by Nigel Dalton Brown

1. The emerging use of COIN (Community of Interest) networks to manage compliance reporting within the supply chain Presented at the 17th Australian HACCP Conference and 5th SQF International Conference August 2010 Melbourne, Australia Nigel Dalton-Brown, iCiX Asia

2. The SQF Code requires Compliance Communication 4.3 Specification and Product Development 4.3.2 Raw Materials 4.3.3 Packaging 4.3.4 Contract Service Providers 4.3.5 Contract Manufacturers 4.3.6 Finished Product Distribution 4.4 Attaining Food Safety 4.4.5 Incoming Goods and Services 4.4.6 Corrective and Preventative Action 4.6 Product Identification, Trace, Withdrawal and Recall 4.6.2 Product Trace 4.6.3 Product Withdrawal and Recall 5.3 Water and Ice Supply 5.3.1 Water Supply 5.3.3 Ice Supply 6.8 Monitoring Water Microbiology and Quality 6.8.3 Analysis 6.10 Supplier Approval 6.10.1 Selecting Approved Suppliers 6.10.2 Approved Supplier Program 6.10.3 Monitoring Approved Suppliers 6.10.4 Register 6.10.5 Records Supply 6.13 Allergen Control 6.13.2 Risk Assessment

3. How does it work in practice? Corrective actions also need to be sent out and actioned Also need to collect Certificates of Analysis from Laboratories and testing houses Buyer sends copies of policies and procedures to all suppliers We also need to carry out mock recalls and Product Withdrawals Distribute Policies and Procedures Collect Compliance Certificates Certificates of Analysis and Audits Corrective Actions Product Withdrawals and Recalls Now need to store and manage multiple certificates from multiple suppliers all with different expiry dates Now have multiple copies of policies and procedures across all suppliers Buyer sets up relationships with suppliers

5. Time wasted filing documents

6. Cost of storage

8. Some open responses from our global survey A number of respondents expressed concern that Supplier Compliance Management was not getting the attention it deserved..... Supplier Compliance is an issue that is at times neglected when minor issue are ignored. However it is the minor issue that eventually contribute to major fallout's Totally ignored till it is too late. As part of the contract commencement, we request the required docs/certs before the contract is signed. Where we are not so good, is managing the document expiry during the life of the contract. My company does not have a central repository for tracking contracts let alone compliance. Each department is allowed to manage or not manage as they deem appropriate A real time system would be very helpful but cost is a constant constraint iCiX/IPcubed Global Survey into the perceived importance of compliance management – May 2010

10. It’s expensive

11. And it’s expensive In 2003 Food Standards ANZ reported example recall costs Major retailer conducting national recall of 17,680 cartons of frozen processed chicken: press advertisements $51,521 stock costs $75,709 cost of recovery $119,425 labour costs $4,000 other associated costs $7,217 Total cost of recall $257,872 FSANZ did not account for consequential loss such as Loss of revenue Damage to brand Data from Food Standards ANZ, 2003

12. The current way of tracking compliance Distribution 64.2% lack coherent standards of what documents actually required 79.6% use a manual, labour intensive, paper based system (excel or a database) 44% deal with over 1,000 documents 50% do not remove suppliers for non-compliance because they could not track it well enough. Staff waste hours chasing missing documents out of date documents Generally inaccurate costly lower quality due to lack of tracking of COPQ exposes the organisation to risk Supply

13. A day in the life of.... “It’s a mind numbing, soul destroying, never ending task”

15. Isn’t that the responsibility of our suppliers?

18. It’s too time consuming

19. We’re not sure what we need to track

20. We keep our fingers crossed nothing goes wrong

23. Community of Interest (COIN) networks COINing It

24. The COIN Approach Buyers post all their policies and procedures to their secure site. May also post technical specifications for suppliers to reference. Only ONE copy is posted on the COIN network. This single copy is then made available to relevant suppliers Each organisation, buyers and suppliers, joins and creates their own secure site The COIN network exists to provide many-to-many connections between trading partners Documents are no longer stored and collected. The key metadata is used to generate reminders and reports in real time. In the same way, suppliers post ONE copy of each relevant compliance certificate, PLUS key metadata, e.g. Type, expiry date, alergens/nutritional data, product specifications...

25. The COIN – COA’s and Audits Auditing and certification companies and laboratories are also part of the COIN. Buyers can request audits with the results posted onto the suppliers sites for viewing by the buyer.

26. The COIN - Recall Customers also join iCiX. This allows for recalls, CAR’s, smartforms, etc Buyers COIN A many to many Community of Interest Third Party Auditors Certification bodies Laboratories Customers Suppliers and subcontractors

27. Key Characteristics Each organisation has it’s own site The responsibility changes from “Buyer collects” to “Supplier publishes and shares” Communication paths created with third parties: Auditors, Laboratories, Customers and Regulators Documents are loaded only once Costs are shared across the industry

28. Follow on benefits of COIN networks Real time reports with high confidence Broadcast messages to suppliers Product Recall/Withdrawl in hours not days or months Corrective action requests with COPQ claims PDF online forms for compliance related work

29. Cost Savings

30. The top three reasons for inaction Insufficient time Inadequate budget Insufficient administrative resources To counter the “no time”, 86% of respondents have decided that someone else (i.e. suppliers themselves or an independent third party) should take on the actual day to day grind of driving supplier participation in the purchasers ethics and compliance initiatives With COIN, suppliers carry out the day to day grind of publish documents. COIN also reduces unnecessary copies by approx 99% To circumvent the “no budget”, 75% of respondents have decided that suppliers should share or bear the cost of participating in the purchasers ethics and compliance initiatives Under COIN systems, everyone pays and so the costs are spread. The emerging solution has a great deal to do with collaboration COIN networks are by definition collaborative Source: Building an ethical supply chain. Michael Levin, 2008 Integrity Interactive Survey, 2008

31. Analysis

33. Urgent Class 2 Recall

34. Urgent Class 3 Recall

35. Market Withdrawal

36. Mock recall

37. Quality Withdrawal

38. Pull-and-Hold

39. Voluntary Recall

40. Stock Check Recall

42. Product recalls/withdrawals using iCiX The “less than 1hr” average response rate has grown from 30.7% to 45.1% and is now 59.2%

43. Product recalls/withdrawals using iCiX We have an average completion rate of 77.1% within 2 hrs Client A is achieving 82.1% within 2hrs across 133 recipients

44. Incorrectly labelled product96.8% recall within 2hrs Client A recall August 9th, 2010

45. CAR using iCiX Data taken from iCiX database from 12/10/2005 to 17/08/2010

46. CAR using iCiX Data taken from iCiX database from 12/10/2005 to 17/08/2010

47. Key differences

48. Janet, I need a Risk Management Assessment on our suppliers The assessment showed that there was a high risk of no management Risk Management Assessment..... Framework Software (UK)

49. It can be different Distribution Supply

50. FREE iCiX-RECALL Sign up to receive free use of iCiX-RECALL module for 3 years Thank You Nigel Dalton-Brown, iCiX Asia