In 2016 the world was surprised by the passing of Brexit and Trump winning the US Presidential election. Looking to 2017 from a global trade perspective, these events make one prediction certain: trade barriers in the Western Hemisphere will not be lowered. To what extent there will be an increase in tariff and non-tariff barriers is unclear, but there is no time like the present to speculate a little.
An interesting year is ahead, and it’s being kicked off on January 1 with the 2017 Harmonized System (HS) Nomenclature overhaul per the latest World Customs Organization (WCO) directions. These changes to the HS Nomenclature will be one of the largest in recent years, with more than half of the changes impacting codes in the agricultural and chemical sectors. In total, there will be 233 sets of amendment revisions. These revisions are meant to address growing global concern around environmental and social issues as well as the importance of collecting HC trade statistics.
With customs professionals expressing a growing concern about their supply chain compliance/Global Trade Management (GTM) challenges, the recent political events in the UK and US have led to increasing uncertainty in the industry. Be prepared for an exciting 2017!
The average global rates have decreased over the years, yet the question is whether 2017 will buck that trend. Will the USA walk away from bilateral or multi-lateral Free Trade Agreements (FTAs), ban countries from General System of Preference (GSP), or increase duty rates for certain countries of origin to protect domestic manufacturing? Will Brexit have an effect on the UK – European Union (EU) duty rates? How will the UK re-create their own external tariff and will it be able to break off UK FTAs from the current EU FTAs? A step further, it is to be seen if any of these events will affect duty rates (initially) on a unilateral basis, if there will be repercussions, and whether a tit-for-tat culture will initiate a tariff war? It’s all not too likely. Negating FTAs is not easily done, and the UK will be cautious to create any economic upheaval that may negatively affect their status as a financial leader in the market.
However, the prospect of an increase in duty rates is realistic as a number of large economic forces will be closely reviewing their trade agreements and tariff structures. Who would have thought the General Agreement on Tariffs and Trade/World Trade Organisation (GATT/WTO) bound rates books would ever have to be dusted off to check possible rate increases would not violate these agreements?
Additionally, two other events could impact duties in 2017. It can be expected that the US will increase pressure on low cost manufacturing, which would lead to a significant number of new Anti-dumping duties/Countervailing Duties (ADD/CVD) cases as unilateral duty increases are possibly too obvious. Lastly, China’s growing debt may threaten current economic stability, but the association with duty rates will likely not be seen in 2017.
Most likely there will be additional paperwork required for goods to move between the UK and the EU, and equally likely there will be UK FTA specific documentation requirements once it is clear how the UK will rearrange its trade relationships with the current EU FTA partners.
On the artificial side of trade barriers, some token reactionary measures may be taken to hamper certain trade lanes (read: importing from China), but expect additional non-tariff barriers to be more in the security, trademark, and consumer marking areas, specifically security around additional compliance measures for dual-use goods (a global trend), a stricter enforcement of trademarked goods, and closer reviews of consumer marking where safety of products containing certain materials is concerned. For example, ‘simple’ accidents like smart phones catching fire will pave the way for more agencies ensuring all imported products are safe for handling.
Some 2017 predictions
And now the unofficial 2017 predictions:
One thing is for certain, 2017 will prove to be an interesting year in the Global Trade Management space.
The prediction business is a tricky business. It is a challenge to separate the signal from the noise when you are looking at the trends that are shaping the market. For me, this challenge is compounded by the rapid pace of innovation in both the core Customer Relationship Management (CRM) space and the adjacent technologies that influence the core.
If we quickly look back to 2016, the continued investments in mobility and social integration have created a wealth of new, rich data and opened the floodgates with regards to interaction channels that are available to customers. There has also been continued investment in analytics with a real focus on turning insights into actions. The evolution of these areas has created a springboard effect in the trends for 2017.
The first trend that I see shaping the CRM landscape in 2017 is personalization. Our workforce is continuing to evolve into an incredibly diverse, multi-generational, multi-cultural body. The way that people interact with CRM solutions varies wildly depending on background, experience, and expectations. The concept of “off the shelf” or “out of the box” has been fully obviated. The coming year will see a demand for CRM solutions to enable deep personalization across four key levels:
Effective personalization drives a sense of ownership at all levels, and that ownership translates to adoption, utilization and achievement of the true CRM value proposition.
The second trend that will dominate CRM in 2017 is simplification. CRM solutions have become part of a standard technology ecosystem over the past several years. Over time, the solution is modified, extended, and enhanced based upon the changes required by evolving business needs. However, these modifications tend to be additive in nature. The continual cycle of additive changes creates overly complex data models, confusing screens, and complicated processes. Organizations with CRM implementations that are over 3 years old should take the time to do a deep review of all aspects of their system with a focus on the following questions:
There are two very specific benefits that a simplification project will provide. First, simplification leads to higher adoption and lower costs of ownership. Simpler solutions are more approachable and easier to embed in a user’s day to day life. In addition, simpler solutions reduce overall training (and retraining) demands as well as reduction in overall user support costs.
Second, and perhaps more importantly, a simplification project paves the way to both predictive and prescriptive analytics. The effectiveness of machine learning and advanced analytics is fully predicated on the quality and consistency of the data that is provided to the algorithms. The adage of “garbage in, garbage out” is fully realized in the world of advanced analytics. Organizations that focus on simplicity will create cleaner, more focused data sets to teach the modeling algorithms, thus deriving better output. Over time, additional data can and should be added to the models, but it is best to start simpler.
The final trend in 2017 that bears some focus is delivering CRM though alternative user experiences. By now, mobility is a given. It is incredibly common to walk into any coffee shop in the world and see people on their smartphones, their tablets, or their laptops interacting with CRM solutions. The innovation that will come to the forefront in 2017 is leveraging voice and chat driven interactions with CRM tools. The recent evolution of natural language interaction in the consumer space through tools like Alexa, Siri, and OK, Google, has created an opportunity for users to interact with CRM solutions in the same manner. From simple use cases, like searching and retrieving information, to more sophisticated scenarios, such as dictating meeting notes or updating records, voice based interactions will change the way people interact with CRM technology.
Similarly, there has been rapid innovation in artificial conversational entities, more commonly known as ChatBots. These bots allow for deep interactions with CRM systems through non-traditional interfaces like Skype from Microsoft. Like voice based use cases, ChatBots enable both simple search and retrieval functions, as well as deeper navigational and data manipulation opportunities.
The value proposition for these alternative user experience models is that there is absolutely no learning curve for a user to be efficient and effective while interactive with a CRM system. The ability to frame questions and drive actions using speech or plain text prompts will drive significant reductions in total cost of ownership. Additionally, these new modes will decrease the informational time lag that is inherent in most CRM systems today. Access to real time user updates will allow organizations to react more quickly to opportunities and challenges in the market.
In conclusion, 2017 will be a transformative year for the CRM space. Advanced technologies like machine learning and natural language processing are opening the door for an explosion of new capabilities for the CRM market. However, organizations need to take the time to thoughtfully prepare for the adoption of these technologies. This year, companies need to take the time to re-think their overall CRM goals and drive simplification efforts through their solutions. Once the solution has been rationalized and simplified, the road forward to enable personalization and alternative user experiences will be much clearer.
As consumers continue to change the way they engage via social media, businesses must also adjust their approach to their customers. The use of private social networks like Everyme and Yammer, as well as messaging apps such as WhatsApp and Facebook Messenger, are on the rise. The messaging apps combined have almost 3 billion users, while the social networks count 2.3 billion users. Consumers are moving between private and social channels and engaging in multiple modes of communication. As a result, businesses are looking at how to engage within dark social, the social sharing that occurs outside web analytics. Chatbots are the future of interaction within these private channels.
Chatbots are a conversational artificial intelligence (AI) capable of interfacing with both humans and other technology. These programs go beyond interactive voice response (IVR) systems to give companies more flexibility in the way they answer customer questions and increase the percentage of questions they are equipped to handle. They will be able to quickly understand the contextual request or problem rather than forcing the customer through a series of selection menus to understand the problem. They are quick to access and available from desktop and mobile devices. Rather than force users to stop what they’re doing and open another application, chatbots allow companies to inject themselves into the places where people are already communicating.
As organizations look to enhance their relationships with customers, the ubiquitous Customer Relationship Management (CRM) system must evolve to meet the demands of both the customer and the CRM user. The software must move from an internally focused information warehouse to an externally driven engagement tool, designed to build relationships based on what is important to both customers and users.
Bots and Your Customers
Consumers are moving away from the browsers and apps to chat platforms for simplicity and convenience. Market research has found that 62% of people who downloaded messaging apps were still using them 12 months later, compared to just 11% of users of other apps, and daily sessions within messaging apps are almost five times greater than all other apps. Over 2.5 billion people have at least one messaging app installed, and that number is expected to reach 3.6 billion within a few years.
Gartner predicts that by 2019 requests for customer support through consumer mobile messaging apps will exceed requests for support through traditional social media. Since chatbots are not downloaded, they should provide a smooth experience for consumers. Rather than searching a website, consumers would engage the chatbot within their preferred messenger app. Content delivered via a chatbot would also be more relevant to the consumer. With social media integration, chatbots have a rich data source to understand user habits around when they check their device, what their interests are, and what event are scheduled, so bots can deliver updates, information, and recommendations that encourage engagement.
Chatbots could become the first interaction a consumer has with a business. For example, a customer utilizes a chatbot to check on their account balance and transfers funds from one account to another. In return, the bot might suggest that you set up an automatic transfer based on your past history of transferring similar amounts around the same time each month. The next interaction might be an inquiry about the current mortgage rates and the loan process. From there, the conversation thread would be transferred to a loan officer, to offer more in-depth information about credit qualifications and completing the loan application. At each step of the process, the conversation threads would be recorded in the CRM system, allowing greater insight into the customer.
Bots and Your Employees
Chatbots also have the potential to serve as a virtual personal assistant for the employee. A chatbot is a perfect tool to help develop the 360° view of the customer. Chatbots can be integrated into a company’s own enterprise chat application, connecting and gathering information from across company-wide applications like CRM systems, Support Ticket systems, or even ERP systems. Such an integrated bot will give you all you need with just a few typed commands. Chatbots have the potential to resolve the data leakage issue in CRM. Garbage In/Garbage Out, as it relates to data, becomes less significant due to automation and smart AI. Potential results include increased customer retention and more accurate revenue forecasts. Chatbots add to the mobile experience as well. The information exchange becomes easier and more productive if you can access data within one mobile app.
Continuing the banking example, a chatbot within the CRM would provide the loan officer with the number of applications currently in underwriting, along with the list of priority tasks for that day. Rather than launching the CRM software, the service representative could tell the chatbot to attach the conversation to the customer record, which saves time. As machine learning continues, bots will enable the user to take action directly by presenting pertinent workflow scripts. For example, when a quarterly update on a key customer relationship is required by the executive team, a bot can present the user with a link to launch a workflow enabling a quick, efficient update script. Such an engaging experience surpasses the current “login – search – retrieve – act” paradigm of today’s enterprise solutions.
Customers want organizations to react to their needs more quickly; to be able to maintain those speeds as the organization grows; to have someone engage with them when they need to connect with the organization; and to have experiences that are tailored to their needs. CRM users expect the same from their systems. While computing tools such as the AI chatbot can automate some job responsibilities, the technology won’t be a replacement for most employees as it isn’t equipped to handle complex tasks. People and smart machines work better together. Chatbots have the potential to allow an organization to increase revenue, streamline internal processes, and improve data exchange across departments.
Businesses are continuously looking for new strategies and supporting technologies to proactively respond to today’s digitally savvy, empowered customers. Customers know they have more choices when it comes to where they spend their money, and they are demanding a richer experience in return. Customer Relationship Management (CRM) systems are the hub of a company’s interactions with customers, as well as with CRM users. The end goal of any CRM is to provide a well-developed customer profile and derive actionable insight from available data. This goal must be achieved in the most efficient manner. As enterprise software continues to develop, the needs of the user must also be addressed and our business systems must elevate their game. Not only should intelligent process look for ways to improve customer experience, but user interfaces must adapt to improve productivity.
“How well do we know you?”
Intelligent CRM begins with data; however, users can no longer be expected to spend hours manually updating records. Integrating software across the enterprise provides the basis of a robust customer profile. Rudimentary demographic facts such as location, income level, education level, and marital status are combined with order history and service tickets to form the foundation. Big data gleaned from social media services, online activity, and information from customers with similar backgrounds provides a treasure trove of additional facts that can improve the customer experience. The Internet of Things (IoT) adds another layer of data. It is estimated that anywhere from 26 to 50 billion devices will be connected to the Internet by 2020. For example, information from sensor devices in a car can be collected by the insurance carrier, so that rates are based on actual driving habits.
Knowing the customers’ social media habits, as well as their demographics, provides deeper understanding into what that customer truly wants from their interaction with your organization. An engaged customer would share his experience with his social media network; a less satisfied customer would browse competitor sites. All of these mechanisms provide millions of data points to be compiled. The challenge is sifting through the noise and pulling together complementary notes to create a symphony. Based on the wealth of information available, Intelligent CRM should be able to segment a company’s client base, not only by the number of products purchased, but also by the number of positive reviews shared online. The system will be able to prioritize, categorize and route so that action can be taken on that insight.
As an organization learns more about its customers, the same methodology should be applied to the users of its CRM system. Rather than pulling a variety of daily and weekly reports to decide on the next action item, Intelligent CRM will push the relevant information to the appropriate user as it happens so actions can be taken to enhance the customer experience in a timely fashion. For example, knowing the teenager will graduating from high school soon should prompt the system to send information qualified expenses for the 529 plan and tips for avoiding potential penalties. If a high net-worth client calls the service center about withdrawal fees, the system would immediately alert the advisor to reach out to the customer. Noticing the customer has also recently searched realtor sites would prompt the advisor to recommend which account to tap for the down payment on that vacation home.
“How do we communicate with you?”
Intelligent CRM will also tailor the interaction for both the customer and the user. Part of a well-developed customer profile must include the preferred channels of communication. The system should be able to predict the best course of action, as well as the level of response required. In addition, the intelligent CRM system should respond in accordance with the time based expectations of the preferred channel. Customers expect faster, more immediate acknowledgement from the company when leveraging social channels. An anticipated service issue would warrant an email outlining the next suggested steps, while a potential grievance demands a phone call to determine the root cause and ways to remedy the situation.
User interactions should also be tailored. Future systems should not require logging into the enterprise system to address customer concerns. Alerts should be sent in real-time via the user’s method of delivery. The levels of notifications could also be preset, based on roles, service levels, and other factors. These subscriptions would provide targeted information to the right person at the right time, avoiding potential “alert fatigue.” Another valuable mechanism would be the ability to interface with the CRM system through those notifications. Shortcuts embedded in the alerts would enable the user to provide updates, add notes, or initiate workflows.
CRM software is about connections, cultivating the relationship between the customer and company. The goal is to manage the journey for both the customer and the user so that the company can deliver consistent experiences based on that accurate, real-time information. Intelligent CRM ultimately becomes a virtual assistant that supports daily activities, helps manage interactions, and drives revenue and growth.
Seven rules have been issued under the Food Safety Modernization Act (FSMA), and the compliance dates for the Preventive Controls for Human Food guideline has passed. FSMA requires that a written record be kept of the entire Hazard Analysis and Risk-based Preventive Controls (HARPC) plan. These records must be maintained for no less than two years, and evaluated whenever there is a significant change at the facility that might increase a known hazard or introduce a new one, or every three years if no significant changes occur.
Most companies have identified what needs to be done in order to comply, but for many the challenge of documenting those efforts remains. Typically there is no consistent format or approach for records maintenance, and too often key information on the same topic or issue is different at different locations. Information should be easily accessible and usable across the organization to identify trends and to remind to follow up on corrective actions and/or audits.
Three key points are the focus for FSMA documentation: the supplier, the facility, and the shipper.
Know who you’re buying from
For most food manufacturers, in-depth knowledge of suppliers is crucial to ensure the quality of the product; now it is also a critical step of your HARPC plan. You must document not only the hazard your supplier is responsible for controlling, but also the action they have taken to prevent or control that issue. For example, an ice cream company would want to ensure that the peanut butter entering their facility is not contaminated with salmonella. Working with certified suppliers would provide assurance that the ingredients meet quality and safety standards. Certificates of analysis from the supplier offer one form of documentation that the product is within limits; in-house testing prior to use would verify those findings. Annual audits would also be necessary to evaluate the supplier’s effectiveness in controlling the hazard.
“Trust, but verify” is the mantra for this stage of documentation. A thorough, written program that details your verification process is necessary to meet FSMA requirements. There is still time to ensure compliance; the supplier verification requirements take effect March 2017. A fully integrated Enterprise Resource Planning (ERP) system would track supplier audits and link the documentation to supplier records. Proactive controls within an alert management system would prevent ingredients from advancing to the manufacturing floor until acceptable test results had been received. When you are fully aware of your suppliers and their capabilities, you can better execute when there is a quality or safety issue.
Many businesses already have preventive controls programs in place; however the challenge now becomes validating and documenting those processes and procedures. Some businesses may have been following Hazard Analysis and Critical Control Points (HACCP) guidelines, but may not have adequate documentation to prove it. Companies with GFSI certifications tend to have more complete documentation, but the format can vary from sophisticated technology to manual logs. Continuing with our example of the ice cream company, sanitation records would be necessary to prove the processing environment would not allow listeria to contaminate the finished product. Listeria is found is soil and water, and can be introduced into a manufacturing facility a number of ways. Floor drains are common sites of contamination as they can be neglected by cleaning staff. Once introduced into a cold environment, it can be difficult to contain, partly because the bacteria grows well at refrigerator temperatures, as low as 40°F. A thorough cleaning and sanitation program is required to keep listeria out of the processing environment. Tests should be run on the finished product to ensure there has been no microbial contamination. A shipping hold would prevent the product from being distributed prior to receipt of clean test results. Shipping documentation must be maintained that would reflect such a hold.
“If it’s not documented, it didn’t happen” is the call to action at this phase. A written analysis of both the identifications of the hazards and the controls to prevent or minimize the issue is required. Verification steps must also be designed and implemented to ensure the HARPC plans are operating correctly. A manufacturing execution system (MES) can record quality assurance tests, as well as cleaning and maintenance protocols, while the alert management system can warn when control checks have not occurred or when conditions are out of tolerance so that immediate action can be taken. A detailed record of the full scope of the plan, including the process, the proof, and the problem, must be kept.
Know who you’re shipping with
The third area of documentation is for shipment of the finished product. The Sanitary Transportation of Human and Animal Food rule requires that entities engaged in the shipping of food and food ingredients ensure that contamination and adulteration are avoided en route. In order to ensure the quality of the product, the ice cream company in our example would want to verify that temperatures are maintained throughout shipment. In addition, a properly maintained transport is necessary to prevent cross-contamination.
“Ignorance is not bliss” resonates for this point. Many food manufacturers already follow most of the requirements of the Sanitary Transportation rule; the focus going forward will be on documentation, training, and validation systems. As with supplier verification, it is your responsibility to document that you provided the shipper with detailed specifications for transport, such as temperature and cross-contamination controls. All written procedures, agreements, and training programs must be maintained for a year after use. While the compliance date for this rule is April 2017, these preventive controls should be put in place as soon as possible.
FSMA states that documentation must be accurate, detailed, and legible; it must be created at the same time as the activity being recorded; and it must be provided within 24 hours of the request for review. An integrated ERP system serving as a single source of truth for the company satisfies all of these provisions, gathering documentation from an MES and an alert management solution. A robust ERP will give a food manufacturer visibility and management of materials, quality, scheduling, and inventory management in order to track specific orders. At each step in the process, if a food safety risk is uncovered, immediate action must be taken to recall the affected product. The traceability feature of ERP allows the company to track a single ingredient or lot of finished product back to the supplier, through the inbound carrier, and forward to the outbound carrier and ultimately the distributor.
The FDA has stated their philosophy is to “educate before and while they regulate.” In keeping with this mindset, expect continuous improvement as these regulations continue to evolve. Implementing FSMA documentation provides an opportunity to encourage greater collaboration, instill a broader business perspective, and build stronger relationships that improve productivity and ensure food safety.
Human beings have been keeping on eye on their food supply since the dawn of time. Livestock has been identified in some form and monitored for centuries, particularly during outbreaks of disease. Ancient Romans had provisions to protect citizens from adulterated food. Early colonial America implemented inspection laws for the export of food to Europe. Only in the last fifty years or so have food companies more routinely relied on product identification codes and electronic systems. Regulations such as the 2001 Bioterrorism Act and the 2011 Food Safety Modernization Act have made traceability a critical factor for food companies to consider.
For most manufacturers, the number one reason to implement track and trace technology is to manage recalls. This capability can be also be used to improve other aspects of an organization, such as inventory management and quality assurance. This wider application can lead to improved efficiencies, reduced costs, and increased customer satisfaction.
Tracking the Source
Globalization has created gaps in safety in the food supply chain. The US imports approximately 19% of its food supply- 80% of seafood, 50% of fruits, and 20% of vegetables. The top three countries are Canada, Mexico, and China. Safety regulations vary by country, as do agricultural practices. Quality should be at the forefront of all supply chain initiatives for risk management and business continuity planning.
Solutions can include built-in controls to provide manufacturers with visibility into qualified suppliers and the ability to specify incoming inspection requirements. If a tolerance issue or contaminant is identified, track and trace technology can notify the manufacturer in real-time to begin addressing the problem and avert the deficient product from the leaving the production floor. If the same product is returned multiple times, a root cause analysis of track and trace data might reveal a quality issue with a specific ingredient or supplier.
Tracking In House
Food manufacturers yield an average of 84% of raw material. Even a small increase in yield improves profitability. Managing growth and keeping costs under control are high priorities for any organization, and visibility into manufacturing operations is crucial.
Track and trace technology can be used to improve inventory management. Knowing when an ingredient arrived, and what its shelf life is, allows a manufacturer to optimize use of its materials. For example, establishing protocols with a first-expired/first-out (FEFO) rotation ensures that stock is used in order, rather than being left to languish on the shelf. Lot controls can also dictate distribution order to that product with an approaching expiration date is shipped ahead of the next batch. Better use of inventory can lead to improved demand forecasting and planning, thus allowing for more strategic operational decisions.
Tracking the Distribution
Increased scrutiny and improved testing methods have led to more product recalls. In fact, contamination recalls have increased 167% from the first quarter of 2016 to the second. General Mills recalled 45 million pounds of flour after it was linked to an E. coli outbreak going back to December 2015. The flour was distributed to consumers, as well as other producers. Betty Crocker instituted a recall of its cake mixes and Krusteaz pulled its blueberry pancake mix, due to receipt of recalled flour. These secondary recalls are a direct result of traceability. By knowing the ingredients that went into the product, these manufacturers were able to take action quickly.
Regulatory bodies are not the only ones demanding that manufacturers be able to track a product forward and backward in production. Many retailers are requiring their suppliers conduct mock recalls to demonstrate their ability to track an ingredient’s path through the manufacturing process. Identification is considered the most important step in increasing the effectiveness of a recall. An industry survey found that 78% of companies can locate lot information within eight hours. An integrated ERP system with full backward and forward lot trace/recall capability has the potential to reduce that time to minutes. The sooner an issue is identified the sooner steps can be taken to resolve it.
According to 2016 International Food Information Council (IFIC) Foundation Food & Health Survey, 66% of respondents were confident in the safety of the US food supply, down 12% from the previous year. Traceability can allow a manufacturer to greatly improve agility and decision-making, thus ensuring product safety, securing customer and consumer trust, and meeting industry and government regulatory requirements.
An estimated 15 million Americans suffer from food allergies, and the numbers are growing. Reactions can range from mild responses, such as a rash or an upset stomach, to severe symptoms including trouble breathing, chest pain, and loss of consciousness. While more than 160 foods have been described as causing allergies, the Food and Drug Administration (FDA) has identified eight that must be declared at least once on the food label. These major allergens - milk, eggs, fish, shellfish, tree nuts, peanuts, wheat, soy - account for 90% of allergic reactions, and are the food sources from which many other ingredients are derived.
Undeclared allergens have been the leading cause of recall since 2011, accounting for 45% of all FDA recalls in 2015, exceeding the total number of recalls for all previous years. In the two months prior to the release of this article, the FDA reported 20 recalls for undeclared allergens. In years past, the FDA had urged manufacturers to avoid unidentified allergens; now the industry is required avoid them as part of the Preventive Controls provisions of the Food Safety Modernization Act (FSMA). The implementation of an integrated ERP system can help a company meet these requirements.
What Went Into It?
Manufacturers need to have control over their recipes and formulas to ensure consistency and quality. In the case of allergens, recipe management is essential. When a new product is formulated, ingredients are tracked within the system. At this point, the presence of allergens is easily captured. But what if an ingredient is not in stock? A substitute is used, and the recipe needs to be modified. For example, if a recipe calls for milk, soy milk is acceptable replacement, but soy is another allergen. An ERP system would detect the conflict and prevent that change from going into production. An alert would bring the error to the attention of the appropriate individual.
What Came In Contact With It?
Another potential source of undeclared allergens involves cross-contact. Cross-contact occurs when an allergen is inadvertently transferred from a food containing an allergen to a food that does not contain the allergen. Ideally, products containing allergens would be processed on separate equipment. If that option is not available, scheduling becomes critical. A hierarchal structure can be programmed into the ERP system so that jobs run from the lowest to the highest of allergens. In a bakery, sugar cookies would be the first product down the line, then peanut butter cookies. Sanitation would occur before the next batch ran on that line, to prevent possible peanut residue from coming into contact with the next batch of cookies.
Where Did It Go?
Traceability has become the guiding principal for almost all food safety regulations. A company must be able to track material along every step of production. Lot traceability allows manufacturers to determine not only where exact ingredients originated within a given batch, but also where that batch went. Version control features provide a historical view of the recipe used to produce each finished good lot so that a complete audit trail is available, back to the original ingredient lots used at a specific date and time. In the event of a recall, time is of the essence. If a supplier realized a shipment of spice mix contained peanuts, the ERP system would be able to answer specific questions such as where the ingredient was used, how much was used, when it was used, and where the finished product went. A targeted recall is more effective than a widespread one, and less damaging to the brand and the bottom line.
When it comes to allergens, ignorance is not bliss. Allergic reactions to food result in more than 300,000 outpatient visits per year among children under 18. Strict avoidance of allergens is important to prevent serious health consequences. Use of an ERP system to manage recipes, establish production schedules, and execute precise recalls can help a company comply with FSMA regulations and protect vulnerable consumers.
The Food Safety Modernization Act (FSMA) requires manufacturers and processors to evaluate and identify food safety hazards, implement preventive controls, and document those measures. Many companies see these regulations as a means of raising the bar for the food and beverage industry. It could be argued that standards are long overdue. Consumer confidence in food manufacturers is low. According to the 2016 Food and Health Survey conducted by the International Food Information Council (IFIC) Foundation, only 10% of respondents view manufacturers as trusted source for food safety.
More educated consumers combined with tougher industry standards are creating an environment where food manufacturers need to take additional steps to ensure their processes can meet these expectations. An ERP system specifically designed for food manufacturers will benefit a company as they comply with FSMA regulations regarding preventive controls, traceability, and documentation. Forward-thinking businesses are going even further, by exploiting the full capabilities of the system in order to improve efficiencies, reduce costs, increase margins, and increase customer service levels.
The Best Defense is a Good Offense
Prevention is the cornerstone of FSMA and is an important issue to consumers. Up to 15 million Americans have food allergies, and reactions can vary from a mild response, such as a rash, to anaphylaxis, which can be fatal. Undeclared allergens are the leading cause of recall. There were over 600 recalls in the United States and Canada in 2015, and a third of those were due to the same allergens: milk/dairy, peanuts, eggs, and wheat/gluten.
Food safety standards recognized by Global Food Safety Initiative (GFSI) are a good defense against potential recalls. When these certifications are complemented by intelligent technology, the protective net around the company tightens. For example, an ERP system with Allergen Control can prevent the creation of recipes containing allergens that are not allowed in the product being produced, as well as control material issues preventing ingredients to be added that are not declared on the label. In addition, using sequencing rules to manage when products with allergens are produced can help reduce any chance for cross contamination. As an additional benefit, improved sequencing using the planning and scheduling tools in ERP can also help reduce changeover times between jobs, thereby increasing utilization resulting in additional production capacity. Software can also capture and analyze data to identify where bottlenecks occur and allow managers to assess and correct such situations. What started as compliance with preventive controls became a more efficient production line, which can lead to greater revenue for the organization.
An Ounce of Prevention is Worth a Pound of Cure
The industry average cost of recalls is $10 million in direct costs, as well as brand damage and lost sales. Actual total loss data is seldom available, and the scope of the damage can be dependent on how well media attention and public perception is managed. Financial analysts estimate that Chipotle will have lost approximately three years of earnings between fiscal years 2014 and 2017, due to outbreaks of E. coli and norovirus. Additionally, they expect to spend about $50 million in food safety measures and marketing campaigns to regain consumer trust.
Hazard Analysis and Critical Control Point (HACCP) plans are the starting point in identifying vulnerabilities. By implementing a comprehensive track-and-trace solution, a company has the ability to conduct an efficient, targeted recall that minimizes potential harm to consumers and negative impact to manufacturers, distributers, and retailers. Using real-time data, problems can be quickly identified and drilled down to the exact culprit within the supply chain, thus avoiding mass recalls. Mock recalls utilizing a robust traceability system reduces the timeframe to execute a recall from days to minutes. Fewer recalls improve bottom line performance; recovery expenses are avoided, the company brand is protected, and supplier relationships are preserved.
Don’t Get Lost in Translation
FSMA regulations require much more stringent data management procedures; there are guidelines as to what data must be recorded, how to record it, when it must be recorded, and which employee recorded it. Standalone applications and homegrown measures can be time-consuming as information is keyed into multiple systems, and the probability of inaccurate information increases due to errors in reentering data. Comprehensive reporting also becomes difficult as information has to be pulled from various systems and compiled in another.
A fully integrated ERP system provides a single source of truth. It should be powerful enough to capture detailed data and flexible enough to produce reports suitable for an auditor. Errors decrease and quality increases when employees have access to documented processes. Business intelligence and analytic solutions present Key Performance Indicators (KPIs) that make it easier to identify situations that require attention. Drill-down capabilities enable users to identify trends and conduct root cause analysis. Real-time information is available to support manufacturing and distribution activities. Managers can focus on strategic planning rather than time-consuming administrative tasks.
FSMA will have some kind of impact on almost every food manufacturer. While compliance is mandated, there can be additional benefits for those organizations that choose to go beyond the minimum standards. A comprehensive ERP system allows a manufacturer more in-depth information about their operation. Such a view allows for improved inventory management as resources are better utilized; increased customer service levels as more accurate electronic records are used in forecasting and planning; and increased efficiencies as workflows are simplified and the possibility of human error is minimized. The end result is a more productive, more profitable organization that has earned the trust of its customers and the confidence of consumers.
In a recent interview, famed fantasy writer George R.R. Martin discussed how flags were a large part of developing such a creative mind at such an early age. Martin tells the story of growing up in New Jersey overlooking Manhattan and watching ships sail in and out of the harbor from all across the globe. He would look at the flags flying high atop these ships and craft stories about the peoples and lands from where they came. The author marveled at how something as simple as flags can convey so much information and create such a level of curiosity.
In our post today, we will draw comparisons between flags and a means of succinctly conveying information in our businesses today. What does a flag really do? What is its purpose? I would argue that flags are used to communicate information about nations and organizations in as simple a way as possible while remaining easily identifiable. Flags primarily use colors and shapes and, at their very best, are immediately recognizable. Take the flags of the USA, UK or Germany as examples. These would likely be recognized by the majority of the world’s population, and all done with just the use of colors and shapes.
So what does this have to do with us as we are busy running our businesses? Isn’t there something that you use daily, or perhaps many times throughout the day that is essential to communicating information in its simplest form? How about Dashboards? Are you getting the most out of yours?
Dashboards exist to provide an organization with a means of conveying data to their audience. But what are the elements of really effective ones? Let’s consider these four essential elements as we consider how to make best use of this tool to better improve our operational performance. Dashboards should be:
A good dashboard should be aligned to your organizational goals. Think of what is on your dashboard as prime real estate. Only the essential information should be included here so you don’t risk anyone tuning out due to a busy screen that they have to parse through to understand. This is your means of conveying key metrics that you want to communicate to your teams, so keep it simple and direct. This will also provide you with a means of aligning your team to your objectives as everybody will be looking at the same things and clearly understand what is important to their organization.
Dashboards should also be visual in nature. Consider the saying, “a picture is worth a thousand words”. You want the viewer to immediately understand what is being represented and equipped to take action without having to ponder about the content on the screen. Try to use as many charts and graphs as possible and make sure to use colors to identify important elements of the data. The key here is to make certain the information is understood clearly and immediately.
Another important element of an effective dashboard is that it is highly accessible. You want your team members to always be able to gauge how they are performing without having to seek out the information. By distributing this data effectively, it reinforces that everyone is on the same page. This allows for real time adjustments and a visual means of seeing the effect(s) of teams working together to set and achieve their goals.
The information you are distributing on your dashboards should be relevant. It should be refreshed frequently or be precisely the data that you want to communicate to drive action (last shift, last product run, last week, last month, last quarter, etc.) Be mindful to continuously review what you are distributing with your dashboards to ensure it is exactly what you want to communicate, or you run the risk of losing employee engagement.
I hope you like my idea of dashboards being flag for your organization. Everyone should immediately understand what it is being communicated and operate as a team under one banner. I strongly believe in their ability to drive excellence in your organizations if utilized effectively.
If you would like to discuss how to improve your dashboard, please reach out to me or your account executive to discuss how Aptean can work with you to make your dashboard a key element in delivering results for your organization.
The recent $100 million Consumer Financial Protection Bureau (CFPB) fine levied on a leading financial institution in the US marks the largest penalty imposed by the CFPB to date and makes the case for implementing a complaints management solution. With potentially millions of customers affected by the systemic fraud from the company’s employees over a five year period of time, it makes sense that some of these customers complained to this financial institution at some point before contacting the CFPB to help them find resolution. The CFPB assists thousands of consumers each week with complaints related to financial products and services like mortgages and credit cards, serving as an intermediary between the consumer and the financial institution. All of those complaints are aggregated and published in the CFPB Consumer Complaint Database after 15 days, whether the company responds or not.
For a bank or credit union, having complaints made public can be embarrassing and may affect current and future customers with a negative brand perception in the market. As companies increasingly compete on their positive customer experience, a process for handling complaints efficiently, and in a timely manner, is a way to distinguish themselves from their competition. Completely missing a trend or pattern of related customer complaints, as evident in the recent fraud case, takes the negative impact of reputational damage to exponential levels.
However, there are some best practices companies can follow to ensure they are protecting their customer relationships by providing timely responses to customer feedback. First, close the loop on customer feedback by automating your complaints process and funneling complaints from all channels to a single system. Complaints can come from a variety of sources -- social media, phone calls, email, or even in person -- and each of these sources should be captured in one place for coordinating responses. The ability to analyze incoming complaints information is critical to determine where action is needed to improve your company’s customer experience. The ability to aggregate data and overlay analytics leads to quickly identifying the root causes of positive or negative experiences, and spotting the hidden trends that could be used to improve customer experiences.
The key takeaway for professionals responsible for handling customer complaints is to understand that while keeping customers happy can often be challenging, the feedback they provide is a treasure trove of information that can help improve their customer experience, protect their company’s reputation, and potentially be the indicator for underlining problem areas in their business. Utilizing the right tool puts that valuable information in their hands, and the ability to use it to transform customer complaints into positive differentiators in their market.
To learn more about how Respond can help with CFPB compliance, click here.