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Supplier Management Software: The New Age of Supplier Management

Posted on January 31, 2022 by Eric Hansen
Eric Hansen

Blog headers (1)-1Supply chains pose inherent risks for the food and beverage industry. While supply chain management has always been a complex endeavor, supplier compliance has become increasingly challenging in light of regulatory changes in recent years. Process manufacturers are reexamining their supplier management strategies (like The 6 Pillars to Effective Supplier Management) to ensure safety, quality, and compliance. This is especially true for companies governed by the Food Safety Modernization Act (FSMA).

Recognizing the supply chain has triggered many recalls, the FDA introduced the FSMA, signed into law in 2011. Since then, the FDA has released guidance documents to help facilities under FSMA navigate supply chain program requirements. Let’s break down some of the best practices for process manufacturers for maintaining a defensible and proactive approach against minimizing risks in the supply chain.

How Are You Currently Managing Your Supply Chain?

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To understand how you may need to refine or strengthen vendor management activities, first analyze what your supply chain looks like now. We often view a supply chain as linear, when in reality it tends to resemble a web. While your facility may have visibility into its tier 1 suppliers, tier 2 and beyond are less clear. As visibility diminishes, it becomes more challenging to control risk factors.

The next step is to identify who is responsible for controlling risks. Although every company takes a different approach to

supply chain management, they nevertheless share many similarities across the industry. For example, many facilities use audits to ensure suppliers have comprehensive food safety programs in place. While larger brands could perform second-party audits, most use third-party audits from sources such as GFSI schemes.

Facilities can also choose to implement certificates of analysis (COA) to confirm ingredients, products, or materials meet specifications. Typically, COA documents include actual results obtained from quality control testing and are usable upon receiving inspections. While these measures are generally dependable, it’s essential to review activities periodically to ensure they’re as effective as possible.

Another common practice process manufacturers use in supplier management is monitoring vendor behavior. Suppose a supplier becomes less responsive, sends materials barely within specifications, or repeatedly misses deadlines. In that case, reevaluate the relationship—it could be time to find a new approved vendor. Check out our tips for seamless food supplier management here.

Questions to Ask Regarding Current Supply Chain Practices

As you analyze your current supplier management practices, here are a few questions to consider:

  • Do we have a complete understanding of our supply chain risks?
  • Do we know who’s responsible for controlling risks in our supply chain?
  • Can we track all the information our facility receives, including COAs and third-party audits?
  • Who is in charge of the supply chain?

While the final question appears to be the simplest, it may, in fact, have the most complex answer. Who is “in charge” can involve multiple parties, including employees from research and development, procurement, product development, legal, and food safety professionals. But it’s crucial to answer these questions fully before identifying supply chain risks.

How to Identify Supply Chain Risks

Not all vendors present the same risks; however, it’s essential to consider supply chain risks in your risk assessment. David Acheson, President, and CEO of The Acheson Group, a global food, and beverage consulting company, explains that it doesn’t matter if you have five or five thousand suppliers—some ingredients will always be riskier than others. It’s essential to weigh these risks carefully to ensure you’re using resources most effectively. Of course, process manufacturers should dedicate resources to areas that present the most significant risks.

Typically, facilities can organize risk factors into three categories:

  • Ingredient Risk: the inherent risks posed by the ingredient itself, including a recurring history of recalls, country of origin, etc.
  • Supplier Risk: supplier behavior, including the degree to which they control risks
  • Your Use of the Ingredient: how you use the product (i.e., cooking minimizes risks)

Some additional points to think about are: 

  • Whether the ingredient constitutes only a trace amount of a single product or if it’s found within every product on the shelf
  • What resources are necessary to manage the risk
  • The potential for a recall
  • How to tailor your risk management approach to fit your company’s budget and allocation of additional resources.

How to Identify Ingredient Risks

The simplest way to gauge risk factors for ingredients is to develop a risk factor questionnaire. Does the ingredient originate from a high-risk area, or has it been found to contain contaminants in the past? You could also rank responses as low, medium, and high risk. Vendor management software can help you assign numerical values to ingredient risks and keep track of the information, so risk management practices are data-based.

How to Identify Supplier Risks

For suppliers, repeat the same process described above for identifying ingredient risks. Compile a questionnaire to gather information about onsite audit results, previous supplier behavior, and qualifications or certificates. Again, this allows you to implement data-driven measures to manage your supply chain risks.

How to Identify Risks Based on Usage

Lastly, generate a list of questions based on your use of ingredients. Include how many products it affects, the volume of products subject to potential contact, and whether it’s included in a product strongly linked to your brand identity.

Based on these findings, you can then compile a risk-based vendor management strategy tailored to the specific characteristics of your supply chain.

Refine Your Supplier Management Strategy

Once you have identified your risks, the next step is to refine your supply chain program. Of the major risks you outlined, who is responsible for control? It could be your supplier, your own company, or your customer. If the customer is responsible for risk control, the FDA will require a letter of assurance stating so under the FSMA Preventive Controls Rule.

At the most basic level, the Preventive Controls Rule for Human and Animal Food requires affected food and beverage manufacturers to assess supply chain risks and verify risks are being controlled. The FSMA Foreign Supplier Verification Program (FSVP) is similar in nature, but it shifts the burden of minimizing risks to importers. The FDA expects importers to assess risks in the supply chain and verify risks are being controlled.

A robust supply chain control program compliant with both the Preventive Controls Rule and FSVP would encompass the following steps:

  • Conduct a hazard analysis and evaluate risks following steps described in the previous section
  • Perform supplier verification activities to ensure vendors are mitigating any risks for which they are responsible
  • Use only approved suppliers, bearing in mind the FDA may request to see your list of approved suppliers and the criteria you use to select and approve them
  • Perform corrective actions any time a supplier fails, and document these actions thoroughly
  • Build your program and maintain records—detailed, organized recordkeeping is a critical component of every aspect of FSMA

Why You Should Collaborate with Suppliers

A supply chain is only as strong as the links holding it together. In this case, the communication between your company and its vendors represents your links. To collaborate seamlessly with suppliers, make sure your facility is actively tracking their performance, thoroughly vetting new suppliers, and communicating any updates or changes to vendors in a timely fashion. Likewise, you’ll also need to ensure your internal teams are aligned. When new products are in development, have all parties on board—including R&D, procurement, food safety management, and supply chain personnel—to proactively assess risks. Identifying major risks in advance may help your company rethink its approach towards introducing new products or working with different suppliers. After putting these measures into place, the final piece of the puzzle is utilizing a tool to streamline supply chain management. Leverage supply chain technology by integrating supplier management software.

What Is Supplier Management Software?

Supplier compliance is critical to reducing risk, ensuring quality, and meeting customer expectations, but the activities involved can be tedious and time-consuming. Supplier Management software takes the guesswork out of managing your suppliers. Put an end to back-and-forth emails about expiring certificates and other supplier details by implementing a software platform that creates a secure supplier management system that allows facilities to own and control their documents. Supplier management software also drives productivity by significantly reducing the number of resources consumed in tracking suppliers. And because supplier management software can issue notifications and generate reports in real-time, process manufacturers can actively minimize supplier risk and create the supply chain visibility they need to prevent disruptions and compliance issues.

What Does the Best Supplier Management Software Include?

So what are the supplier management software features you need to consider? 

Centralized online supplier systems reduce tedious tasks required by paper processes and complex spreadsheets while facilitating faster and more straightforward communication, collaboration, and adoption. Suppliers can log in and upload or update critical documents from anywhere and at any time. You’ll also have access to supply chain analytics and mobile compatibility, allowing your teams to verify supplier shipments, prevent the use of non-compliant ingredients, and compare performance data to identify your best and worst suppliers. Thus, you’ll have constant visibility into every aspect of your supply chain, helping you to make better decisions to support safety, profitability, and compliance for your brand.

Like many aspects of ensuring food safety and quality, supplier compliance is not a “one and done” activity. Once supplier verification and management activities are in place, the real work begins with continuous monitoring. By ensuring your supply chain management activities are working to prevent risks, you’ll be able to promote better compliance and food safety within your facility.

Supply chains pose inherent risks for the food and beverage industry. While supply chain management has always been a complex endeavor, supplier compliance has become increasingly challenging in light of regulatory changes in recent years. Process manufacturers are reexamining their supplier management strategies (like The 6 Pillars to Effective Supplier Management) to ensure safety, quality, and compliance. This is especially true for companies governed by the Food Safety Modernization Act (FSMA).

Recognizing the supply chain has triggered many recalls, the FDA introduced the FSMA, signed into law in 2011. Since then, the FDA has released guidance documents to help facilities under FSMA navigate supply chain program requirements. Let’s break down some of the best practices for process manufacturers for maintaining a defensible and proactive approach against minimizing risks in the supply chain.

How Are You Currently Managing Your Supply Chain?

To understand how you may need to refine or strengthen vendor management activities, first analyze what your supply chain looks like now. We often view a supply chain as linear, when in reality it tends to resemble a web. While your facility may have visibility into its tier 1 suppliers, tier 2 and beyond are less clear. As visibility diminishes, it becomes more challenging to control risk factors.

The next step is to identify who is responsible for controlling risks. Although every company takes a different approach to supply chain management, they nevertheless share many similarities across the industry. For example, many facilities use audits to ensure suppliers have comprehensive food safety programs in place. While larger brands could perform second-party audits, most use third-party audits from sources such as GFSI schemes.

Facilities can also choose to implement certificates of analysis (COA) to confirm ingredients, products, or materials meet specifications. Typically, COA documents include actual results obtained from quality control testing and are usable upon receiving inspections. While these measures are generally dependable, it’s essential to review activities periodically to ensure they’re as effective as possible.

Another common practice process manufacturers use in supplier management is monitoring vendor behavior. Suppose a supplier becomes less responsive, sends materials barely within specifications, or repeatedly misses deadlines. In that case, reevaluate the relationship—it could be time to find a new approved vendor. Check out our tips for seamless food supplier management here.

Questions to Ask Regarding Current Supply Chain Practices

As you analyze your current supplier management practices, here are a few questions to consider:

  • Do we have a complete understanding of our supply chain risks?
  • Do we know who’s responsible for controlling risks in our supply chain?
  • Can we track all the information our facility receives, including COAs and third-party audits?
  • Who is in charge of the supply chain?

While the final question appears to be the simplest, it may, in fact, have the most complex answer. Who is “in charge” can involve multiple parties, including employees from research and development, procurement, product development, legal, and food safety professionals. But it’s crucial to answer these questions fully before identifying supply chain risks.

How to Identify Supply Chain Risks

Not all vendors present the same risks; however, it’s essential to consider supply chain risks in your risk assessment. David Acheson, President, and CEO of The Acheson Group, a global food, and beverage consulting company, explains that it doesn’t matter if you have five or five thousand suppliers—some ingredients will always be riskier than others. It’s essential to weigh these risks carefully to ensure you’re using resources most effectively. Of course, process manufacturers should dedicate resources to areas that present the most significant risks.

Typically, facilities can organize risk factors into three categories:

  • Ingredient Risk: the inherent risks posed by the ingredient itself, including a recurring history of recalls, country of origin, etc.
  • Supplier Risk: supplier behavior, including the degree to which they control risks
  • Your Use of the Ingredient: how you use the product (i.e., cooking minimizes risks)

Some additional points to think about are: 

  • Whether the ingredient constitutes only a trace amount of a single product or if it’s found within every product on the shelf
  • What resources are necessary to manage the risk
  • The potential for a recall
  • How to tailor your risk management approach to fit your company’s budget and allocation of additional resources.

How to Identify Ingredient Risks

The simplest way to gauge risk factors for ingredients is to develop a risk factor questionnaire. Does the ingredient originate from a high-risk area, or has it been found to contain contaminants in the past? You could also rank responses as low, medium, and high risk. Vendor management software can help you assign numerical values to ingredient risks and keep track of the information, so risk management practices are data-based.

How to Identify Supplier Risks

For suppliers, repeat the same process described above for identifying ingredient risks. Compile a questionnaire to gather information about onsite audit results, previous supplier behavior, and qualifications or certificates. Again, this allows you to implement data-driven measures to manage your supply chain risks.

How to Identify Risks Based on Usage

Lastly, generate a list of questions based on your use of ingredients. Include how many products it affects, the volume of products subject to potential contact, and whether it’s included in a product strongly linked to your brand identity.

Based on these findings, you can then compile a risk-based vendor management strategy tailored to the specific characteristics of your supply chain.

Refine Your Supplier Management Strategy

Once you have identified your risks, the next step is to refine your supply chain program. Of the major risks you outlined, who is responsible for control? It could be your supplier, your own company, or your customer. If the customer is responsible for risk control, the FDA will require a letter of assurance stating so under the FSMA Preventive Controls Rule.

At the most basic level, the Preventive Controls Rule for Human and Animal Food requires affected food and beverage manufacturers to assess supply chain risks and verify risks are being controlled. The FSMA Foreign Supplier Verification Program (FSVP) is similar in nature, but it shifts the burden of minimizing risks to importers. The FDA expects importers to assess risks in the supply chain and verify risks are being controlled.

A robust supply chain control program compliant with both the Preventive Controls Rule and FSVP would encompass the following steps:

  • Conduct a hazard analysis and evaluate risks following steps described in the previous section
  • Perform supplier verification activities to ensure vendors are mitigating any risks for which they are responsible
  • Use only approved suppliers, bearing in mind the FDA may request to see your list of approved suppliers and the criteria you use to select and approve them
  • Perform corrective actions any time a supplier fails, and document these actions thoroughly
  • Build your program and maintain records—detailed, organized recordkeeping is a critical component of every aspect of FSMA

Why You Should Collaborate with Suppliers

A supply chain is only as strong as the links holding it together. In this case, the communication between your company and its vendors represents your links. To collaborate seamlessly with suppliers, make sure your facility is actively tracking their performance, thoroughly vetting new suppliers, and communicating any updates or changes to vendors in a timely fashion. Likewise, you’ll also need to ensure your internal teams are aligned. When new products are in development, have all parties on board—including R&D, procurement, food safety management, and supply chain personnel—to proactively assess risks. Identifying major risks in advance may help your company rethink its approach towards introducing new products or working with different suppliers. After putting these measures into place, the final piece of the puzzle is utilizing a tool to streamline supply chain management. Leverage supply chain technology by integrating supplier management software.

What Is Supplier Management Software?

Supplier compliance is critical to reducing risk, ensuring quality, and meeting customer expectations, but the activities involved can be tedious and time-consuming. Supplier Management software takes the guesswork out of managing your suppliers. Put an end to back-and-forth emails about expiring certificates and other supplier details by implementing a software platform that creates a secure supplier management system that allows facilities to own and control their documents. Supplier management software also drives productivity by significantly reducing the number of resources consumed in tracking suppliers. And because supplier management software can issue notifications and generate reports in real-time, process manufacturers can actively minimize supplier risk and create the supply chain visibility they need to prevent disruptions and compliance issues.

What Does the Best Supplier Management Software Include?

So what are the supplier management software features you need to consider? 

Centralized online supplier systems reduce tedious tasks required by paper processes and complex spreadsheets while facilitating faster and more straightforward communication, collaboration, and adoption. Suppliers can log in and upload or update critical documents from anywhere and at any time. You’ll also have access to supply chain analytics and mobile compatibility, allowing your teams to verify supplier shipments, prevent the use of non-compliant ingredients, and compare performance data to identify your best and worst suppliers. Thus, you’ll have constant visibility into every aspect of your supply chain, helping you to make better decisions to support safety, profitability, and compliance for your brand.

Like many aspects of ensuring food safety and quality, supplier compliance is not a “one and done” activity. Once supplier verification and management activities are in place, the real work begins with continuous monitoring. By ensuring your supply chain management activities are working to prevent risks, you’ll be able to promote better compliance and food safety within your facility.

Topics: Supply Chain, Technology, supplier management