When It Comes to the Fight for Food Safety, Process and Strategy Is No Match for Culture
By Barry Lee
Companies in emerging markets increasingly understand the business case for investing in food safety. Producers can enter new export markets and gain access to major retailers and multinational restaurant chains. Better discipline and control of production can reduce costs through lower losses, fewer recalls and audits, in addition to better worker productivity and retention. High standards of food safety support sales and brand value, builds consumer trust and ensures more sustainable and reliable business relationships.
But too many companies fail to maximize returns on food safety investments by focusing almost exclusively on equipment and processes — the easy part. Lasting success depends on people, and building a culture of food safety, where people confront risks and do the right thing, even if it’s the toughest choice to make. A strong culture where people are empowered can compensate for weak processes, and head off lapses that can impart significant business costs.
A strong culture is a safety net.
The largest ever detected Listeria outbreak — running for almost two years in South Africa — was declared over by the government just a few weeks ago in September. Between Jan. 1, 2017, and July 17, 2018, South Africa recorded 1,060 laboratory-confirmed cases of listeriosis, including 216 deaths. The outbreak was linked to a ready-to-eat processed meat plant owned by Tiger Brands, a facility which remains closed. The food processing company and three of its retailers exported to 15 countries in the African region, all of which have issued recalls for the implicated products. The company, with its focus on exports, had food safety processes in place, but its culture fell short in ensuring implementation.
Lose a lot now, or a lot more later.
A few years ago, one of my clients experienced a contamination problem with meat products, which was believed to have happened because meat was exposed to higher temperatures while waiting to be packed over an extended period of time. This forced a plant shut-down. Sampling and testing revealed more problems with stock. Production fell to just a quarter of capacity, while the company implemented new capital investments and a stronger maintenance schedule. Inventory write-downs alone were as much as $7 million, a sizeable sum for a company this size, which forced it to raise new funding to continue.
Employees empowered to interrupt production at the first sign of problems could have limited the losses.
Money comes and goes. Your reputation stays with you.
Another client voluntarily recalled a food ingredient from one of their major export markets. Management moved quickly to seek advice in managing risk to reputation, compliance with export market standards and support for achieving HACCP certification in food safety. But capacity to implement HACCP remained weak for several years, because it didn’t take steps to strengthen its culture of food safety. The financial costs were relatively modest, but the damage to reputation has kept its products under scrutiny from regulators ever since.
Culture eats strategy for breakfast.
In risk management in general and food safety specifically, the best plans are no match for culture. Culture is a pattern of ways of thought and behavior. These patterns embody an organization’s foundation core values and practices including leadership, management visibility, employee empowerment and accountability, and best practices. A company should have a culture of responsibility and care for its products throughout the entire supply chain. For example, if goods are packaged by a third party, companies continue to hold duty of care to ensure products are safe for consumption. A company should not believe that it can simply outsource its responsibilities.
People need the incentives, the knowledge and the recognition to ensure an organization’s culture supports the implementation of food safety strategies and risk management in their supply chains. People may not be able to head off every risk, but they can react more quickly and limit the damage.
We will focus on how to build this kind of strong culture at the IFC International Food Safety Forum in Ho Chi Minh City, Vietnam on November 28–29.
Barry Lee is a Principal Industry Specialist, IFC Manufacturing, Agribusiness, and Services.