampling and testing, review of records, and other relevant measures.
• Corrective Actions: Importers must have procedures in place to address any identified non-compliance or food safety issues promptly. This includes establishing corrective actions and follow-up measures to rectify deficiencies.
• Recordkeeping: Detailed records related to the FSVP must be maintained. This includes documentation of hazard analyses, supplier evaluations, verification activities, and any corrective actions taken, and making it available to the FDA upon request.
• Qualified Individual: Importers should designate a qualified individual or individuals who have the necessary knowledge and training to develop and oversee the FSVP.
• Reassessment: The FSVP should be reassessed periodically or when there are changes in circumstances that may impact the safety of the imported food.

These key elements of the FSVP work together, and if FSVP compliance is not maintained, it may result in penalties, import disruptions, or refusal of entry into the U.S. market. It is also important for FSVP importers to stay informed about FDA regulations, updates, and guidance related to FSVP to ensure ongoing compliance with these requirements. FDA released the final draft guidance for FSVP requirements on 11th January 2023, retaining the core components from the draft guidance and feedback from stakeholders that aimed to assist importers in building a successful FSVP.

Smart Supplier as a Digital Solution to Ensure Safe Ingredient Sourcing

SmartFoodSafe presents Smart Supplier as a supplier approval and performance management software solution designed to ensure safe ingredient sourcing by creating a risk-based supplier approval program and supervising vendor performances with customized KPIs. It offers a range of features and functionalities that streamline supplier qualification, engagement, and performance monitoring, such as:

Supplier Lifecycle Management: Effectively manage and oversee the entire lifespan of suppliers in a centralized platform, from initial onboarding and qualification to ongoing performance evaluation and, if necessary, discontinuation or replacement.

Automated Supplier Risk Assessment: Identify, monitor, and mitigate country, commodity, and supplier-specific risks to help companies make informed decisions about supplier selection and understand their potential impact on business objectives.

Objective Vendor Qualification: Provide configurable checklists and approval scores and ratings for objective vendor qualification to confirm that the vendor satisfies predetermined criteria and standards before being approved as a qualified supplier, enabling consistent and standardized supplier evaluation.

Supplier Performance Evaluation: Systematically evaluate supplier performance with customizable performance checklists to decide the supplier performance decision to initiate requalification of suppliers, disqualify suppliers, or continue working with them.

Supplier Portal: Promote optimized communication and collaboration with suppliers through a supplier engagement portal to submit documentation for food safety controls, product specification, and certification documentation, and update as and when they expire.

Alerts & Notifications: Keep suppliers informed about actionable items and requirements by generating automated real-time alerts and notifications, delivered via customized email, in-app notifications, etc., on supplier-related activities to allow stakeholders to give prompt or timely responses.

Non-compliance Management: Enable effective tracking, resolution, and documentation of non-compliance issues to determine and manage supplier non-compliances to maintain the supplier’s adherence to regulatory and internal requirements.

Dashboard & Reporting: Enhance data-driven decision-making for supplier performance monitoring by visualizing supplier status and performance through custom filters, graphs, and analytical reports.

Therefore, Smart Supplier is an impactful digital tool that can bring about the best supplier management outcomes to maintain safe ingredient sourcing while simultaneously establishing transparency, compliance, and cost-effectiveness throughout the supply chain.