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THE ECONOMIC IMPACT FOR MANUFACTURING SITES OPERATING TO BRCGS CERTIFICATION
AUTHORS:
Dr. Ray Lambert Independent Consultant and Associate Research Fellow, Department of Management, Birkbeck, University of London [email protected]
Dr Marion FrenzReader in ManagementDepartment of Management, Birkbeck, University of London [email protected]
DATE: October 2021 © Frenz Lambert 2021
© Frenz Lambert 2021
CONTENTS1 Executive Summary 22 Introduction 63 Scope of paper 74 Demand side based on ‘brands interviews’ 8
4.1Benefitsofstandards:thevaluetobrandsofthird-partystandards 84.2Limitationsofthird-partystandards 84.3.Dobrandsonlyacceptcertifiedsuppliers? 84.4ArethereparticularadvantagesanddisadvantagesofworkingwithBRCGSstandards? 94.5Impactofthird-partystandardsondirectauditing 94.6Impactofthird-partystandardsonFBOcompetitiveness 94.7Standardsconvergenceandthefutureofthird-partystandards 9
5LiteratureReview 105.1Internationaltrade 105.2Productrecalls 105.3Microlevel–surveys 10
5.3.1Objectiveandmotivationsforcertification 115.3.2Challengesandcostsofcertificationtofoodsafetystandards 115.3.3Outcomesofcertificationtofoodsafetystandards 125.3.4 Derived indicators 13
6Empiricalresearch 166.1Motivationsandobjectivesforcertification 166.2Impactsofcertificationonbusinessoperations 18
6.2.1 Modernisation 186.2.2Efficiencyandinvestment 246.2.3Operations 19
6.3 Impact on business performance 206.3.1Competitiveness 206.3.2Growthinsalesinhomemarketsandabroad 216.3.3Internationaltrade 226.3.4Othercommercialeffects 226.3.5Profitability 236.3.6Certificationtootherstandards 24
6.4Responsesbysub-group 256.4.1Region 25
6.4.2 Size 256.4.3Lengthofcertification 25
6.5Respondentcomments 256.6Storylinesandatypologyofcertificationuse 26
6.6.1Factoranalysis 266.6.2Regression 276.6.3Clusters 27
30313351
7ConclusionsBibliographyAnnex 1. Basic statistics Annex2.Factor,regressionandclusteranalyses
© Frenz Lambert 2021
LIST OF FIGURES
Figure1:Theneedtoprovidesafefoodasamotivationforcertification 16Figure2:Theneedtomeetexistingcustomerrequirementsasamotivationforcertification 17Figure3:Theneedtomeetpotentialcustomerrequirementsasamotivationforcertification 17Figure4:Theneedtoincreasecompetitivenessinthedomesticmarketasamotivationforcertification 17Figure5:Theneedtoimprovecompetitivenessinexportmarketsasamotivationforcertification 17Figure6:Theneedtorespondtocompetitor’scertificationasamotivationforcertification 17Figure7:Businessmodernisation 18Figure8:Efficiencyandinvestment 19Figure9:Operations:training,productqualityandrecalls 20Figure10:Competitiveness 21Figure11:Growthinhomemarketsandabroad 22Figure12:Othercommercialeffects 23Figure13:TheimpactonbusinessperformanceofBRCGScertificationcomparedtoothercertificationstandards 24
LIST OF TABLES
Table1:Objectivesandmotivationforcertificationtofoodsafetystandards 11Table2:Challengesandcostsofcertificationtofoodsafetystandards 12Table3:Outcomesofcertificationtofoodsafetystandards 13Table4:GroupingsofFBOsbytypeofcertificationuse(strategicorientation) 27Table5:GroupsofFBOsbysize 28Table6:GroupsofFBOsbylocation 28Table7:GroupsofFBOsbycertificatetype 29Table8:FBOgroupsandchangeinsalesandprofits 29
2© Frenz Lambert 2021
1 EXECUTIVE SUMMARY1.1 PURPOSE OF PAPERThereisacommonviewthattherearebenefitstoFoodBusinessOperators(FBOs)thatarecertificatedaswellasbrandsorretailersthatspecifythemwithintheirsupplychains.Whilethesebenefitsarewellpublicised,priortothisstudy,therehasbeenalackofhardevidenceontheeconomicandoperationalbenefitstoeithercertificatedFBOsorinthewidersupplychain.
ThisresearchseekstoredressthislackofevidencebyusinginternalandexternaldatasetstoidentifythevalueofcertificationforcertifiedFBOs,thewidersupplychain,andonsaferfoodforconsumers.ThispaperwillalsoexplorewhethercertificationtoBRCGSprogrammesprovidesadditionalvalueoverotherstandardsintermsoffoodsafety,top-linegrowth,profitability,modernisationandoperationalefficiency.
Thishasbeencarriedoutthroughdemand-sideinterviewswithlargeBrands,areviewofextantliteratureoncertificationandfoodsafetystandards,anddatafromaround450responsestoasurveyofFoodBusinessOperators(FBOs).
1.2 SUMMARY OF MAIN OUTCOMESTheempiricalevidenceindicatesthatcertificationtoBRCGSstandardsgeneratesextensiveandpositivebusinessimpactsforsuppliers,onascalegreaterthanmighthavebeenexpectedinthelightofpreviousresearch.Thisismorenotableasthestandardshaveprimarilybeendevelopedtoensuretheproductionanddistributionofsafefood,andnotwiththeobjectivesofbusinessgrowth,profitability,operationalefficiencyandinnovation.
Thefindingscanbecategorisedunderi)motivations/objectivesforcertification;(ii)thebusinessactionstakentoachievecertificationand(iii)themajorimpactsonfirmperformanceofcertificationandtheassociatedbusinessactions.
Motivations and objectives for BRCGS certification
• Inlinewithpreviousstudies,ensuringtheproductionofsafefoodisakeydriverforseekingcertificationwith80%of respondentscitingthisasaprimarymotive.
• 85%ofrespondentsstatedthatmeetingtheneedsofexistingcustomersisamajorfactor.Thisisasimilaraimto meetingtherequirementsofpotentialcustomers.
• Enhancingcompetitivenessalsoemergesasakeydriverwith50%seekingdomesticgrowth,and61%growthin overseasmarkets.
• Respondingtocompetitorcertificationisseenasanimportantfactorwith40%ratingitashighlyimportant.
The empirical evidence indicates that certification to BRCGS standards generates extensive and positive business impacts for suppliers.
3 © Frenz Lambert 2021
100%
90%
80%
70%
60%
50%
40%
30%20%
10%
0%SUPPLY SAFE
PRODUCTSCURRENT
CUSTOMERSPOTENTIAL
CUSTOMERSDOMESTIC
COMPETITIVENESSEXPORT
COMPETITIVENESSCOMPETITOR
CERTIFIED
AGREE
NEUTRAL
DISAGREE
Impacts of BRCGS certification on business operations
• AkeyfindingoftheresearchhasshownthatBRCGSstandards,whichdonotinthemselvesincludeinnovationasa purpose,actasadeterminantofbroad-basedinnovation.Thisincludesproductinnovation,operationalefficiencyand business expansion.
• InordertoobtaincompliancewithBRCGScertification,manybusinessesreportedthattheyhadundertakenchanges inbusinesspracticesorproductionresources.Thismodernisationincludesimprovingthestockofphysicalcapital throughneworupgradedplantandequipment,whichwascitedby50%ofrespondents,27%hadupdatedtheiri informationtechnology,and28%hadupdatedproductdevelopmentprocesses.Theseimprovementssupport thegoalsoffoodsafetyaswellasproductivityandcompetitiveness.
• ThedatashowsthatBRCGScertificationhasbeenaspurtoinvestmentandmanagementchanges.70%of respondentsstatedthatchangesinproductionmethodshadledtoefficienciesandgreaterproductivity.50%have investedinnewtechnologyinordertoenablesafeandhighqualityfood.While30%statedthatcertificationhasledto product innovation.
• OperationalimprovementshavebeenachievedthroughobtainingBRCGScertification,with63%reportingproduction improvements.Thisisevidencedthrougha40%reductioninfoodrecallssinceachievingcertification.
70% of respondents stated that changes in production methods
had led to efficiencies and greater productivity.
4© Frenz Lambert 2021
Competitiveness in domestic and export markets
• BRCGScertificationisassociatedwithexpandedmarketopportunitiesandachievedgrowth,inhomeandexport markets(55%).IthelpsdrivecompetitivenessforlargesharesofFBOs,especiallyinexportmarkets(60%).
• Overonethirdofrespondentsquantifiedtheirsalesgrowth,averagingaround7.5%(forthereportinggroup).
• Aroundonethirdreportincreasesinprofitabilityresultingfromcertificationandtheassociatedinvestmentsand adaptations,averagingaround6%(forthereportinggroup).
• AsmallproportionofFBOsreportedreducedcosts(17%)attributedtocertification,howevernearlyhalfofrespondents findthatcertificationleadstofewercustomeraudits.
100%
90%
80%
70%
60%
50%
40%
30%20%
10%
0%UPDATE
PHYSICAL CAPITAL
IT INVESTMENT
CHANGE PRODUCT
DEVELOPMENT PROCESS
IMPROVED ORGANISA-
TION OF PRODUCTION
INVESTMENTIN NEW
TECHNOLOGY
INCREASE IN PRODUCT INNOVATION
AGREE
NEUTRAL
DISAGREE
INVESTMENT IN HUMAN CAPITAL
IMPROVEMENTS IN PRODUCT
QUALITY
FEWER RECALLS
100%
90%
80%
70%
60%
50%
40%
30%20%
10%
0%INCREASED
COMPETITIVENESS IN HOME MARKET
INCREASED COMPETITIVENESS IN
EXPORT MARKETS
REDUCTION IN COSTS
INCREASED PROFITABILITY
FEWER AUDITS BY CUSTOMERS
AGREE
NEUTRAL
DISAGREE
5 © Frenz Lambert 2021
A comparison between BRCGS and other standards
ManyrespondentsarecertifiedtootherGFSIandnon-GFSIstandardsandwereableprovideinformationabouttheimpactontheirbusinessofthesestandards.
• Around35%ofrespondentswithcertificatestostandardsinadditiontoBRCGSreportedanincreaseinsalesto existingcustomersfollowingfromcertification.Thisresultissimilarto,butsomewhatlowerthan,forBRCGS certification.
• 55%ofrespondentsexperiencedincreasedsaleshavinggainedcertificationtoBRCGS.Only44%ofrespondentswith othercertificationstandardsreportedincreasedsales.
• 26%ofrespondentsagreedthatsalesintheirhomemarkethadincreased,comparedto30%ofBRCGScertificated respondents.
• 46%ofrespondentswithBRCGScertificationreportedincreasedsalesinexportmarkets,comparedwith42%for othercertificationstandards.
• SimilarlytotheshareofBRCGScertifiedfirms,around28%ofrespondentsagreedthatprofitabilityhadincreased.
• Over40%ofrespondentsagreedthattherearefewercustomerauditsaftercertificationtoanotherthird-partystandard. Thiscompareswith48%withBRCGScertification.
60%
50%
40%
30%
20%
10%
0%SALES TO EXISTING
CUSTOMERS FOLLOWING
CERTIFICATION
SALES TO NEW CUSTOMERS FOLLOWING
CERTIFICATION
SALES INCREASE IN DOMESTIC
MARKET FOLLOWING CERTIFICATION
SALES INCREASE IN EXPORT MARKETS
FOLLOWING CERTIFICATION
INCREASE IN PROFITABILITY
FOLLOWING CERTIFICATION
FEWER CUSTOMER AUDITS FOLLOWING
CERTIFICATION
BRCGS
OTHER
55% of respondents experienced increased
sales having gained certification to BRCGS.
6© Frenz Lambert 2021
2 INTRODUCTIONFoodsafetystandardshavebeendevelopedoverthelast20yearstoprovideasystemofassurancethatfoodfromanysourceissafe.Partlyaresponsetosomehigh-profilefoodscares,butalsotheglobalisationoffoodsourcing.Theyprovideanexternallyvalidatedframeworkforassessingthesafetyandqualityoffoodproductionanddistribution.
Thewell-publicisedincidentsofcontaminatedorotherwiseunsafefoodsfindingtheirwaytoconsumerstriggeredlegislationbymanygovernmentsandtheconsequentestablishmentofregulationsthatseektoensurefoodsafety.Theseframeworksofoversightofnationalandinternationalfoodchainshaveimpelledmajorfoodbrands,retailersandthequick-servicerestaurantindustry(collectivelyreferredtohereinafteras“brands”)toundertakefoodsafetyauditsoftheirsuppliers.Sincemostfoodmanufacturersselltonumerouscustomers,whilebrandshavemultiplesuppliers,thisminimisesriskofinterruptiontothesupplychain.
Directauditingbybrandsofsupplierqualityandsafetycanbecostlyforallparties.Anothermotivation,thereforeforthedevelopmentofprivatethird-partystandardswassomerationalisationofthenumberofauditsbythemajorcustomersofFBOs.Severaloftheleadingstandardshavebeendevelopedundertheleadershipofconsortiaofmajorretailers–BRCGS1intheUK,IFS2inFrance,ItalyandGermany,andSQF3intheUS.AfurtherstagehasbeentheformationoftheGlobalFoodSafetyInitiative4(GFSI)toprovidebenchmarkingoftheoperatingcriteriaforprivatestandards.TheInternationalStandardsOrganisation5(ISO)hasalsopublishedafoodsafetystandard(ISO220006)buildingonthegeneralmanagementstandardISO9001.Thiswasintendedtoofferanalternativetomultipleauditsofsuppliersbybrands.TheISOstandardonitsownisnotcompliantwithGFSIcriteriasinceitlackspre-requisiteprogrammes(whicharecoveredbyseparateISOstandards)butarecentlydevelopedvariantFSSC220007doesfallundertheGFSIumbrella.
Foodcertificationhasemergedasarequirementtogainconsumerconfidenceandensurefoodsafetyacrossvariousstagesinthesupplychain.Theglobalfoodcertificationmarketisforecasttogrow8duetoitsapplicabilityinawiderangeoffoodproducts,increasedhealthandethicalconsciousnessamongconsumers,andmorecomplexsupplychains.Asaresult,foodmanufacturersandsuppliersareactivelyseekingISO22000,BRCGS,SQF,IFS,and‘free-from’certifications.
BRCGS’sfoodsafetystandardwasthefirsttobebenchmarked.Nowinits8theditionwiththe9theditiontobepublishedin2022,thestandardhasevolvedtomeettheneedsofindustryandtoprotecttheconsumer.ItwasthefirststandardtobeGFSIbenchmarked,aswellasintroducefoodsafetyculturerequirements,definefoodfraud,andreduceauditburdenthroughadditionalmodules.BRCGSappliesacomplianceprogrammetoensureconsistentauditoutcomesandresultsthatbrandscanrelyon.
BRCGSstandardsareusedbyover30,000sitesin130countries,andacceptedby70%ofthetop10globalretailers,60%ofthetop10quick-servicerestaurants,and50%ofthetop25manufacturers9.FSSC22000certificationshavebeenadoptedby27,000sites,IFSin17,000sites,andSQFin10,000.TheglobalfoodandgrocerymarketsizewasvaluedatUS$11.7trillionin201910.20%ofthesesalesareplacedonthemarketbymanufacturersthatarecertifiedtoaGFSIcertificationprogramme11.BRCGScertifiedFBOsaccountfor36%ofpost-farmgatesales,andthereforeimpactonUS$800billionofproductsales12.ThisexcludesthesignificantsalesmadeintheQuickServiceRestaurantsector.
1 https://www.brcgs.com/2 https://www.ifs-certification.com/index.php/en/3 https://www.sqfi.com/4 https://mygfsi.com/5 https://www.iso.org/6 https://www.iso.org/iso-22000-food-safety-management.html7 https://www.fssc22000.com/8 FoodCertificationMarket–GlobalGrowthto2025,MarketsandMarkets,20209 Source:Deloitte,QSRMagazine10 Source:GrandViewResearch(2019)11 Source:GFSI,TheConsumerGoodsForum12 Source:BRCGSinternalcalculations
7 © Frenz Lambert 2021
3 SCOPE OF PAPERThereisacommonviewthattherearebenefitstoFBOsthatarecertificatedaswellasbrandsorretailersthatspecifythemwithintheirsupplychains.Thesebenefitsareunderstoodtoincludemarketaccess,operationalimprovementandefficiencies,andgreaterprocesscontrolleadingtolesswasteorproductrecalls.Brandsandretailersbenefitbyrelyingon3rdpartycertificationaspartoftheirsupplierapprovalandriskmanagementprocesses.Thisallowsthemtofocustheirsupplierauditsonareasofriskandpriority. Whilethesebenefitsarewellpublicised,thereisalackofevidencetosupporttheeconomicandoperationalbenefitstoeithercertificatedFBOsorinthewidersupplychain.Thereissomeanecdotalevidenceandindividualcasestudyinformation,howeverthereislimitedevidencetosupporttheseclaims.ThepurposeofthisresearchistouseinternalandexternaldatasetstoidentifythevalueofcertificationforFBOs,thewidersupplychain,andsaferfoodforconsumers.ThispaperalsoexploreswhethercertificationtoBRCGSprogrammesprovidesadditionalvalueoverotherGFSIandnon-GFSIstandardsintermsoffoodsafety,top-linegrowth,profitability,modernisationandoperationalefficiency.
Thisreportcontainsthreemainparts:
1.Areviewofthedemand-sidebasedoninterviewswithlargebrands;2.Areviewoftheextantliteratureoncertificationandfoodsafetystandards;3.Analysisofresultsfromasurveyofaround450FoodBusinessOperators(FBOs).
Food certification has emerged as a
requirement to gain consumer confidence
and ensure food safety across various stages in
the supply chain.
8© Frenz Lambert 2021
4 DEMAND SIDE BASED ON BRANDS INTERVIEWS4.1 BENEFITS OF STANDARDS: THE VALUE TO BRANDS OF THIRD-PARTY STANDARDSThegroupofthird-partyfoodsafetystandardsweredevelopedinthelate1990sinresponsetotheincreasingdemandforcloserscrutinyofthefoodsupplychain,toreducetherisksofcontaminatedordangerousfoodsfindingtheirwaytoconsumers.Legislationinseveralcountriesrequiredbrands,includingretail,QuickServiceRestaurantsandproducersofbrandedfoods,toexerciseduediligenceonsafetyissueswhenpurchasingfromanincreasinglyglobalsupplychain.Thisincludedsafetyauditsoftheirsuppliers.Ingeneral,supplierscouldbesellingtoseveralcustomers,whilebrandscouldbesourcingfrommanysuppliers.Thislevelofauditburdenimposedsubstantialcostsonsuppliers,manyofwhomaresmallfirms,whocouldbesubjecttomultipleauditsfromaproliferationof2ndpartystandards.Substantialcostswerealsoincurredbybrandsincarryingoutsomanyaudits,withduplicationofworkforthemanufacturersandexpensewithintheindustry,hencethedriveforharmonisedstandards.
Soasolutionwasdevelopedthatinvolvedanindependentbodydevelopingstandards,inconsultationwithstakeholders,andarrangingauditsandvisitsonbehalfofthebrands.Thiswasviewedasamoreefficientprocess.IntheUKthiswassetupundertheauspicesoftheBritishRetailConsortium13alobbyingorganisationrepresentingUKretailers.SimilararrangementswerelaterdevelopedinotherpartsofEuropeandinNorthAmerica.
Themainbenefitsliein:
• Feweraudits,reducingcostsforbrandsandfoodmanufacturers.
• Apublishedstandardwhichcanbedevelopedandrevisedovertime,withinputfrominterestedparties,including brandsandthecertificationbodieswhocarryouttheaudits.Forexample,theBRCGSfoodstandardisatversion8, withversion9duetobepublishedin2022.
• Foodmanufacturerswhoarecertifiedtooneormoreofthefoodsafetystandardsthusdemonstratebasiccompetenceto actualandpotentialcustomersinanobjectiveway.Thisenablesbrandsthemselvestofocustheirinquiriesto suppliersontheirownmorespecificrequirements. • Certificationisalsoasignaltothemarketthathereisasoundsupplier,thusenablingcompetitionandsupporting internationaltradebyprovidinginformationatlowcostontheavailabilityofreliablesources.
• Suppliersthemselvesbenefitfromtheexternal,expertscrutiny,astheycanembedthegoodpracticesneededfor certificationintotheirownproceduresandthuscontinuouslyimprovethebusinesswhilesupplyingsafefoodtoconsumers.
4.2 LIMITATIONS OF THIRD-PARTY STANDARDSThird-partystandardsprovideanoverallframeworkthatcomplementsbasicGoodManufacturingPractice(GMP)andHazardAnalysisandCriticalControlPoint(HACCP)principles.Firstandsecond-partyauditscanbemorespecifiedandallowforadeeperexplorationofanygivenoperationalrequirement.Brandsthereforehavegreatercontrolindirectingtheauditprocessaccordingtotheirneed.
Theprocessforthird-partyauditsisclearlydefinedanddoesnotpermitauditorstoprovideadviceorguidancetomanufacturersthatmighthelpwithimprovingthesafetyandthequalityoftheirproductsandprocesses.Theirroleistoassessandreportoncomplianceandnon-complianceswithinthetermsofthestandardinaconsistentway. Whilethesetrade-offsareacceptable,togaintheefficienciesofthethird-partystandardsframework,brandsarekeentoensurethatcertificationprogrammeowners(CPOs),suchasBRCGS,maintainthecompetenceandeffectivenessofthecertificationbodiesandthereliabilityoftheauditstheycarryout.
Itwasalsoreportedthatbrandswouldstillfacethestructuralissuesofsourcingreliableaudits,evenabsentthethird-partystandardsframework.Inaddition,brandsmayengageinauditsandsitevisitsoftheirown,tosupplementthethird-partyprocessesandtomaintaintheirownconfidencethatthethird-partystandardsremainfitforpurpose.
4.3. DO BRANDS ONLY ACCEPT CERTIFIED SUPPLIERS?Thebroadpictureisthatbrandsrequirethattheirfirst-tier–directsuppliers–shouldbecertificatedtooneoftheavailablethird-
13 https://www.brc.org.uk/
9 © Frenz Lambert 2021
partystandards.SomemandateaparticularstandardwhileothersinprinciplewillacceptanypertinentGFSI14benchmarkedstandards,suchasBRCGS,FSSC22000,SQForIFS.
Theymayexpressapreferenceforoneorotherofthese.Whilesomespecifiersrequirecertificationfurtherupthesupplychain,itisnotcommon,however,butthemajorityexpecttheirfirst-tiersuppliersthemselvestoensurethesafetyofboughtiningredients.FailuresupthesupplychainwilltriggerinvestigationsbythebrandsthemselvesandcomplaintstotheCPOsandcertificationbodies.Retailersrequirecertificationoftheirsuppliersofownbrandproducts.Manufacturersofbrandedgoodsareresponsibleforensuringsafeproductionintheirownsuppliers.
4.4 ARE THERE PARTICULAR ADVANTAGES AND DISADVANTAGES OF WORKING WITH BRCGS STANDARDS?TherewasagreementamongthebrandsinterviewedthatBRCGSprovidesmanybenefits,andBRCGSstandardsareperceivedasanespeciallygoodexampleofaGFSIbenchmarkedCPO.
Thestandardiswelldefinedandregularlyrevised.BRCGSprovidestrainingtomanufacturersandauditors,usefulinformationandothervalue-addedservices.BRCGSisalsoperceivedtobeopentoideasandwillingtotakeinputfromallstakeholders.
Thepotentialdownside,ofanyofthefoodsafetystandard,thatneedstobecarefullyscrutinised,isthequalityofauditing.BRCGSwaswidelyviewedtobeanexampleofgoodpractice,withtrainingofauditorsandacomprehensivecomplianceprogrammethatsystematicallyreviewsauditperformance.
4.5 IMPACT OF THIRD-PARTY STANDARDS ON DIRECT AUDITINGManybrandscontinuetohavetheirownprogrammeofauditsandsitevisits,toensurethattheythemselvesmeettheneedforduediligenceinmanagingtheirsources.TheGFSIstandardsprovideasoundbaseline.Buttheycannotcoverallthespecificsforeverybrand.Consequently,thereareadditionalinspectionsthatmaybebasedonanassessmentofrisk,butdonotcoverthesamegroundastheGFSIaudits,butexplorethebrands’specificneeds,whichtheywouldnotperhapswishto“pool”inthethird-partystandards.
Visitstositescanbemoreinthenatureofoverallassessmentsofmanufacturerquality,overandabovethefactorscodifiedinthethird-partystandards.Theycaninvestigatethemanufacturers’facilitiesandapproachtoproductionforaparticularbrand,whichmightnotbeselectedforclosescrutinyduringthegeneralauditsagainsttheGFSIstandards.Theycanalsoincludeelementsofadviceandmentoring,supportingsupplierstoenhancequalityaswellassafety,andtothereforegrowtheirbusinesswithvariousbrands.However,anunderstandingofmanufacturers’operationscanalsoinformbrands’inputsintorevisionsofthestandards.
4.6 IMPACT OF THIRD-PARTY STANDARDS ON FBO COMPETITIVENESSCertificationisperceivedassupportingmanufacturers’competitiveness.First,byensuringbasicsafety,whichprovidescredibilityinthemarketplace.Second,winningcontractsfrommajorbrandsraisestheprofileandreputationwithotherpotentialcustomers,andsoitisaplatformforFBOgrowth.
4.7 STANDARDS CONVERGENCE AND THE FUTURE OF THIRD-PARTY STANDARDSJudgingbyourowninterviewswithbrandowners,thereisnoapparentexpectationof,orenthusiasmfor,futureconvergencetoasinglestandard.Althoughthediversityofstandardsmightappeartonullifyoneofthemainbenefitsoftheemergenceofthethird-partyframework,thatdiversitymaintainsanelementofchoiceforFBOsandbrandsandcompetitionbetweenCPOs.
Thelatterstimulatesaprocessofrevisingthestandardsonaregularbasis.Adegreeofco-ordinationthroughGFSIbenchmarkingandtheirorganisingofinternationalnetworkinghelpstomaintainquality.GFSIthemselvesmaynothavetheresourcestodevelopasinglestandard,anditisperceivedasunlikelythatCPOsandbrandswouldsupportsuchadevelopment.
Anothercandidateforasinglestandard–ISO22000–hasnopre-requisiteprogrammes.ThesearedefinedontheISOwebsiteas“(PrerequisiteProgrammes-Allfoodbusinessmusthaveinplaceprerequisiteprogrammes(PRPs).Thesearegoodhygienepracticesthatarethebasicconditionsandactivitiesnecessarytomaintainahygienicenvironment.FBOsmustalsoconsidermaintenanceofthecoldchainandallergencontrolwhenputtingPRPsinplace.)”AGFSIbenchmarkCertificateProgrammeOwner–FSSC22000-hasbuiltonthebasicstandardbyaddingPre-requisiteprogrammes.
14 GFSIaimsforthecontinuousimprovementoffoodsafetymanagementsystemstoensureconfidenceinthedeliveryofsafefoodtoconsumersworldwide.Activitiesincludethedefinitionofrequirements forfoodsafetyschemesthroughabenchmarkingprocess.
10© Frenz Lambert 2021
5 LITERATURE REVIEWThissectionisabriefreviewofsomeofthepublishedresearchintotheimpactofprivatefoodstandards,includingtheeffectsoninternationaltrade,foodsafetyandonindividualFBOs.
5.1 INTERNATIONAL TRADEFBOscertifiedtofoodsafetystandardsareabletooffertheirproductworldwidewiththeircertificatebeingacceptedasdemonstratingsafeandgoodqualityfood.Thestandardsarethussimilartoothertechnicalandmeasurementstandardsthatareacceptedinternationallyasprovidingassuranceofreliability.Theyacttoreducenon-tariffbarrierstointernationaltrade,enablingexportsbyboththecountriesdevelopingthestandardsandothernationswhoseproducersarecertifiedtoit.Animportantresearchquestionisthereforehowtheyareeffectiveastradepromoters.Researchhasfocussedonrelatingtradevolumesinagriculturalandfoodproductstothenumberofcertificationstoastandardintheexportingcountry.Indicatorshavebeenthenumberofcertificationsforoneorotherstandards,nottheaggregateofallsuchcertifications.
Theprimaryresultshaveshownthatintensityofcertificationsdoespromoteexports–thereisareductioninbarrierstotrade.Somepapershavereportedthatthiseffectisinsignificantorevennegativefordevelopingorlowerincomecountries.Astudy(Mangelsdorf,2016)oftherelationshipbetweentheexportsofmanycountriesandthenumberofcertificatestotheInternationalFeaturedStandard(IFS)heldfoundthatthereisingeneralapositivelink–morecertificatesleadtomoreexports.Thismayinpartbeattributedtoknowledgetransferthroughthecertificationprocess.ButthispositiveeffectisabsentforcountriesinAfrica,interpretedasindicatingalackofknowledgetransferthroughcertificationinthatcontinent.Usingthesamedataset,anotherpaperfindsthatcertificationtotheIFSstandardstimulatestradeflowsbetweenpairsofhigherincomecountriesbutcanhaveanegativeeffectonexportsoflowerincomecountries(Ehrich&Mangelsdorf,2016).
Buttheremaybedifferencesintheeffectsofcertificationbetweenagriculturalproductsandmanufacturedfoodproducts.CertificationtotheAgriculturalProductsStandard,GlobalGaphasbeenreportedtostimulateexportsoffoodfromlessdevelopedcountriestoEurope(Andersson,2019).ThepaperalsoreportsresultsfromresearchintoFBOsinFrancewhichfoundthatBRCGScertifiedfirmsweremorelikelytoexportthannon-certifiedorthosewithothercertificates.
Kim(2021),whousesthenumberofISO22000certificatesastheexplanatoryvariablefindsthatthereisanegativeeffectontheexportsofprocessedfoods,whichtendtobemoretheprovinceofdevelopedeconomies.Buttheeffectispositiveonagriculturalexports,whichistakentoindicatethatdevelopingcountries’exportsarenotdiscriminatedagainstbytheuse of food safety standards.
5.2 PRODUCT RECALLSSomepaperspublishedrecentlyhavereportedincreasingnumbersoffoodproductrecalls,especiallyintheUS(Potteretal.,2012;Page,2018).Thesecanhavesignificantcostsfortheproducers.Onestudyfoundthatthestockmarketvalueofafirmwitharecallwithpotentiallyserioushealthconsequencesfellbyanaverageof1.15%within5daysoftheannouncement(Pozo&Schroeder,2016).Buttherewasnoimpactforarecallwithonlyaminorhazard.
Theupwardtrendinrecallshascoincidedwiththeincreasingavailabilityoffoodsafetystandards.Undertakingprocessreformstoattaincertificationtooneofthesestandardsisanoptionforfoodbusinesseslookingtoreducetheriskofproblemsleadingtorecalls.ResearchforanMScthesis(Zhang,2016)foundthattheexperienceofaproductrecalldidleadtoahigherprobabilityofseekingcertificationtoastandard.Thethesisalsoreportsthataformulaforestimatingthedirectfinancialcostsofarecall(publicity,productretrievalanddisposal)hasbeencalculatedas(retailpricex3xvolumeofproductrecalled).
Acontributoryfactortotheupwardtrendhasbeentherapiddevelopmentinsurveillancesystemsandcapabilitybyregulatorybodies,lowertolerances,betterandincreasedmonitoringandreporting,andincreasedrangeofhazardsthatcantriggerarecall.Operationalratherthanbiological/chemicalhazards,especiallyundeclaredallergens,havebecomethereasonforthemajorityofrecalls(Page,2018).
5.3 MICRO LEVEL – SURVEYSThereareseveralexamplesofresearchontheexperienceofbusinessesofcertificationtofoodstandardsundertaken
11 © Frenz Lambert 2021
throughsamplesurveys.Mostoftheseworkedwitharelativelysmallsample,intherangeof40to350responses.Thequestionsweremostlyrelatedtomotivesforseekingcertificationtoastandard,andtheconstraintsorproblemsintheirimplementation.Therewereratherfewerattemptstoengagewiththeenterpriseleveleffectsandevenlesscoverageoftangiblecommercialbenefits.Mostofthesurveysuselikertscalestogaugetheimportancetotherespondentsofaseriesofpropositionsaboutthevariousaspectsofcertification.
5.3.1 OBJECTIVE AND MOTIVATIONS FOR CERTIFICATION Insummary,thehighestratedmotivationstendtobethecorepurposesofthethird-partyfoodstandardssystem,namelysaferfoodandacceptabilityoraccesstomajorretailcustomers.Surprisingly,commercial,marketmotivationsandbenefitsweregenerallyratedlower,althoughitmustbeborneinmindthatthesurveyquestionnairestendedtoofferfewerpropositionsintheseareas.
AsmallsurveyinPortugalwith62respondentscertifiedtoISO22000(TeixeiraandSampaio2013)reportedthat3ofthetop4motivationsrated‘Important’or‘MostImportant’bythelargershareswereConfidenceofConsumers,CustomerRequirements,CommitmenttoProductSafetyandMarketDifferentiation,whichwasthethirdhighestranked,perhapspointingtocompetitiveadvantageasaconsciousobjectivethatwasnotfullybroughtoutinthisstudy.
Astudyofanachievedsampleof192Agri-foodbusinessesinItaly(Spadonietal.2014),whichwereBRCGScertified,withquestionsusinga7pointlikertscales,includedmotivations,howeverthepaperdoesnotreporttheresultsforthese.Theysuggestatheoreticalframeworkforunderstandingtheroleofprivatefoodstandards.Thisisbasedontheconceptofproductcharacteristics,whichincludeCredenceAttributes-assertedbyexpertsorknowledgeableusers,andsocanbebelievedbyconsumersandPotemkinattributes,whichcanbeclaimedbutarenotobservableevenbyexternalexperts15.
Table1showsthefourmosthighlyrankedobjectivesfromseveralsurveysofusersoffoodsafetystandards.Thesearelargelyconcernedwithimprovingtheperceptionofthebusinessbycustomersandconsumers.
Table1:Objectivesandmotivationforcertificationtofoodsafetystandards
5.3.2 CHALLENGES AND COSTS OF CERTIFICATION TO FOOD SAFETY STANDARDSThestudiesreviewedwereheavilyfocussedontheconstraintsorchallengesfacedbybusinessesinimplementingthevariousfoodstandards,perhapsgivinganimpressionslightlybiasedtowardsthenegative.Thedirectcostofadoptingastandardwasfrequentlycited,(Rincon-Ballesterosetal.,2019;Casolani,Liberatore,andPsomas2018)particularlyforsmallerbusinesses.
Similarly,theburdensofperceivedbureaucracy,whosepurposeswerenotwellunderstood,waswidelycited(EscancianoandSantos-Vijande2014a).Somequalitymanagerswereconcernedaboutaperceivedrigidityofapproachbyauditors,whodidnotadapttheirassessmentstothecircumstancesofindividualFBOs.Alsoimportantweresomeinternalconstraintsonimplementingthechangesinorganisationandbusinessprocessesneededtoachievecertificationtooneofthestandards.Theseincludedlackofskillsofemployeesandtheirresistancetochange(MensahandJulien2011;TeixeiraandSampaio2013).Thelevelofemployeeskillsandthecostsoftrainingtoachievetherequiredlevel,togetherwithresistancetochangesinpractices,werealsoreportedasamongstthemainconstraintsonimplementationbyChenetal(2015).However,thesebarrierswereovershadowedbythedirectcosts-paperworkandprocessdevelopment.Table2summarisesthemainfindingsonchallengesandcostsfromtheliterature.
BRCGS(Rincon-Ballesterosetal.,2019)
Productsafetyandquality
Consumerwelfare
Accessforeignmarkets
Ethicalprinciples
BRCGS(MensahandJulien2011)
Productquality
CustomerRequirement
RegulatoryRequirement
Marketingadvantage
ISO 22000(TeixeiraandSampaio2013)
Consumerconfidence
Customerrequirement
Marketdifferentiation
Foodchainproductsafety
ISO 22000(EscancianoandSantos-Vijande2014b)
ImproveimageintheMarket
Improvequalityandsafety
Achievecustomerconfidence
Future competitive advantage
15 ThisideaisexplainedbyBecker(1999)as‘placeboeffect’or‘potemkineffect’withtheexampleofpublicregulatorysupportunlinkingtheimportanceof‘countryoforigin’asanindicatorofquality.
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Table2:Challengesandcostsofcertificationtofoodsafetystandards
5.3.3 OUTCOMES OF CERTIFICATION TO FOOD SAFETY STANDARDSThemostimportanteffectsoroutcomesforbusinessesofadoptingafoodstandardreportedintheliteraturehaveclusteredaroundinternaloperationalimprovements(MensahandJulien2011;Spadonietal.2014)andexternalreputationandimageeffects-perceivedasasupplierofsafefood(TeixeiraandSampaio2013)16.
Certificationprovidesassurancethatgoodsafetypracticesarebeingfollowed(EscancianoandSantos-Vijande2014a).Directmarketandcommercialgainsgenerallyhavealowerprofilebutare,byimplication,expectedtoarisefromcompetingonperceivedquality.
ApaperonthefinancialperformanceofPolishsmalltomediumsizedbusinesses(SMEs)(Kafel&Sikora,2012)foundthatresultswerebetterforthosecertifiedtotheBRCGSorIFSstandardsbutwerebetterstillforthosewhoalsoholdtheISO900117managementstandard,pointingtothescopeforcomplementaritybetweengenericandfoodsafetystandards.Thestudywasbasedonjust30businessessocannotbetakenasdefinitive.
Improvedbusinessperformancewasalsoreportedinapaperbasedonasurveyof210businesseswithHalalFoodCertificationinMalaysia,whichisarguedtobestrictandcomprehensiveenoughtobeequivalenttooneoftheFSMSstandards.Table3summarisesthemainfindingsonoutcomes.
BRCGS(Rincon-Ballesterosetal.,2019)
Financialconstraints
Lackoffavourableinstitutionalenvironment
Organisationalresistance
Lackofinformation and support(FSMS)
ISO 22000(TeixeiraandSampaio2013)
Internalresistance to change
Direct costs
Employeeskills
Takeupofemployeetime
ISO 22000(EscancianoandSantos-Vijande2014b)
Notaprerequisitefordoingbusiness
ISO22000notwellknown
Highcostsofimplementation
Notrequiredbygovernment
ISO 22000(EscancianoandSantos-Vijande2014b)
Excessive demands on time and resources
Excessive formalism
Thevolumeofdocumentation required
Highcost,financialconstraints
ISO 22000(Casolani,Liberatore, and Psomas2018)
Costforcertification
Slowsdown some procedures
Lackofinternationalconsumer expectations
Notflexible
BRCGS(MensahandJulien2011)
Employeeresistance to change
Lackoftechnicalknowledgeandskillofemployees
Lackofawareness of requirements
Highcostofdevelopmentandimplementation
Certification provides assurance that good safety practices are
being followed (Escanciano and Santos-Vijande 2014a)
16 WHOalsoreportthatover70%ofrespondentswerecertifiedtomorethanonestandard.17 https://www.iso.org/iso-9001-quality-management.html
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Table3:Outcomesofcertificationtofoodsafetystandards
5.3.4 DERIVED INDICATORS Someofthesurveyedpapershaveappliedexploratoryfactoranalysistotheirdatainordertogeneratesummaryindicators.Thesecanbeinterpretedasthemorefundamentaldimensionsoffoodbusiness’purposesandoutcomesfromcertification.
Thespecificquestionsinthesurveyscanthenbeunderstoodasthefacetsorbuildingblocksofthesecoreconceptsoftheeffectsofcertificationtoastandard.Oneexampleisthederivationofsummaryindicatorsbyfactoranalysisfrom120responsestoasurveyofUKFoodManufacturers(MensahandJulien2011).
NearlyallofthesewerecertifiedtotheBRCGSstandard.Factor1concernsengagementwithinternalandexternalstakeholders-employees,governmentand‘learningcentres’.Factor2isaboutupgradingsystemsandstaffand
BRCGS(Spadonietal.2014)
TheHACCPsystemismoreefficient
Astrongcommitmentwas necessary for thetrainingandqualificationofthepersonnel
Intensificationandbetter interpretation ofmonitoringprocedures on chemicalandphysicalcontamination,GMOandallergens
Anenhancementofimageandanincreasingofreputation towards customers occurred
Also important:TheBRCGSapproachisalsoeffectiveduringthepublicbodiesaudits
Internalauditsystem(asdescribedintheBRCGSstandard)hasalloweda self-evaluationmoreeffective
ISO 22000(Casolani,Liberatore,andPsomas2018)
Improvingcapacitytoaccess domestic and internationalmarkets
Improvingproductsafety
Improvingtraceability
Demonstration of improved safety
ISO 22000(TeixeiraandSampaio2013)
Improved methodologiesandpractices
Improved customer satisfaction
Improved consumer confidence
Improved food safety
ISO 22000(EscancianoandSantos-Vijande2014a)
Bettermanagement/controloffoodhazards
Improvedimageinthemarket
Facilitatescompliancewithfoodsafetylegislation
Betteremergencyresponse
BRCGS(MensahandJulien2011)
Increased customer satisfaction
Improvedinternalprocedures
Improved product quality
Compliancewithregulatoryrequirements
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standardprocessesandmakingthisacontinualpartofthebusinessprocess.Factor3includestrainingoftheirownstaffandsuppliermanagement.Thefinalfactoristopmanagementcommitment,whichissuggestedtobeaprecursortotherestandisanessentialpartofmostofthestandards.
Anotherexampleoffactoranalysiswasappliedtoanachievedsampleof192agri-foodbusinessesinItalywhowereBRCGScertified(Spadonietal.2014).Thesurveygenerated28variables,whichwerereducedto8summaryvariablesbyusingfactoranalysis.Thesearelabelledbytheresearchersas:
• Compliance;• Teaminvolvement;• Resourcemanagement;• Managementofinspection;• Relationshipmanagement;• Reducedautonomy;• Auditefficiency.
Thelasttwoofthesemakesmallcontributionstotheexplanatoryeffectoftheanalysis.Thepapertakesthefurtherstepofderiving,byclusteranalysis,fivegroupsofbusinesseswithsimilarpatternsoffactorscores.
Theseareinterpretedas:
• Conformers-Themajority(nearly50%)whoadoptedthestandardasacustomerrequirement,butfeltittobe somewhatofaconstraintontheirfreedomofaction.
• Opportunists-Agroupwhichfoundbenefitsmainlyinimprovedexternalrelationshipsincludingmarketing,butdidnot considerthatthestandardhadbeenimposed.
• Unconcerned-Athirdclusteridentifiedasnotperceivingsignificantbenefitsthemselvesbutobligedbycustomersto gaincertification.
• Unaware-Aclusterwhofindthestandardenhancesteamwork,supportedbytraining.Buttheydonotseemtohave exploitedtheopportunitythuscreatedtoenhancetheirmarketposition.
• Consolidated–Asmallclusterthatfindthestandardhelpfulforteaminvolvement,buildingonexistingoperating strengthsandintegratingotherqualitymanagementsystems.Thisgroupiscomposedbycompaniesthatingeneral didnotperceiveanyspecificimpactoftheBRCGSimplementationbuttheystronglyagreeontheeffectsof BRCGSintermsofteaminvolvementandauditefficiency.
Insummary,thesecategoriesimplyarelativelypassiveattitude,withlimiteduseofcertificationstatuspro-activelytoachievemarketorcommercialadvantage.Butthegroupsidentifieddisplayaplausiblerangeofattitudes.
Astudyof192foodbusinessesinSpaincertifiedtoISO22000(EscancianoandSantos-Vijande2014)alsoderivedtwosetsoffactorssummarisingproblemsandbenefits.Thisisalimitinguseofthetechniquesinceitmaintainsthehardandfastdistinctionunderlyingthesurveyquestions.Poolingthedatafromasurveyenablestheidentificationofmorecomplexinteractionsandpatternsofcommonalityacrosstheinitialcategories.
Problems• “organizationalresistance”includingemployeeattitudes• “bureaucracyandcost”similarlytostudiesofimplementingothermanagementsystemsandstandards.• “unfamiliarity”-limitedawarenessofimplicationsofthestandards.
Benefits• “improvedfoodsafety”• “commercialbenefits”especiallyaccesstointernationalmarkets.• “internalefficiency”involvingimprovedcommunicationsandresourcemanagement• “improvedcompetitiveposition”
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• “improvedcommunication”• “technologicalimprovement”-betterpremisesetc.
Therearesome,butlimited,similaritiesbetweenthesummaryindicatorsderivedbythesestudies,mainlyaroundinternalteamsandtheirdevelopment,externalrelationshipsandmanagementofresources.Communicationsandimprovedcompetitivepositionalsoemergedasunderlyingaspectsofcertification.
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6 EMPIRICAL RESEARCHAmajorpartofthiseconomicresearchprojectisasurveyoffoodcompanies(FBOs)certifiedtoBRCGSstandards.Thissectionpresentsthemainfindingsfromthesurveyandputstheseinthecontextsoftheotherfacetsofthestudy,includingthereviewofrelevantpublicationsandinsightsprovidedbyinterviewswithbrandrepresentatives.
EarlierresearchemphasisedthemotivesforFBOsinseekingthird-partycertification.Asthesestandardshavedevelopedmainlythroughtheleadershipofmajorbrands,whoarethedirectcustomersofFBOs,itisnotsurprisingthattheneedtomeettherequirementsofthesecustomers,enshrinedinthestandards,hasbeenaprimarydriveroffoodcompanies’adoptionofthestandardsandthecertificationprocessthatgoeswiththem.Thesestudiesdidnotcitetheimpactsonsales,costsandprofits,andonmarketaccessandcompetitivenessrelatedmotivations.
Acoreobjectiveofthisstudyhasthereforebeentoexploreinmoredetailthemarketandcommercialaspectsofthird-partystandards,includinghowtheyenterFBOs’objectivesforseekingcertification.So,thecurrentsurveyinstrumentshavefocusedmoreonthebusinessdimensions,aswellasincludingfoodsafetyaspects.
Atotalof451businessesrespondedtothesurveyfromawiderangeofgeographiclocationsacrossEurope,NorthAmerica,SouthAmerica,AsiaPacifictheMiddleEastandAfrica.Respondentscoveredawiderangeofproductsandstandards,includingnon-food.Afullbreakdownofterritory,businesstypeandsizeisavailableinAnnex1.
Thefindingsaresetoutundertheheadingsofi)motivations/objectivesforcertification;(ii)thebusinessactionstakentoachievecertificationand(iii)themajorimpactsonfirmperformanceofcertificationandtheassociatedbusinessactions.
6.1 MOTIVATIONS AND OBJECTIVES FOR CERTIFICATION
Figure1:Theneedtoprovidesafefoodasamotivationforcertification
Similarlytotheresultsofearlierresearch,over80%ofrespondentsseeensuringthattheirproductsaresafeasahighlyimportantreasonforcertification.
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Over 80% of respondents see ensuring that their products are safe as a highly important reason for certification.
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Figure2:Theneedtomeetexistingcustomerrequirements Figure3:Theneedtomeetpotentialcustomer asamotivationforcertification requirementsasamotivationforcertification
Inlinewithpreviousstudies,over85%reportedtherequirementsofcurrentcustomersashighlyimportantmotivesforcertification.Asimilarnumberofrespondentsreporttherequirementsofpotentialcustomersasahighlyimportantmotivation.
Figure4:Theneedtoincreasecompetitivenessinthe Figure5:Theneedtoimprovecompetitivenessinexportdomesticmarketasamotivationforcertification marketsasamotivationforcertification
Enhancingmarketcompetitivenessalsoemergesasamajordriver,withover50%citinghomemarketcompetitiveness.61%ofbusinessesreportcompetitivenessinexportmarketsasahighlyimportantfactorinseekingcertification.Foodcompaniesperceivethatcertificationtoathird-partystandardactsasacompetitiveweaponinseekingtowidenanddeepentheircustomerbase.
Respondingtocompetitors’certificationwasalsoafactorformanyFBOsbutonly40%sawitashighlyimportant.
Figure6:Theneedtorespondtocompetitor’scertificationasamotivationforcertification
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5040
0
MOST IMPORTANT
HIGHLY IMPORTANT
SOME IMPORTANCE
NEITHER IMPORTANT OR UNIMPORTANT
NO IMPORTANCE
NOT APPLICABLE/DON’T KNOW
252015105Percentage of respondents (%)
30
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Seekingcertificationinordertogaincompetitiveadvantagecanbeseenasapro-activeuseofthestandardssystem.ThisissimilartothewaysinwhichtechnicalandotherstandardspublishedbyISOandnationalstandardsbodiesareusedasknowledgeinputsbyinnovativebusinesses(egTempleetal,2005).
6.2 IMPACTS OF CERTIFICATION ON BUSINESS OPERATIONSWenextturntothesurveydataonFBOimplementationofbusinessactionstomeettherequirementsofBRCGSstandards.Theseincludedexpenditureonenhancingthecapabilitiesofthefirm’sdaytodayoperations,aswellasinvestmentsincapacityanddevelopmenttopresentamorecompetitiveofferingtothemaincurrentandpotentialcustomers.RespondentsalsoreportedontheirviewofthedirectcostsofacquiringandmaintainingtheirBRCGSstandards,andonthecostsofpaperworkandreportingassociatedwithcertification.Thesetoocanberegardedasaformofinvestmentingainingthemarketcredibilitythatcomeswithcertificationtooneoftheleadingfoodsafetystandards.Thedataalsoincludesasetofperformanceoutcomescoveringgrowthinsales,exportsandprofitability.
Themainpurposeoffoodsafetycertificationistoreducetheriskstoconsumersfromunsafefoodenteringthesupplychain.Fromthatperspective,improvementsinbusinessperformanceareinsomerespectsanunanticipatedbonus,andtheappropriatebenchmarkforassessingtheirscaleiszero.TheextensiveandintensiverangeofimpactsreportedinthefollowingsectionscanthusbeseenasimpressiveandasexceptionalbenefitsforBRCGScertifiedFBOs.
6.2.1 MODERNISATION AsonedimensionofthemultiplewaysofmeetingtherequirementsoftheBRCGSstandards,asubstantialshareoftheFBOsrespondingtothesurveyhadundertakenchangesinbusinesspracticeorintheirproductionresourcesthatcanbestbeinterpretedasmodernisation.Aspectsofthishaveincluded:
• Improvingthestockofphysicalcapitalthroughneworupgradedplantandequipmentwascitedby50%of respondents.Betterproductionfacilitiesshouldcontributetoachievingthegoalsoffoodsafetyaswellasproductivity andcompetitiveness.Around27%hadupdatedtheirinformationtechnology.
• Changestotheproductdevelopmentprocesswerereportedby28%ofbusinesses.
Figure7:Businessmodernisation(Source:owncalculations)
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6.2.2 EFFICIENCY AND INVESTMENTThecertificationprocesshasbeenaspurtoarangeofinvestmentandmanagerialchangesthatarelikelytohaveraisedthelevelofefficiencyandopenedexpansionopportunities.Examplesoftheseinclude:
• Changesinorganisationhasbeenespeciallywidespread,withnearly70%ofrespondentsinagreementthatthiswas oneoftheeffects.Itisplausiblethatexternalscrutinyoftheiroperationsandtheavailabilityofacodifiedsummaryof goodpracticeinproducingfoodsafelywerehelpfulinputstoFBOswillingtomakechangestotheiroperations.
• Nearly50%ofrespondentsagreethattheyhaveinvestedinnewtechnology,whichshouldfurtherenable consistentlysafeandhigh-qualityfoodproductionanddistribution.
• Aswellasefficiencygains,thecertificationprocesshasbeenassociatedwithincreasesinproductinnovationfor30% ofrespondents.Thisisastrikingresultastheinitiativeinnewproductdevelopmentmightbeexpectedtolielargelywith majorbrands,ratherthanFBOs.
Themajorityofthosenotreportingefficiencyandinvestmentgainswereneutral,withonlylowsharesbeingsurethatthesechangeshadnotoccurredintheirbusiness.
Figure8:Efficiencyandinvestment(source:owncalculations)
6.2.3 OPERATIONS Aswellastheinvestmentincapital,ITandorganisationalchange,thevastmajority–85%ofrespondentshaveenhancedtheiremployeeshumancapitalbyinvestingintrainingaspartoftheiradoptionofBRCGScertification.Theskillandcommitmentofstaffisacrucialelementinachievingandmaintaininghighqualityproductionandcontributingtoanenvironmentthatconsistentlysuppliessafefood.Trainingalsoenhancesthefutureemploymentprospectsofstaffandhelpstoraisethelevelofskillsfortheindustryasawhole.
Investmentsinoperationalchangearealsoassociatedwithbetterqualityproducts,withmorethan63%ofrespondentsreportingimprovements,whiletheeffectsonfoodsafetyareevidencedasaround40%ofrespondentsreportfewerproductrecallsandwithdrawals,sinceachievingBRCGScertification.
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INNOVATION
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Figure9:Operations:training,productqualityandrecalls(Source:owncalculations)
6.3 IMPACT ON BUSINESS PERFORMANCE
6.3.1 COMPETITIVENESSWehaveseenthatenhancingtheircompetitiveedgewasanimportantobjectiveformanyFBOs.Thissectionreportsontheextenttowhichsurveyrespondentsconsiderthattheyhaveachievedimprovementsincompetitivenessinvariousmarketsandhowthesehavebeentranslatedintogrowthandprofitability.
Over50%ofrespondentsreportanimprovementincompetitivenessintheirhomemarket,while60%reportimprovedcompetitivenessinexportmarkets.Takentogether,over70%hadincreasedcompetitivenessinoneorbothofhomeandexportmarkets.
Thereisevidencefromthesurveythatcertificationopensmarketopportunitiesasitprovidesaclearandobjectiveindicatorofsafetyinproductionandinproductquality.Similarsharesofrespondentstothosereportingcompetitivenessgainsfoundthattheyhadaccesstolargermarketsbothathomeandinoverseasmarkets.Again,lowsharesofrespondentswerecertainthattherehadnotbeengainsincompetitiveness.
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Over 70% of respondents had increased competitiveness in one or both ofhome and export markets.
21 © Frenz Lambert 2021
Figure10:Competitiveness(Source:owncalculations)
6.3.2 GROWTH IN SALES IN HOME MARKETS AND ABROADSomestrikingcommercialresultsflowedfromthegainsinefficiency,operationalimprovementsandcompetitivenessassociatedwithcertification.Theresultswereparticularlyextensiveingainingnewcustomersandinexportmarkets,withcertificationprovidingassurancetopotentialcustomersthatFBOscansupplysafeandhigh-qualityfoods.
Growthinsalestotheirestablishedcustomerbasewasexperiencedbynearly40%ofrespondents,whileexpansionofsalesvolumestonewlygainedcustomerswasreportedby55%.Certificationofferscurrentandespeciallypotentialcustomersahigherprobabilityofpurchasingsafeandhigher-qualityproductsandhelpsFBOstopenetratenewmarkets.
Similarly,around55%ofrespondentsagreethattheyhaveincreasedsalesinthehomeorexportmarketsorboth.
Somewhatunexpectedly,animpressiveshareofrespondentswereabletoproviderangequantificationofsalesgrowth.Therangesinthequestionwereincreasesinsalesof:
• 0-5%• 5-10%• Over10%
Itispossibletosummarisethisdataintoasinglefigureontheworkingassumptionsthattherangescanberepresentedbytheirmidpoints.Fortheupperrangeofover10%theassumptionusedhereisthatthiscanbecappedat20%,withamid-pointof15%followingthelogicthatthetopofeachrangeisdoublethebottom.
• 0-5%=2.5%• 5-10%=7.5%• Over10%=15%
Ontheseassumptions,theweightedmeanincreaseinsalesforthose(43%ofrespondents)givingapositiveresponsewas 7.5%.
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6.3.3 INTERNATIONAL TRADESomeoftheresearchcitedintheliteraturereviewhasfoundasignificantassociationbetweentheshareoffoodbusinessesholdingcertificatesfromoneoftheCPOsandthevolumeofinternationaltradebetweenthenationsconcerned.Consistentlywiththeseresults,thepresentstudyhasfoundthatover45%ofrespondentshaveseensalesgrowthinexportmarkets,reflectingthegainsininternationalcompetitivenessnotedabove.Ingeneral,thestimulustogrowthofcertificationtotheBRCGSstandardislargerforexportsthanfordomesticsales,althoughthelatteraresubstantial.
Figure11:Growthinhomemarketsandabroad(Source:owncalculations)
6.3.4 OTHER COMMERCIAL EFFECTSThesurveyreportedonarangeofothercommercialimpactsfromBRCGScertification,namelycosts,profitabilityandnumber of audits. Onlyasmallproportion–lessthan17%-attributeoperatingcostreductionstocertification,whereasover50%disagreewiththisproposition.Thereismuchmoreofatendencytoincurcoststomeettherequirementsofthestandard,althoughsomeoftheoutlaysseemlikelytogiverisetootherbusinessbenefits,suchasenhancedphysicalandhumancapital.
Justunder30%ofrespondentsagreewiththeideaofincreasedprofitability,butitisperhapsstrikingthatsuchasubstantialsharecanidentifyprofitabilitygains.
Interestingly,nearlyhalfofrespondentsfindthatcertificationisassociatedwithfewerauditsbytheircustomers–oneoftheleadingrationalesforthedevelopmentofthird-partyfoodsafetystandards.Andtheinterviewswithbrandrepresentativessuggeststhat,withtheavailabilityofthird-partystandards,suchasthoseoftheBRCGS,theirownauditingismoreconcernedwiththeunderlyingcapabilitiesofsuppliersandthebrands’specificrequirementsandrepresentaddedknowledgeforthem,andnotmainlyundertakenasdoublecheckingonthethird-partyaudits.
BRCGS certification has been associated with a wide range of changes in business processes and investments.
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Figure12:Othercommercialeffects(Source:owncalculations)
6.3.5 PROFITABILITYOursurveyhasdiscoveredthatacquiringandmaintainingBRCGScertificationhasbeenassociatedwithawiderangeofchangesinbusinessprocessesandinvestmentsinthedevelopmentofresources.Inturn,largeproportionsofFBOshaveachievedimprovementsinbusinessperformance,includingoutputgrowth,especiallyexports.Comparedwiththelimitedevidenceonfinancialimpactsofcertificationfoundinpreviousresearch,ourdatashowedthataroundonethirdofrespondentswereabletoreportenhancedprofitabilityandwerealsoabletoprovidesomequantificationofthis.
Althoughinresponsetothequalitativequestionaround27%ofrespondentsagreethatBRCGScertificationisassociatedwithanincreaseinprofitability,butrespondingtothequestionaboutquantifyingprofitabilityincrease,over34%ofrespondentsagreethattheyhaveincreasedprofitabilityinarangefrom0toover10%.
Somewhatunexpectedly,animpressiveshareofrespondentswereabletoproviderangequantificationofprofitabilitygrowth.Therangesinthequestionwereincreasesinprofitabilityof:
• 0-5%• 5-10%• Over10%
Itispossibletosummarisethisdataintoasinglefigureontheworkingassumptionsthattherangescanberepresentedbytheirmidpoints.Fortheupperrangeofover10%theassumptionusedhereisthatthiscanbecappedat20%,withamid-pointof15%followingthelogicthatthetopofeachrangeisdoublethebottom.
• 0-5%=2.5%• 5-10%=7.5%• Over10%=15%
Ontheseassumptions,theweightedmeanincreaseinprofitabilityforthose(34%ofrespondents)givingapositiveresponse was 6%.
Closeranalysisindicatesahighcorrelationbetweenthequantifiedincreasesinsalesandinprofitability,whichimpliesthatsalesgrowthataroughlyconstantmarginwasthemaindeterminantofhigherprofitability.Thisisconsistentwiththesurveydatashowingthatonly17%ofrespondentsagreedthattheyhadachievedcostsavingsasaresultofimplementingthirdpartyfoodstandards.
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24© Frenz Lambert 2021
6.3.6 CERTIFICATION TO OTHER STANDARDSThestandardsofferedbyBRCGSarebenchmarkedagainstseveralothersbytheGFSI.Aswellasthisgroup,foodsafetystandardscanbesetbyindividualbrands,toensurethatsuppliersmeettheirveryspecificrequirements.AnothersourceistheISO22000standardpublishedbytheInternationalStandardsOrganisation.ThisisoutsidetheGFSIgroupasitdoesnotitselfentailtheuseofpre-requisiteprogrammesbyfoodcompanies.Butitisanoptionalrouteforthem,onitsownoralongsideGFSIstandards.
InordertotrytoplacetheBRCGSstandardsinthewiderfoodstandardscontext,thesurveyforthisprojectaskedafewquestionsabouttheimpactonfoodcompaniesoftheircertificationtootherstandards,inadditiontothoseofBRCGS.Inpractice,thevastmajorityofrespondentsarecertifiedtomultiplestandards,with425of450questionnairereturnsprovidinginformationabouttheimpactontheirbusinessofotherstandards.Theextentofmultiplecertificationsislikelytobearesultoftheneedforfoodcompanies,eventheverysmall,todiversifytheircustomerbaseandminimisetheriskthatlosingonecustomerjeopardisesthebusiness.Brandshavecorrespondingimperativestodiversifysuppliers,tominimisetherisksofdependenceonafew.Thequestionnairedidnotrequestinformationonwhichstandards,anditislikelythattheresponsesrepresentamixofotherGFSIandperhapsnon-GFSIstandards.
Themainfindingsareshowninfigure13.
Figure13:TheimpactonbusinessperformanceofBRCGScertificationcomparedtoothercertificationstandards
• Around35%ofrespondentswithcertificatestostandardsinadditiontoBRCGSreportedanincreaseinsalesto existingcustomersfollowingfromcertification.Thisresultissimilarto,butsomewhatlowerthan,forBRCGS certification.
• 55%ofrespondentsexperiencedincreasedsaleshavinggainedcertificationtoBRCGS.Only44%ofrespondentswith othercertificationstandardsreportedincreasedsales.
• 26%ofrespondentsagreedthatsalesintheirhomemarkethadincreased,comparedto30%ofBRCGS certificatedrespondents.
• 46%ofrespondentswithBRCGScertificationreportedincreasedsalesinexportmarkets,comparedwithalowerfigure of42%forothercertificationstandards.
0
FEWER CUSTOMER AUDITS FOLLOWING CERTIFICATION
INCREASE IN PROFITABILITY FOLLOWING CERTIFICATION
SALES INCREASE IN EXPORT MARKETS FOLLOWING CERTIFICATION
SALES INCREASE IN DOMESTIC MARKET FOLLOWING CERTIFICATION
SALES TO NEW CUSTOMERS FOLLOWING CERTIFICATION
SALES TO EXISTING CUSTOMERS FOLLOWING CERTIFICATION
5040302010Percentage of respondents (%)
60
BRCGS
OTHER
25 © Frenz Lambert 2021
• SimilarlytoBRCGScertifiedfirms,around29%ofrespondentsagreedthatprofitabilityhadincreased.
• Over40%ofrespondentsagreedthattherearefewercustomerauditsaftercertificationtoanotherthird-partystandard. Thiscompareswith48%withBRCGScertification.
TheresultsshowthatbusinesseswithBRGCScertificationexperienceamodestextentofgreaterpositiveimpactonperformance,acrossmostofthecommonindicators.Itisperhapsnotsurprisingthatthereisbroadsimilarityofimpacts,sincethemajorityoffoodsafetystandardsarebenchmarkedbytheGFSIinordertoensuresimilarqualityandreliability.Andourdatacomesfrombusinesseswhoaremultiplecertifiedandregularlyauditedagainstseveralstandards,solarge-scaledivergencesintheimpactsofthevariousstandardsseemunlikely.
6.4 RESPONSES BY SUB-GROUPThissectionshowstheresultsofcomparingthepatternofresponsestothequestionsonbusinessbehaviourbetweenthemembersofsamplesub-groups.Thesub-groupsare:FBOsbygeographicallocation(region);FBOsbysizeofbusiness(employment);andFBOsgroupedaccordingtothelengthoftimethebusinesshasbeencertifiedtoaBRCGSstandard.Weidentifiedthosesub-groupvariationsthatarestatisticallysignificant,wherethetestofsignificanceistheprobabilitythatthereisnorelationship,generatedbythechisquaretest,usinga5%threshold.Atableoftheindicatorsexhibitingsignificantvariationbysub-groupsisinAnnex1.Belowwesummarisethemainfindings.
6.4.1 REGIONResponsestothesurveyexhibitsomestrongpatternsbygeographicallocation.Outof48indicators,30showsignificantdifferencesbetweentheregions,withthemajorityofthesedrivenbyhigherthanexpectedsharesof“agreement”responsesintheMiddleEastorAsiaPacific.
6.4.2 SIZEWefoundthat6indicatorsshowedsignificantvariationbysizeofbusiness,mostlyasaresultofahigherthanexpectedshareofsmallfirmsinagreementwiththestatementsinthesurvey.
6.4.3 LENGTH OF CERTIFICATIONOnly5indicatorsshowedsignificantdifferencesbylengthofcertification,thesevariationsweremainlydrivenbyahigherthanexpectedshareofthosecertificatedfor1-5yearsinagreementwiththestatementsoffered.
6.5 RESPONDENT COMMENTSThesurveyquestionnaireprovidedanumberofopportunitiesforrespondentstoaddtheirownthoughtsandcommentsonindividualquestionsandontheaimsofthesurveyoverall.
Insummary,thesewereslightelaborationsonthebasicquestionnaireresponsesanddidnotprovidemajoradditionalinsightsintotheattitudesofrespondents.
Overalltherewere112Comments(72inEnglish).Thesewerespreadacrossthequestions,withthemajorityinthegeneralcommentssectionattheendofthesurvey.OfthoseinEnglish,asubjectiveinterpretationandsummaryofthebalanceofthecommentsisasfollows.
• 24werepositive,inthesensethattheymadespecificremarkspointingtoimprovementsinthebusinessasaresultof adoptingtheBRCGSstandard.
• 20werenegative,inthesenseofspecificallycriticalontheBRCGSstandards,mainlythedirectcostsofcertification, saidtobehigherthanalternatives.
• 21wereneutral,inthesensetheymadegeneralremarksaboutfoodsafetyandcertification,withoutavaluejudgement onBRCGS.
• 7concernedCustomerAudits,withcomplaintsthatholdingtheBRCGSstandarddidnotpreventcustomersfrom carryingouttheirownaudits.Overall,aroundhalfofrespondentsindicatedthatBRCGScertificationhadledtofewer customeraudits.Thisissuewasalsohighlightedinpreviousresearch.
26© Frenz Lambert 2021
6.6 STORY LINES AND A TYPOLOGY OF CERTIFICATION USESomeearlierresearchbasedonsurveysofusersofsafetystandardshasdevelopedsometypologiesbasedonFBOs’motivationsforcertificationandontheimportancetheyhaveattachedtothereportedusestheymakeandtheimpactsonthemofbeingcertified(e.g.MensahandJulien,2011,Spadonietal.2013).Inthissection,wereportonsimilarexercisesinmodellingthepatternsofapproachestoobtainingandapplyingcertificationtoBRCGSstandards.Inthiswehavetheadvantageofaratherlargersurveydatasetthanthoseavailabletoearlierresearchers.
ThesurveyofBRCGScustomershasgeneratedalargeamountofdataforaround450businesses.ThisdataenablesthecalculationofindicatorsofhowgroupsofthesebusinessesapproachqualifyingfortheBRCGSstandardsandusingtheircertificationtoincreasetheircompetitivenessininternationalmarketsanddevelopingandimprovingtheirproducts.Inthissectionwereportontheresultsofapplyingsomewell-establishedstatisticaltechniques,knownasfactorandclusteranalysis,toderiveasmallsetofindicatorsthatsummarisethelargeamountofdatafromthesurvey.Wecanthinkoftheseasthe“storylines”thatexplain,insuccinctterms,howthesurveyrespondentscombinethevariousaspectsoftheiradaptationtoandapplicationoftherequirementsoftheBRCGSstandards.Theseindicatorscan,inturn,beusedasexplanatoryvariablesinregressionequationsthatpredictthequantitativeindicatorsofrateofgrowthinsalesandrateofincreaseinprofitability.
Thefirststageintheanalysisistoestimateasetof“factors”thatreducethewiderangeofvariablesfromthesurveytoafewthatrepresenttheunderlyingdatabutaremoreapproachableandabletobeinterpretedasstrategiclevelbusinesspracticesthatintegratethevarietyofmorespecificactivitiescoveredinthesurvey.
Throughtheapplicationofthistechnique,wehaveidentified5factorsorplausiblestorylinesabouttheimpactsofcertificationtoBRCGSstandards.Thesecanbeinterpretedasthemorefundamentaldimensionsoffoodfirms’purposesandoutcomesfromcertification.Thespecificquestionsinthesurveyscanthenbeunderstoodasthefacetsorbuildingblocksofthesecoreconceptsoftheeffectsofcertificationtoastandard.
6.6.1 FACTOR ANALYSISToarriveatthetypologyofcertification–thestoryline–weuse39surveyinstruments(questions)coveringthefollowingbroadareas:(i)agreementwiththeimportanceofasetofobjectivesforcertificationconsistingofsixindividualquestions;(ii)agreementwithfinancialcostsandotherchallenges(10questions),(iii)choiceofBRCGS(4questions);(iv)agreementwithasetofoperationaloutcomes(8questions);(v)agreementwithspecificmarketoutcomes(4questions);and(vi)agreementwithasetofcommercialoutcomes(7questions).TheresultsarepresentedinAnnex2.Thesurveyresponsescanusefullybereducedintofivefactors,typesofcertificationuseorFBOsstrategicorientations.
• Type 1 Product and process innovation.Thisfactorexplainsthelargestshareofvariationinthedataandpullstogether issuesaroundimprovingproductqualityandproductsafety,togetherwithinvestmentintrainingandnewtechnology.It alsoscoreshighlyonthechoiceforaBRCGSstandardandincreasedprofitability.• Type 2 Competitiveness led growth in the home market.Thisstrategicorientationsummarisesresponsesconnected withincreasedsalesinthehomemarketlinkedwithincreasedprofitability.• Type 3 Competitiveness led growth in export markets.Thisstrategicorientationpullstogetherapatternofresponses forexportmarketgrowthandcompetitiveness.• Type 4 Costs of certification and investment.Drawstogetherresponsepatternsaroundthepossiblecostsofattaining andutilisingcertification.• Type 5 Customer requirement for certification.Bringstogetherallquestionsrelatedtothepullforcertificationvia customerrequirements.Thistypealsodrawsincostsaspectsofthecertificationprocess.
Type1,whichwetermed“productandprocessinnovation”,hasconsiderablesimilaritytosomeoftheconceptsusedinmeasurementofbroadinnovation–includingmanagerialchange–forpublicpolicypurposes.Innovationmeasuredinthiswayhasbeenshowntobesignificantlystimulatedbytheavailabilityoftechnicalandmanagerialstandards.(ForashortsummaryoftheliteratureseeSwann,G.andLambert,R.(2017).Asfarasweknow,thereisnopreviousresearchonhowfarprivatefoodsafetystandardshavesuchimpacts.The well determined finding from this research project, that BRCGS food safety standards, which do not in themselves include innovation as a purpose, also act as a determinant of broad-based innovation is a particularly unexpected and impressive result.Fromthefactorsa“score”canbederivedforeachsurveyrespondent,thatisaquantitativeindicatorofhowstronglytheyfavourthatfactor.Thesefactorscoresareusedintwofurthermodellingexercises-regressionequationsandclusteranalysis.
27 © Frenz Lambert 2021
6.6.2 REGRESSIONRegressionequationsareestimatedinordertoshowwhichofthe5indicators–factorsandstrategicorientations–areimportantindeterminingtheimpressiveratesofgrowthinsalesandinprofitabilityreportedinSection6.3.
AbasicOLSregressionandanorderedlogitregressionrevealthatTypes1,2,3and5aresignificantinexplainingthequantumofgrowthinsales;whileTypes1,2and3arealsosignificantinexplainingthequantumofincreasesinprofitability.
6.6.3 CLUSTERS Wethenuseclusteranalysis–atechniquethatgroupstheFBOsbytheirsimilaritiesanddifferencesacrossthefivetypesofcertificationuse–bytheirstrategicorientationtowardscertification.Table4liststhefiveresultinggroupsofFBOs(clusters)andtheircharacteristics–highorloworientation-withregardstothefivetypesofcertificationuse:productandprocessinnovation;competitivenessledgrowthinthehomemarket;competitivenessledgrowthinexportmarkets;costsofcertificationandinvestment;andcustomerrequirementforcertification.
Table4GroupingsofFBOsbytypeofcertificationuse(strategicorientation)Source:owncalculations.HierarchicalclusteranalysisusingWardlinkages.5clustersolutionwasselectedfollowinginspectionoftheDendrogram(clustertree).N=425.Thevariablesfeedingintotheclusteranalysisarethesavedstandardizedfactorscores.Therefore,anegativevalueisindicativeofascorebelowtheaverageonatypeandapositivevalueofascoreaboveaverage.Scoresgreaterthan+/-1deviatealotfromtheaverage.Putdifferently,68%percentofallobservationsfallwithintheintervalof[-1;1]. Thecharacteristics–intermsoftheirstrategicorientationtowardscertification–ofeachgroupofFBOs–Groups1to5–areintherowsofTable4.
Group 1–Exportorientedinnovatorsisthesecondlargestclustercontaining114FBOsandcharacterisedbyanaboveaverageagreementwiththeoutcomeofimprovedproductquality,safetyandinnovationandalowagreementwithhavingexperiencedcostorotherchallengesandlowagreementontherequirementofcertificationbycustomers. Group 2–Requirementdrivenisthesmallestclusterofjustunder30sites.Thesecompaniesagreethattheirmainobjectiveforcertificationiscustomerrequirement.Thisclusterisalsoexperiencingnogrowthinthehomemarket. Group 3–Exportorientedmodernisersisthelargestcluster(199sites).TheseFBOsagreedwiththeincurredcostsandotherchallenges.Thereissomeindicationofagreementwithgrowthinhomeandexportmarkets.So,theyareveryawareofcostsofimplementationbutalsothatadaptingtheirresourcesandbusinesspracticesisassociatedwithenhancedmarketopportunities. Group 4–Homemarketorientedinnovatorsisasmallgroupofbusinesses(40)whichshowhighagreementonthevalueofcertificationinproductquality,safetyandinnovationandwhoatthesametimeshowverylowinternationalorientation.Butasscoringhighlyonproductqualityandinnovationtheyarelikelytoachieveenhancedprofitability. Group 5–Passiverespondersisalsoasmallclusterofsites(45)thatdonotagreethatcertificationledtoanimprovement
GROUPS OF FBOS
1. Export oriented innovators
2.Requirementdriven
3. Export oriented modernisers
4.Homemarketoriented innovators
5.PassiveResponders
NO. OFFBOS
CUSTOMER REQUIREMENT OF CERTIFICATION
COSTS OF CERTIFICATION ANDINVESTMENT
COMPETITIVENESS LED GROWTH IN EXPORT MARKETS
COMPETITIVENESS LED GROWTH IN THE HOME MARKET
PRODUCT AND PROCESS INNOVATION
114
27
199
40
45
0.4
0.3
0.0
0.8
-1.9
0.1
-1.8
0.2
-0.3
0.1
0.3
0.2
0.3
-2.0
-0.5
-0.6
-0.9
0.6
0.3
-0.6
-0.8
0.9
0.2
-0.1
0.7
28© Frenz Lambert 2021
inproductqualityandsafetyorinvestments.Thesesitestendtobecertifiedbecauseofkeycustomers’requirements.Theydifferfromgroup2innotperceivingexportmarketbenefitsfromcertificationandinalowscoreoninnovation. InthefollowingwecomparethecharacteristicsofthefivegroupsofFBOsintermsofsize,location,timesincecertified,theirproductsandtypeofcertificatesheld.
Table5GroupsofFBOsbysizeSource:owncalculation.Cellcontentpercentages.N=424
Groups4and5,bothfocussedontheirhomemarkets,containalargeproportionofsmallenterprises.Whilegroups1and2containalargershareoflargeenterpriseswith500andmoreemployees.
ThereisnosignificantdifferenceacrossthegroupswithreferencetothetimesinceFBOswerefirstcertified.Notableispresented.
Table6GroupsofFBOsbylocationSource:owncalculation.Cellcontentpercentages.N=424.
Group5,asmallergroupof45FBOs,containsproportionallyalargershareofUKbasedFBOs.Group5isalsomostcriticalintermsofthebenefitsofcertificationonproductquality,safety,andinnovation.Groups1and2haveahigherproportionofFBOslocatedintheMiddleEasternandAsiaPacificregions.(Aswithsizegroup3isdistributedinasimilarpatterntoallresponses).
ThereisnosignificantpatternacrosstheproducttypesofFBOs.Thereis,however,adifferenceacrossgroupswithrespecttothecertificatetypeheld.
GROUPS OF FBOS
1. Export oriented innovators
2.Requirementdriven
3. Export oriented modernisers
4.Homemarketorientedinnovators
5. Passive responders
Total
MORE THAN 1,500
501-1,50051-5001-50 EMPLOYEES
25
22
33
45
47
33
58
56
61
55
44
57
13
11
5
0
7
7
4
11
2
0
2
3
GROUPS OF FBOS
1. Export oriented innovators
2.Requirementdriven
3. Export oriented modernisers
4.Homemarketorientedinnovators
5. Passive responders
Total
NORTHAMERICA
EUROPEUK
2
4
14
18
51
14
35
37
40
35
27
37
8
7
8
28
9
10
7
4
10
3
0
7
SOUTHAMERICA
MIDDLEEAST
ASIAPACIFIC
15
19
11
3
4
11
33
30
18
15
9
21
29 © Frenz Lambert 2021
Table7GroupsofFBOsbycertificatetypeSource:owncalculation.Cellcontentpercentages.N=425.
Group2containsrelativemoreFBOscertifiedforfoodprocessing.Itisthesmallestgroupwithonly27FBOs.Group5,containing45FBOs,hasrelativelymoreFBOscertifiedforstorageanddistribution,andagentsandbrokersandfewerbusinesseswithfoodprocessingcertificates.
Table8FBOgroupsandchangeinsalesandprofitsSource:owncalculation.Cellcontentpercentages.N=309.Columns2and3arepercentagesofFBOsreportinggrowthinsalesandprofits.
Inthesurvey59percentagreedthattheirsalesgrewowingtocertificationand48percentagreedthatprofitsgrewowingtocertification.
Inparticulargroups1and3–theexport-orientedinnovatorsandmodernisers–reportedaboveaveragesalesandprofitgrowths.ThesetwogroupsofFBOscontainbyfarthelargestnumberofbusinesses(313outof425businesses).
GROUPS OF FBOS
1. Export oriented innovators
2.Requirementdriven
3. Export oriented modernisers
4.Homemarketorientedinnovators
5. Passive responders
Total
FOOD PROCESSING
51
74
60
53
22
54
27
15
28
20
16
25
8
7
7
15
29
10
4
0
3
8
29
6
6
0
2
3
2
3
4
4
1
3
2
2
PACKAGING STORAGE AND DISTRIBUTION
AGENTS AND BROKERS
CONSUMER PRODUCTS
OTHER
GROUPS OF FBOS
1. Export oriented innovators
2.Requirementdriven
3. Export oriented modernisers
4.Homemarketorientedinnovators
5. Passive responders
Total
60
54
68
35
35
59
59
50
52
27
14
48
SALES GROWTH GROWTH IN PROFITS
30© Frenz Lambert 2021
7 CONCLUSIONSThisreporthasbuiltontheevidenceandinsightsfrompreviousresearch,whichmostlyfocussedonthemotivationsforfoodsupplierstobecomecertified,andontheinternationaltradeeffectsofthedisseminationofthird-partycertifications.However,thisstudyhasaddedmateriallytotheevidencebase,particularlyonFBOperformanceeffects.
Throughdiscussionswithrepresentativesof“brands”-theproximatedemandsideoffoodmarkets-andthroughanextensivesurveyofcertificatedusersoftheBRCGSstandards,wehavebeenabletoevidencetheFBOperformanceeffectsofimplementingBRCGScertification.Thesehadbeensuspectedbuthavenowbeendemonstratedandquantified.
ThisstudyhasdemonstratedthewidespreadeffectsandreachonmultipleaspectsoftheirbusinessoperationsandperformancewithnearlyallFBOrespondentshavingatleastonepositiveimpactfromBRCGScertification.
Althoughoftenaninitialresponsetoarequirementofexistingcustomers,theattainmentofBRCGScertificationopensupmarketopportunities,especiallyinexportmarketsandwithnewcustomers.
ThestudyhasshownthatBRCGScertificationdrivesincreasedcompetitivenessviainvestmentandmodernisation.Itenablesincreasedcompetitivenessamongstfoodsuppliersbyprovidingincentivestoinvestmentinfacilitiesandinhumancapitalandthoughmodernisationoftheproductionorganisationandoperations.
BRCGScertificationalsodeliverspositive“bottomline”effectsformanyFBOs,whichwerepreviouslyun-observed.Thesecanbecalculatedasanaverageof7.5%salesgrowthand6%profitabilitygrowthforthe30to40%ofrespondentsreportingthesequanta.
ThestudyshowsthatBRCGSstandardshavesimilarpositiveimpactstoISOtechnicalandmanagementstandards,inrelationtoenablingproductandprocessinnovation,andthusgrowthinoutputandproductivity.However,BRCGScertificationgoesfurtherthanthesebystimulatingmodernisationandinvestment–broadinnovation.Broaderinnovationincludesproductinnovationandnewtechnologyaswellaschangesinbusinessprocessesandenhancedproductquality(includingsafety).
ThestudyidentifiedhowBRCGScertificationisplacedinthewiderfoodstandardscontext.Whiletherearebroadsimilaritiesinimpact,FBOswithBRCGScertificationexperienceamarginallygreaterimpactonperformanceacrossmostindicators.
This study has shown the widespread effects of BRCGS certification on multiple aspects of business operations and performance.
31 © Frenz Lambert 2021
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Medium-sizedEnterprises’,Food Control,64,pp.120–127.Mensah,L.D.andJulien,D.(2011)‘ImplementationoffoodsafetymanagementsystemsintheUK’,Food Control,22(8), pp.1216–1225.doi:10.1016/j.foodcont.2011.01.021.MohamedSyazwanAbTalib,ThooAiChinandFischer,J.(2017)‘LinkingHalalfoodcertificationandbusiness performance’, British Food Journal,119(7),pp.1606–1618.doi:10.1108/BFJ-01-2017-0019.Neacsu,N.A.(2015)‘ImplementationofISO22000-atooltoincreasebusinessefficiencyandcustomersatisfaction.A CaseStudy:SCProdlactaBrasov’,Bulletin of the Transilvania University of Brasov. Economic Sciences. Series V, 8(2),p.105.Page,E.T.(2018)Trends in food recalls:2004-13.Potter,A.etal.(2012)‘Trendsinproductrecallswithintheagri-foodindustry:EmpiricalevidencefromtheUSA,UKand theRepublicofIreland’,Trends in food science & technology,28(2),pp.77–86.Pozo,V.F.andSchroeder,T.C.(2016)‘Evaluatingthecostsofmeatandpoultryrecallstofoodfirmsusingstockreturns’, Food Policy,59,pp.66–77.Psomas,E.L.andKafetzopoulos,D.P.(2015)‘HACCPeffectivenessbetweenISO22000certifiedandnon-certifieddairy companies’, Food Control,53,pp.134–139.Rincon-Ballesteros,L.,Lannelongue,G.andGonzález-Benito,J.(2019)‘ImplementationoftheBRCfoodsafety managementsysteminLatinAmericancountries:Motivationsandbarriers’,Food Control, 106, p. 106715. doi:10.1016/j.foodcont.2019.106715.Rincon-Ballesteros,L.,Lannelongue,G.andGonzález-Benito,J.(2020)‘Effectiveimplementationofafoodsafety managementsystemanditsrelationshipwithbusinessmotivations’,British Food Journal[Preprint].Silva,M.M.,Fonseca,L.M.andSousa,S.D.(2016)‘TheimpactofISO9001:2015onISO22000andfoodsafety managementsystems(FSMS)’,Calitatea,17(152),p.81.Stranieri,S.,Orsi,L.andBanterle,A.(2017)‘Traceabilityandrisks:anextendedtransactioncostperspective’,Supply Chain Management: An International Journal[Preprint].Šušnić,S.etal.(2016)‘CharacteristicsandspecificsofFSSC22000applyinginthemeatindustry’,Journal of Hygienic Engineering and Design,15,pp.42–48.Swann,G.andLambert,R.(2010)‘WhydoStandardsEnableandConstrainInnovation?’,inunpublished paper, Nottingham University Business School, April.Swann,G.andLambert,R.(2017)‘StandardsandInnovation:ABriefSurveyofEmpiricalEvidenceandTransmission Mechanisms’,inStandards and Innovation.EdwardElgarPublishing.Teixeira,S.andSampaio,P.(2013)‘Foodsafetymanagementsystemimplementationandcertification:surveyresults’, Total Quality Management & Business Excellence,24(3–4),pp.275–293.Temple,P.etal.(2005)The Empirical Economics of Standards.London:DepartmentofTradeandIndustry.Trienekens,J.andZuurbier,P.(2008)‘Qualityandsafetystandardsinthefoodindustry,developmentsandchallenges’, International journal of production economics,113(1),pp.107–122.Varzakas,T.H.(2011)‘ApplicationofISO22000,failuremode,andeffectanalysis(FMEA)causeandeffectdiagramsand paretoinconjunctionwithHACCPandriskassessmentforprocessingofpastryproducts’,Critical reviews in food science and nutrition,51(8),pp.762–782.Zhang,H.(2016)‘TheImpactofFoodRecallonThird-partyCertificationAdoption’.Zimon,D.,Madzik,P.andDomingues,P.(2020)‘Developmentofkeyprocessesalongthesupplychainbyimplementing theISO22000standard’,Sustainability,12(15),p.6176.
33 © Frenz Lambert 2021
ANNEX 1. BASIC STATISTICSThisannexpresentsthebasicdatafromthesitesurvey.Theformatissimpletabulationsofthenumber(frequency),percentagebreakdownandcumulativepercentagesofresponseswithshortbulletnotesdrawingoutthemost salientpoints.
Interestingfindingsinclude:
Profile• Responsescoverarangeofgeographiclocations.• ButthenumberfromtheUKisrelativelylow.• Theycoverarangeofproductsandstandards,includingnon-foods.• Whilethemostfrequentreasonsforseekingcertificationwerethepreferencesofcurrentandpotentialcustomers, improvingcompetitiveness,especiallyinexportmarkets,wasimportantforaround80%.
Costs• Afairlymodestshareofaround50%agreedthatBRCGSandAuditorchargeswerehigh.• TherehasbeenextensiveupgradingofphysicalequipmentandITwhile65%hadtrainedstaff.Thecertificationprocess hasstimulatedmodernisationofbusinesses’physicalandhumancapital.• Only30%reportedthatstaffwereresistanttochange-thiswasseenasamoremajorissueinsomeacademic research.• AnotherissueraisedinsomeearlierresearchwasofFBOsinsmallerorlessdevelopedcountriesfacinglocal infrastructurelimitations,suchasaccesstoauditors.Butonly20%reportedsuchissuesinthissurvey.• Over54%agreedthatpaperworkcostshadbeenincurred-againperhapslessthanexpected.
Why BRCGS• ThemostfrequentlyreportedreasonforthechoiceofaBRCGSstandardwaslargercustomerrequirement.• ButtheBRCGScoverageofthebusiness’soperationswasalsoimportantforover80%,whiletherewasalsoextensive satisfactionwiththequalityofauditing.• Around50%agreedthatBRCGSprovidedthebestvalueformoney.
Operational Outcomes• Morethan63%ofrespondentsreportedimprovementsinproductquality.• VeryhighproportionsofFBOshadmodernisedorenhancedtheirrealandhumanassetswithover70%improvingthe organisationofproductionwhile80%hadinvestedinstafftraining.
Market and commercial outcomes• ImplementingBRCGSstandardsstimulatedcompetitivenesswithover50%ofrespondentsreportinganimprovement intheircompetitivenessintheirhomemarketand60%inexportmarkets.• Alargeproportionoffirmshadachievedsalesgrowth,especiallytonewcustomers–nearly55%–andin exportmarkets.
34© Frenz Lambert 2021
RESPONDENT PROFILE
Language
Languages-Summary• ThegreatmajoritycompletedthesurveyinEnglish.• ButreasonablenumberstookadvantageoftheopportunitytocompleteinMandarin,SpanishorTurkish.
Location
Location-Summary• TheresponseratefromtheUKisrelativelylow.• ThelargestgrouparerespondentsfromEurope.• Butotherregionsshowausefulnumberofresponses,notablyAsia-Pacific.
Size
Size-Summary• Themajorityofrespondents(90%)areinthesmallormediumcategories.• Ausefulsharearethoughlargeorverylarge.
USER LANGUAGE
332
59
26
34
451
74
13
6
8
100
FREQ. PERCENT CUM.
74
87
92
100
English
Spanish
Turkish
Mandarin
Total
WHERE ARE YOU LOCATED?
67
162
44
31
49
97
450
15
36
10
7
11
22
100
FREQ. PERCENT CUM.
15
51
61
68
78
100
UK
Europe
NorthAmerica
SouthAmerica
MiddleEastandAfrica
AsiaPacificcountries
Total
HOW MANY EMPLOYEES DOES YOUR SITE HAVE?
143
261
33
14
451
32
58
7
3
100
FREQ. PERCENT CUM.
32
90
97
100
Lessthan50
51-500
501-1,500
Morethan1,500
Total
35 © Frenz Lambert 2021
Years certified
YearsCertified-Summary• ThereisgoodrepresentationofFBOswithshorterandlongerperiodscertifiedtoBRCGSstandards.• Some60%havebeencertifiedforbetween1and10years.
Products certified
Productscertified-Summary• Respondentscoverarangeofproducttypes,includingnon-foods.
Certifications
Certifications-Summary• Thelargestgroupofcertificatesheldareforfood.• Butpackagingandstoragearealsowellrepresented.
HOW LONG HAVE YOU BEEN CERTIFIED?
61
140
128
79
43
451
14
31
28
18
10
100
FREQ. PERCENT CUM.
14
45
73
90
100
Lessthan1year
1-5years
6-10years
11-15years
Morethan15years
Total
CERTIFIED PRODUCTS
34
76
12
92
92
144
450
8
17
3
20
20
32
100
FREQ. PERCENT CUM.
8
24
27
48
68
100
Bread
Fruit
Dairy
Meat
Non-food
Other
Total
CERTIFICATES HELD
242
110
47
29
15
9
452
54
24
10
6
3
2
100
FREQ. PERCENT CUM.
54
78
88
95
98
100
Food
Packaging
Storage
Agents
ConsumerProducts
Other
Total
36© Frenz Lambert 2021
REASONS FOR CERTIFICATION
Current customers
Currentcustomers-Summary• Currentcustomerrequirementisimportantinseekingcertificationfor95%ofrespondents• Thevastmajorityoftheseregarditashighlyormostimportant
Potential customers
Potentialcustomers-Summary• Similarlytoexistingcustomers,potentialcustomerrequirementforcertificationareadriverfor95%ofrespondents.• Thisfactorisrankedslightlylowerinimportancethantheneedsofexistingcustomers.
Domestic competitiveness
CERTIFICATION IS REQUIRED BY CURRENT CUSTOMERS
7
5
13
45
207
174
451
2
1
3
10
46
39
100
FREQ. PERCENT CUM.
2
3
6
16
61
100
Notapplicable/don’tknow
No importance
Neitherimportantorunimportant
Some importance
Highlyimportant
Most important
Total
CERTIFICATION IS REQUIRED BY POTENTIAL CUSTOMERS
7
7
9
72
238
118
451
2
2
2
16
53
26
100
FREQ. PERCENT CUM.
2
3
5
21
74
100
Notapplicable/don’tknow
No importance
Neitherimportantorunimportant
Some importance
Highlyimportant
Most important
Total
INCREASE COMPETITIVENESS IN HOME MARKET
21
43
36
130
161
56
447
5
10
8
29
36
13
100
FREQ. PERCENT CUM.
5
14
22
51
87
100
Notapplicable/don’tknow
No importance
Neitherimportantorunimportant
Some importance
Highlyimportant
Most important
Total
37 © Frenz Lambert 2021
Domesticcompetitiveness-Summary• CertificationisalsoimportanttoFBOsbecauseitcanbeusedtopromotetheirofferingtodomesticcustomersor potentialcustomers.• Nearly80%regardgainingdomesticcompetitivenessasimportant.• Closeto50%regardasofhighormostimportance.
Export competitiveness
Exportcompetitiveness-Summary• Aslightlyhigherproportion-83%,seecertificationasimportantforcompetinginexportmarkets.• Similarly,ahighershare-over60%-finditofhighormostimportance.
Safe products
Safeproducts-Summary• Over80%ofrespondentsregardsafeproductsasahighlyimportantreasonforcertificationtoastandard.• Afurther11%seeitasofsomeimportance.
INCREASE COMPETITIVENESS IN EXPORT MARKETS
23
26
28
92
200
77
446
5
6
6
21
45
17
100
FREQ. PERCENT CUM.
5
11
17
38
83
100
Notapplicable/don’tknow
No importance
Neitherimportantorunimportant
Some importance
Highlyimportant
Most important
Total
NEED TO SUPPLY SAFE PRODUCTS
4
19
13
50
157
206
449
1
4
3
11
35
46
100
FREQ. PERCENT CUM.
1
5
8
19
54
100
Notapplicable/don’tknow
No importance
Neitherimportantorunimportant
Some importance
Highlyimportant
Most important
Total
38© Frenz Lambert 2021
Competitor certified
Competitorcertified-Summary• Nearly70%ofrespondentsseesomeneedtomatchcompetitorsuseofcertification• And40%seeitashighlyormostimportant..
COSTS AND CHALLENGES
BRCGS Charges
BRCGSCharges-Summary• Over50%ofrespondentfindBRCGSchargestobeveryhigh.• But11%disagree• And36%areneutral• Theoverallbalanceofresponsesisclosetoneutral-perhapssurprisingly.
COMPETITOR HAS CERTIFICATION
33
52
57
119
115
68
444
7
12
13
27
26
15
100
FREQ. PERCENT CUM.
1
5
8
19
54
100
Notapplicable/don’tknow
No importance
Neitherimportantorunimportant
Some importance
Highlyimportant
Most important
Total
BRCGS SPECIFIC CHARGES ARE VERY HIGH
13
9
30
166
179
54
451
3
2
7
37
40
12
100
FREQ. PERCENT CUM.
3
5
12
48
88
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
39 © Frenz Lambert 2021
Auditor charges
Auditorcharges• AhigherproportionofrespondentsagreethatauditchargesarehighthanBRCGScharges.• Butover40%disagreeorareneutral.
Training
Training-Summary• Some65%ofrespondentshavespentontraining.• Only15%disagreethattheyhavedoneso.
Recruitment
AUDIT CHARGES ARE VERY HIGH
8
10
31
136
205
61
451
2
2
7
30
45
14
100
FREQ. PERCENT CUM.
2
4
11
41
86
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
COSTS HAVE BEEN INCURRED FOR TRAINING OF STAFF TO MEET CERTIFICATION REQUIREMENT
10
14
47
87
238
54
450
2
3
10
19
53
12
100
FREQ. PERCENT CUM.
2
5
16
35
88
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
COSTS HAVE BEEN INCURRED FOR RECRUITMENT OF STAFF TO MEET CERTIFICATION REQUIREMENT
27
20
109
106
160
28
450
6
4.44
24.22
23.56
35.56
6.22
100
FREQ. PERCENT CUM.
6
10.44
34.67
58.22
93.78
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
40© Frenz Lambert 2021
Recruitment-Summary• Over40%ofrespondentshavespentmoneyonrecruitingstafftomeettheneedsofcertification.• But28%havenothadthatexperience,while24%areneutral.• Recruitmentofnewstaffcangeneratebenefitsthroughincreasedcapabilityandresponsivenesstocustomersand markets.
Employee resistance
Employeeresistance-Summary• Thelargestgroupofrespondents-over44%-disagreethatemployeesareresistanttochange.• Over20%areneutral.• Some30%feelthatthereissuchresistance.• Thebalanceofresponsessuggestthatthisisnotanextensiveproblem.
Modernisation of capital
Modernisationofcapital-Summary• Around50%ofrespondentshaveincurredexpenditureonup-datingequipment.• Only23%disagreethatthisactionwastaken• While25%wereneutral.• Modernisationcanbenefitthebusinessthroughefficienciesandcustomersthroughimprovedproductsandservices.
EMPLOYEES ARE RESISTANT TO CHANGE
20
51
148
99
109
23
450
4
11
33
22
24
5
100
FREQ. PERCENT CUM.
4
16
49
71
95
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
COSTS HAVE BEEN INCURRED FOR NEW OR UPGRADED MACHINERY AND EQUIPMENT
38
18
89
80
181
42
448
8
4
20
18
40
9
100
FREQ. PERCENT CUM.
8
13
32
50
91
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
41 © Frenz Lambert 2021
Modernisation of IT
ModernisationofIT-Summary• Over27%ofrespondentshadspentonmodernisingtheirIT.• Butnearly40%hadnot.• Aroundonethirdwereneutral.• ThebalanceofresponsesindicatesthatupgradingproductionequipmentwasmorewidelyadoptedthanimprovingIT provision.
Infrastructure
Infrastructure-Summary• Only20%overallofrespondentsagreedthatcertificationfacedlocalinfrastructureproblems.• Over50%didnotseesuchproblems.• Some25%wereneutral.• Thebalanceofresponsesdoesnotindicatewidespreadinfrastructureissues-althoughparticularlocationsmightshow ahigherincidence.
COSTS HAVE BEEN INCURRED FOR NEW/UPGRADED IT
42
33
140
106
111
12
444
9
7
32
24
25
3
100
FREQ. PERCENT CUM.
9
17
48
72
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
LOCAL INFRASTRUCTURE PROBLEMS SUCH AS ACCESS TO AUDITORS
39
72
170
75
72
20
448
9
16
38
17
16
4
100
FREQ. PERCENT CUM.
9
25
63
79
96
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
42© Frenz Lambert 2021
Product development
Productdevelopment-Summary• Morerespondents-33%disagreedthatthesecostswereincurred.• Some28%agreed.• Over38%wereneutral.
Cost of bureaucracy
Costofbureaucracy-Summary• Around54%agreedthatsuchcostswereincurred.• Only24%disagreed.
COSTS HAVE BEEN INCURRED FOR CHANGES TO PRODUCT DEVELOPMENT
61
24
124
113
111
15
448
14
5
28
25
25
3
100
FREQ. PERCENT CUM.
14
19
47
72
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
COSTS HAVE BEEN INCURRED DUE TO INCREASED PAPERWORK AND DOCUMENTATION
8
29
78
93
188
50
446
2
7
17
21
42
11
100
FREQ. PERCENT CUM.
2
8
26
47
89
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
43 © Frenz Lambert 2021
WHY BRCGS?
Biggest customer
Biggestcustomer-Summary• Around77%ofrespondentsagreethattheirbiggestcustomerrequiredBRCGScertification.• Only6%hadsomedegreeofdisagreement.• Thebalanceimpliesthatbrandsareoftenthedefacto“customer”forFoodSafetystandards.
Coverage
Coverage-Summary• Over80%ofrespondentsagreethatthecoverageoftheiractivitiesbytheBRCGSstandardwasimportantintheir choiceofthatsourceofcertification.• Veryfew(16%)disagreedorwereneutral.
REQUIRED BY BIGGEST EXISTING CUSTOMER
14
2
25
63
203
145
452
3
0
6
14
45
32
100
FREQ. PERCENT CUM.
3
4
9
23
68
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
GOOD COVERAGE OF OUR OPERATIONS
5
4
14
49
284
95
451
1
1
3
11
63
21
100
FREQ. PERCENT CUM.
1
2
5
16
79
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
44© Frenz Lambert 2021
Auditors
Auditors-Summary• 80%ofrespondentsagreedonthehighqualityofauditorsavailabletotestcertificationtotheBRCGSstandard.• Under3%disagreed.• TakentogetherwiththeirappreciationofthebreadthofcoverageoftheBRCGSstandard,thisimpliesahighlevelof satisfactionwiththeintegratedstandardsprovisionandcertificationsystemofferedbyBRCGS.
Value for money
Valueformoney-Summary• LessthanhalfofrespondentsagreedthatBRCGSofferedthebestvalueformoney.• Butonlyaround10%disagreed.• Over45%wereneutral.• SothereappearstobeasubstantialbutnotoverwhelmingsharewhoseegoodvalueformoneyfromBRCGS.
HIGH QUALITY OF AUDITORS
2
2
10
73
285
80
452
0
0
2
16
63
18
100
FREQ. PERCENT CUM.
0
1
3
19
82
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
BEST VALUE FOR MONEY
18
7
40
187
165
34
451
4
2
9
41
37
8
100
FREQ. PERCENT CUM.
4
6
14
56
92
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
45 © Frenz Lambert 2021
OUTCOMES
OPERATIONAL OUTCOMES
Food quality and safetyWhilethisisnotthemainfocusofthesurvey,theresponsesconfirmthatfoodsafetyandqualityhasbeenverysubstantiallyenhancedbytheirBRCGScertification.
Product Recalls
Recalls-Summary• Around40%ofrespondentsreportfoodsafetyimprovementsthroughexperiencingfewerproductrecallsand withdrawals,sinceachievingBRCGScertification.• Another40%wereneutralorlackedknowledgeontheissue• Under20%reportednosucheffects.
Quality
Quality-Summary• Morethan63%ofrespondentsreportedimprovementsinproductquality• Around11%weresureofnosuchimprovement• Some25%wereneutral(notsureorperceivingnonchange).
WE HAVE EXPERIENCED FEWER PRODUCT RECALLS/WITHDRAWALS
58
30
58
125
132
49
452
13
7
13
28
29
11
100
FREQ. PERCENT CUM.
13
19
32
60
89
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
OUR PRODUCT QUALITY HAS IMPROVED
16
10
42
97
228
63
456
4
2
9
21
50
14
100
FREQ. PERCENT CUM.
4
6
15
36
86
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
46© Frenz Lambert 2021
Product safety
Safety-Summary• Some80%ofrespondentsareconfidentthatBRCGScertificationhasachievedisprimarypurposeofenablingsafer food production.• Only5%disagree.• Around15%areneutralonthistopic.
Efficiency and InvestmentSurveyrespondentsextensivelyreportefficiencygainsthroughorganisationofproduction,oftenwithinvestmentinnewtechnology.Over80%haveinvestedinstafftraining.Theseenhancementsofphysicalandhumancapitalbenefitthesuppliersandtheircustomers.Productinnovationisalsoreportedbysome30%,whichseemshigh,giventheimportanceofcustomerspecificationsinthefoodsupplychain.
Organisation of production
Organisationofproduction-Summary• Nearly70%ofrespondentsreportimprovementsintheirorganisationofproduction.• Only10%definitelydidnotexperiencethiseffect.• Slightlymorethan20%werenotabletogiveanassessment.
OUR PRODUCT SAFETY HAS IMPROVED
6
5
20
59
255
110
455
1
1
4
13
56
24
100
FREQ. PERCENT CUM.
1
2
7
20
76
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
WE HAVE ACHIEVED BETTER ORGANISATION OF PRODUCTION
29
11
36
68
256
53
453
6
2
8
15
57
12
100
FREQ. PERCENT CUM.
6
9
17
32
88
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
47 © Frenz Lambert 2021
Innovation
Innovation-Summary• Asmallerproportionofrespondents-30%lessthanforotheroperationaloutcomesreportincreasesin product innovation.• Over20%areclearthatinnovationhasnotbeenincreasebycertification.• Nearly50%cannottakeaviewonthematter.
New technology
Newtechnology-Summary• Nearly50%ofrespondentsagreethattheyhaveundertakeninvestmentinnewtechnology,stimulatedbycertification totheBRCGSstandard.• Overonethirdarenotabletosay.• Around17%areclearthattheyhavenotsoinvested.
PRODUCT INNOVATION HAS INCREASED
51
19
73
174
111
24
452
11
4
16
39
25
5
100
FREQ. PERCENT CUM.
11
15
32
70
95
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
WE HAVE INVESTED IN NEW TECHNOLOGY
36
8
71
121
186
31
453
8
2
16
27
41
7
100
FREQ. PERCENT CUM.
8
10
25
52
93
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
48© Frenz Lambert 2021
Training
Training-Summary• Thevastmajority-85%ofrespondentshaveinvestedintrainingaspartoftheiradoptionofBRCGScertification.• Around4%havenotdoneso.• Some11%areunsure.
Integration with other standards
Integrationofstandards-Summary• Around50%ofrespondentsagreethatthereisbetterintegrationwithothermanagementstandards.• Some8%disagree.• Another42%arenotsure.
WE HAVE INVESTED IN TRAINING
1
3
16
50
309
73
452
0
1
4
11
68
16
100
FREQ. PERCENT CUM.
0
1
4
15
84
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
THERE IS BETTER INTEGRATION WITH OTHER MANAGEMENT STANDARDS (E.G. ISO 9001)
88
6
29
102
181
48
454
19
1
6
22
40
11
100
FREQ. PERCENT CUM.
19
21
27
50
89
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
49 © Frenz Lambert 2021
MARKET OUTCOMESForalargeproportionofBRCGScustomerswhorespondedtothesurvey,theoperationaldevelopments,aswellasanenhancedmarketreputation,signalledbygainingcertification,haveledtoimprovedcompetitiveness,especiallyinexportmarkets,whilecertificationstatushasopeneduplargermarketopportunities.Relativelysmallsharesofrespondentshavedisagreedwiththepropositionsonmarketoutcomes.
Competitiveness in home market
Competitiveness-Summary• Over50%ofrespondentsreportanimprovementintheircompetitivenessintheirhomemarket.• But16%donotagreethatcompetitivenesshasimproved.• Aroundonethirdareneutral/undecided.
Competitiveness in export markets
Exportcompetitiveness-Summary• Some60%ofrespondentshavegainedcompetitivenessinexportmarkets-ahighersharethaninhomemarkets.• Only8%havenotfoundexportcompetitiveness.• Again,aroundonethirdareneutralonthesubject.
WE HAVE INCREASED COMPETITIVENESS IN THE HOME MARKET
36
20
55
114
189
40
454
8
4
12
25
42
9
100
FREQ. PERCENT CUM.
8
12
24
50
91
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
WE HAVE INCREASED COMPETITIVENESS IN EXPORT MARKETS
41
8
30
101
207
68
455
9
2
7
22
45
15
100
FREQ. PERCENT CUM.
9
11
17
40
85
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
50© Frenz Lambert 2021
Access to larger home market
Largerhomemarket-Summary• Over50%ofrespondentfindthattheyhaveaccesstoalargerhomemarketasaresultsofBRCGScertification• Some15%havenotfoundthis.• Theremaining35%areunsightedonthetopic.
Access to larger export market
Largerexportmarket-Summary• Again,accesstolargerexportmarketsarereportedbymorerespondents-some65%,thanforhomemarkets.• Justover5%havenotfoundlargerexportmarkets.• Around30%areneutralonthesubject.
THERE IS ACCESS TO LARGER HOME MARKET
36
16
52
122
192
37
455
8
4
11
27
42
8
100
FREQ. PERCENT CUM.
8
11
23
50
92
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
THERE IS ACCESS TO LARGER EXPORT MARKET
40
4
22
93
220
75
454
9
1
5
20
48
17
100
FREQ. PERCENT CUM.
9
10
15
35
83
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
51 © Frenz Lambert 2021
COMMERCIAL OUTCOMES
SALES EFFECTSBRCGScertificationisassociatedwithhighersalestoexistingcustomersfornearly40%ofrespondents.However,ithashelpedtogainbusinesswithnewcustomersfor55%ofrespondents,confirmingtheefficacyofcertificationinimprovingcompetitiveness.Thesharewhohavegainedsalesinexportmarketsissomewhathigherthaninhomemarkets,whichsuggeststhatcertificationraisestheinternationalprofileofBRCGScustomers.
Sales to existing customers
Increasedsales-Summary• Over38%ofrespondentsagreethattheyhaveachievedincreasesintheirsalestotheirexistingcustomers,following certificationbyBRCGS.• Morethan20%donotthinkthattheyhaveachievedhighersales.• Around40%areneutral.
Sales - new customers
Increasedsalestonewcustomers-Summary• Ahighershareofrespondents-nearly55%-reportincreasedsalestonewasopposedtoexistingcustomers.• Only13%areclearthattherehasnotbeenanincrease.• Again,onethirdareneutralonthequestion.
INCREASED SALES VOLUMES - EXISTING CUSTOMERS
34
19
72
150
151
20
446
8
4
16
34
34
4
100
FREQ. PERCENT CUM.
8
12
28
62
96
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
INCREASED SALES VOLUMES - NEW CUSTOMERS
32
10
49
110
215
29
445
7
2
11
25
48
7
100
FREQ. PERCENT CUM.
7
9
20
45
93
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
52© Frenz Lambert 2021
Sales - home market
Increasedsalesinhomemarket-Summary• Around30%ofrespondentsagreethattheyhaveincreasedsalesinthehomemarket.• Butover22%havenotfoundthis.• Some46%havenovieworinformationonthequestion.
Sales - export markets
Increasedsalesinexportmarkets-Summary• Over45%ofrespondentsagreethattheyhaveseenincreasedsalesinexportmarkets,comparedto30%in homemarkets.• Around13%donotagreethatexportsaleshaveincreased.• 40%ofrespondentsremainneutralonchangesinthevolumeofexportsales.
Other commercial effectsOnlyasmallproportionattributeoperatingcostreductionstocertification,whereas50%definitelydisagreewiththeproposition.Under30%ofrespondentsagreewiththeideaofincreasedprofitability,whileaverysimilarproportiondisagree.Nearlyhalfofrespondentsfindthatcertificationisassociatedwithfewerauditsbytheircustomers-oneoftheleadingrationalesforthedevelopmentofthirdpartyfoodsafetystandards.Howevernearly30%disagree.
Quantification of commercial impactsOver40%ofrespondentswereabletoestimatethepercentagechangeinsalesarisingfromoperatingwithBRCGScertification.Only5%indicatedapercentageforreductionsinsales.Onprofitability,35%quantifiedanincreasewhile6%quantifiedsomedecline.
INCREASED SALES VOLUMES - HOME MARKETS
47
20
81
161
119
15
443
11
5
18
36
27
3
100
FREQ. PERCENT CUM.
11
15
33
70
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
INCREASED SALES VOLUMES -EXPORT MARKETS
57
9
50
125
169
36
446
13
2
11
28
38
8
100
FREQ. PERCENT CUM.
13
15
26
54
92
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
53 © Frenz Lambert 2021
Cost reduction
Reductionincosts-Summary• Only16%ofrespondentsassociateBRCGScertificationwithloweroperatingcosts.• Nearly48%aresurethatthereisnoreduction.• Around35%areneutralonthisquestion.
Profitability
Increaseinprofitability-Summary• Around27%ofrespondentsagreethatBRCGScertificationisassociatedwithanincreaseinprofitability.• Againaround27%donotagreethatprofitabilityisincreased.• Some42%areneutral.
REDUCTION IN OPERATING COSTS
25
48
167
130
66
8
444
6
11
38
29
15
2
100
FREQ. PERCENT CUM.
6
16
54
83
98
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
INCREASE IN PROFITABILITY
32
27
97
167
107
14
444
7
6
22
38
24
3
100
FREQ. PERCENT CUM.
7
13
35
73
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
54© Frenz Lambert 2021
Fewer audits
Fewercustomeraudits-Summary• Nearly48%ofrespondentsagreethattheexperiencefewerauditsbytheircustomers.• But28%donotagreethatthisisthecase.• Around23%areneutral.
Quantified sales growth
Percentchangeinsales-Summary• Around43%ofrespondentsagreetheyhaveincreasedsalesintherange0toover10%.Thisisconsistentwiththe sharesreportingsomedegreeofincreaseinsalesinanearlierquestion.• Some5%agreethattheyhaveexperiencedadeclineinsalesintherange0toover10%.• Over25%reportnochangeandafurther25%areunabletoestimate.
A LOWER NUMBER OF CUSTOMER AUDITS
18
45
82
87
158
55
445
4
10
18
20
36
12
100
FREQ. PERCENT CUM.
4
14
33
52
88
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
QUANTIFIED SALES INCREASE
7
4
11
113
82
65
51
117
450
2
1
2
25
18
14
11
26
100
FREQ. PERCENT CUM.
2
2
5
30
48
63
74
100
Morethan10%decline
5to10%decline
0to5%decline
Nochange
0to5%increase
5to10%increase
Over10%increase
Don’tknow
Total
55 © Frenz Lambert 2021
Quantified profitability increase
Percentagechangeinprofitability-Summary• Over34%ofrespondentsagreethattheyhaveincreasedprofitabilityinarangefrom0toover10%.• Some6%considerthattherehasbeenadeclineinprofitabilityinarangefrom0toover10%.• Nearly30%areunabletosaywhileafurther30%reportnochangeinprofitability.
Comment:Thesharereportingpositiveratesofprofitabilityincreaseheredoesnotseemfullyconsistentwithanswerstothebroaderquestionofwhetherprofitabilityhasincreased,where27%agreedthattherehadbeensomeincreaseinprofitability.Thedivergenceislargelydue(numerically)to38respondentswhoanswered“NeitherAgreenorDisagree”tothegeneralquestiononprofitabilitybut“0to5%”topercentagechangeinprofitability.Afurther12indicated“5to10%”increase.
OTHER FOOD SAFETY STANDARDSThesurveyrepeatedafewofthecommercialoutcomequestionsbutaddressedtoFBOswhowereapplyingotherfoodsafetystandardsintheiroperations.ThiswasaimedatprovidingsomeelementsofabroadercontextfortheinformationgatheredonthosecertificatedtotheBRCGSstandard.Thequestiondidnotspecifywhatsortsofstandardtoinclude,egnotspecificallyGFSIbenchmarkedstandards.SorespondentscouldbethinkingofISO22000orpossiblysomecustomerspecificstandards.Themajorityofsurveyrespondents(425of450)completedthesequestions,suggestingthatmostsuppliersareoperatingincompliancewithmorethanonefoodsafetystandard.
Inbroadterms,thepatternofresponsesweresimilartothoseconcernedwithBRCGSstandardsonly.Relativelylargedifferencesthoughoccurredfor:“Increasedsalestonewcustomers”where55%ofBRCGScertifiedFBOsagreedagainst43%ofthoserespondingon“Otherfoodsafetystandards.”“Reductionincustomeraudits”confirmedby47%ofBRCGScertifiedrespondentsagainst40%ofthosealsousingotherstandards.
PROFITABILITY INCREASE
6
4
19
132
87
37
30
132
447
1
1
4
30
19
8
7
29.53
100
FREQ. PERCENT CUM.
1
2
6
36
55
64
70
100
Morethan10%decline
5to10%decline
0to5%decline
Nochange
0to5%increase
5to10%increase
Over10%increase
Don’tknow
Total
56© Frenz Lambert 2021
Sales - existing customers
Increasedsalestoexistingcustomers-Summary• Around35%ofrespondentswithcertificatestostandardsinadditiontoBRCGSreportedanincreaseinsalesto existingcustomers.(ThisresultissimilartobutsomewhatlowerthanforBRCGScertification.)• Some15%didnotagreethattherewasanincrease.• Theremaining50%wereneutral.(AmuchhigherproportionthaninthecaseofBRCGSstandards,where40% wereneutral.)
Sales - new customers
Increasedsalestonewcustomers-Summary• Over43%agreedthattheyexperiencedincreasedsalestonewcustomers.(Thisismarkedlylowerthanthe55%of BRCGScertificatedrespondents.)• Just11%disagreedwiththeproposition.• 45%wereneutral.
INCREASED SALES VOLUMES -EXISTING CUSTOMERS
77
11
53
133
137
14
425
18
3
12
31
32
3
100
FREQ. PERCENT CUM.
18
21
33
64
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
INCREASED SALES VOLUMES - NEW CUSTOMERS
76
7
39
118
164
22
426
18
2
9
28
39
5
100
FREQ. PERCENT CUM.
18
19
29
56
95
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
57 © Frenz Lambert 2021
Sales - home market
Increasedsalesinhomemarket-Summary• Some26%ofrespondentsagreesthatsalesintheirhomemarkethadincreased.(Slightlylowerthanthe30%of BRCGScertificatedrespondents.)• Around15%disagreedwiththepropositionofhigherdomesticsales.• Thelargershare-55%-wereneutral.
Sales - export markets
Increasedsalesinexportmarkets-Summary• Morethan42%ofrespondentsexperiencedincreasedsalesinexportmarkets(slightlylessthanthe46%ofBRCGS certificatedrespondents).• Some10%disagreedwiththeideaofincreasesinexportsales.• While47%wereneutral.
INCREASED SALES VOLUMES - HOME MARKETS
92
19
60
143
99
11
424
22
4
14
34
23
3
100
FREQ. PERCENT CUM.
22
26
40
74
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
INCREASED SALES VOLUMES - EXPORT MARKETS
87
9
35
113
149
31
424
21
2
8
27
35
7
100
FREQ. PERCENT CUM.
22
26
40
74
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
58© Frenz Lambert 2021
Cost reduction
Costreduction-Summary• Just17%ofrespondentsagreedthatcertificationtoanotherstandardledtoloweroperatingcosts.• But39%disagreed.• While43%wereneutral.
Profitability
Increaseinprofitability-Summary• Around29%ofrespondentsagreethatprofitabilityhasincreased.• However21%disagree.• Butover50%areneutralonprofitability.
ThispatternofresponsesisverysimilartothoseforBRCGScertification.
REDUCTION IN OPERATING COSTS
71
32
135
112
59
14
423
17
8
32
26
14
3
100
FREQ. PERCENT CUM.
22
26
40
74
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
INCREASE IN PROFITABILITY
81
15
74
133
109
11
423
19
4
17
31
26
3
100
FREQ. PERCENT CUM.
19
23
40
72
97
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
59 © Frenz Lambert 2021
Customer audits
Fewercustomeraudits-Summary• Over40%ofrespondentsagreethattherearefewercustomerauditsaftercertificationtoanotherthird-partystandard. Thiscompareswith47%onBRCGScertification.• Some25%disagreeonthisimpact.• While44%areneutral.
RESPONSES BY SUB-GROUPSThefollowingtablesreportonthetestofstatisticalsignificanceacrosssub-groupsofFBOs:byregion;size;and timecertified.
By region
A LOWER NUMBER OF CUSTOMER AUDITS
56
30
76
88
139
35
424
13
7
18
21
33
8
100
FREQ. PERCENT CUM.
13
20
38
59
92
100
Notapplicable/don’tknow
Stronglydisagree
Disagree
Neitheragreeordisagree
Agree
Stronglyagree
Total
Export competitiveness
Competitorcertified
Employeeresistance
Upgradephysicalcapital
Coverageofoperations
Bestvalueformoney
Productrecalls
Organisation
Export competitiveness
Salestoexistingcustomers
Pearsonchi2(25)=86.6229Pr=0.000
Pearsonchi2(25)=50.9086Pr=0.002
Pearsonchi2(10)=18.1847Pr=0.052
Pearsonchi2(10)=19.9154Pr=0.030
Pearsonchi2(10)=19.7933Pr=0.031
Pearsonchi2(10)=47.8302Pr=0.000
Pearsonchi2(10)=44.9076Pr=0.000
Pearsonchi2(10)=41.4187Pr=0.000
Pearsonchi2(10)=70.8166Pr=0.000
Pearsonchi2(10)=24.1012Pr=0.007
UKlowimportance, Europehighimportance
60© Frenz Lambert 2021
By size
By time certified
BRCGScharges
Coverageofoperations
Bestvalueformoney
Homecompetitiveness
Customeraudits
Pearsonchi2(6)=13.0886Pr=0.042
Pearsonchi2(6)=13.9317Pr=0.030
Pearsonchi2(6)=15.1187Pr=0.019
Pearsonchi2(6)=17.8515Pr=0.007
Pearsonchi2(6)=15.1756Pr=0.019
1-50highagree
501-1500morellikelytoagree
1-50morelikelytoagree
Export competitiveness
Recruitment
Homecompetitiveness
Profitability
Customeraudits
Pearsonchi2(20)=33.5231Pr=0.030
Pearsonchi2(8)=16.1911Pr=0.040
Pearsonchi2(8)=17.1027Pr=0.029
Pearsonchi2(8)=20.9139Pr=0.007
Pearsonchi2(8)=32.9498Pr=0.000
1-5yearshavehigherthanaverageagreement
1-5yearshighagree,over15yearslowagree
1-5yearshighagree,over11yearslowagree
1-5yearhighagree
61 © Frenz Lambert 2021
ANNEX 2. FACTOR, REGRESSION AND CLUSTER ANALYSESFACTOR ANALYSISToarriveatthetypologyofcertificationweuse39surveyinstruments(questions)coveringthefollowingbroadareas:(i)agreementwiththeimportanceofasetofobjectivesforcertificationconsistingofsixindividualquestions;(ii)agreementwithfinancialcostsandotherchallenges(10questions),(iii)choiceofBRCGS(4questions);(iv)agreementwithasetofoperationaloutcomes(8questions);(v)agreementwithspecificmarketoutcomes(4questions);and(vi)agreementwithasetofcommercialoutcomes(7questions).TheresultsarepresentedintheAppendix.Thesurveyresponsescanusefullybereducedintofivefactorsortypesofcertificationuse.
• Type 1 Product and process innovation.Thisfactorexplainsthelargestshareofvariationinthedataandpullstogether issuesaroundimprovingproductqualityandproductsafety,togetherwithinvestmentintrainingandnewtechnology.It alsoscoreshighlyonthechoiceforaBRCGSstandardandincreasedprofitability.• Type 2 Competitiveness led growth in the home market.Thistypologysummarisesresponsesconnectedwith increasedsalesinthehomemarketaswellasincreasedprofitability.• Type 3 Competitiveness led growth in export markets.Thistypologypullstogetherthepatternofresponsesforexport marketgrowthandcompetitiveness.• Type 4 Costs of certification and investment.Drawstogetherresponsepatternsaroundthepossiblecostsofattaining andutilisingcertification.• Type 5 Customer requirement for certification.Bringstogetherallquestionsrelatedtothepullforcertificationvia customerrequirements.Thistypealsodrawsincostsaspectsofthecertificationprocess.
Goingacrossthetopofthetablethetypologyofcertificationuse.Determiningtherowsoftheablearethe39individualsurveyquestionsthataresummarisedintothefivetypes.Thenameofeachtypologyisourowninterpretationbasedonthevaluesinthetable.Eachcellinthetableshowshowstronglyaspecificsurveyquestioncorrelateswithorloadsupontoaspecifictypologyandhowmuchitcontributestoitsmeaning.
62© Frenz Lambert 2021
Table1.FactoranalysisSource:owncalculations.N=425. Methodology for the factor analysis
ThefactoranalysisisperformedusingaSpearmanrankcorrelationmatrix.Allvariablesfeedingintotheanalysisaremeasuredona5-pointlikertscalerangingfromstronglydisagreetostronglyagree.Rotationmethodvarimax.Factorloadingsbelow0.3arenotshown.5factorswitheigenvaluesgreaterthan1areretained.Allfactorstakentogetherexplain87%ofvariationinthedata.Theresultingfactorscoresaresavedusingaregressionmethod.
CertificationisrequiredbycurrentcustomersCertificationisrequiredbypotentialcustomersIncreasecompetitivenessinhomemarketIncreasecompetitivenessinexportmarkets.NeedtosupplysafeproductsCompetitorhascertificationBRCGSspecificchargesareveryhighAuditchargesareveryhighCostshavebeenincurredfortrainingofstafftomeetcertificationrequirementsCostshavebeenincurredforrecruitmentofstafftomeetcertificationrequirementsEmployeesareresistanttochangeCostshavebeenincurredforneworupgradedmachineryandequipmentLocalInfrastructureproblemssuchasaccesstoauditorsCostshavebeenincurredfornew/upgradedITCostshavebeenincurredduetoincreasedpaperworkanddocumentationCostshavebeenincurredforchangestoproductdevelopmentRequiredbybiggestexistingcustomerGoodcoverageofouroperationsHighqualityofauditorsBestvalueformoneyWehaveexperiencedfewerproductrecalls/withdrawalsWehaveachievedbetterorganisationofproductionOurproductqualityhasimprovedOurproductsafetyhasimprovedProductinnovationhasincreasedWehaveinvestedinnewtechnologyWehaveinvestedintrainingThereisbetterIntegrationwithothermanagementstandards(e.g.ISO9001)WehaveincreasedcompetitivenessinthehomemarketWehaveincreasedcompetitivenessinexportmarketsThereisaccesstolargerhomemarketThereisaccesstolargerexportmarketIncreasedsalesvolumes-existingcustomersIncreasedsalesvolumes-newcustomersIncreasedsalesvolumes-homemarketsIncreasesalesvolumes-exportmarketsReductioninoperatingcostsIncreaseinprofitabilityAlowernumberofcustomeraudits
COM
PETI
TIVE
NESS
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GROW
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THE
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ARKE
T
PROD
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INNO
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AND
INVE
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COM
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GR
OWTH
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XPOR
T M
ARKE
TS
UNIQ
UENE
SS
CUST
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REQ
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SURV
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SURVEY QUESTION
IMPO
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IVES
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0.60.60.60.50.80.80.60.60.60.60.90.60.80.60.60.60.80.70.70.70.70.40.40.60.50.60.70.80.50.30.50.30.40.50.30.30.60.60.9
0.50.5
0.40.4
0.5
0.30.6
0.30.40.4
0.60.6
0.50.4
0.60.5
0.50.4
0.40.40.4
0.50.7
0.70.6
0.60.60.50.3
0.40.4
0.40.4
0.60.50.8
0.7
0.7
0.7
0.80.40.5
0.8
0.3
63 © Frenz Lambert 2021
REGRESSION ANALYSISWeperformedalinearregressiontolookatcorrelationsbetweenthefactorsandchangesinsalesandprofits.
Table2Regressionresultsfortypesofcertificationandoutcomes–profitsandsales
Andanorderlogitregressionwhichshoeshighlysimilarcorrelations.
VARIABLES
0.25***(0.06)
0.22***(0.06)
0.22***(0.05)-0.10*(0.06)-0.02(0.07)
2.67***(0.64)
29710.17***
0.15
(1)CHANGE IN PROFITS
(2)CHANGE IN SALES
Product and process innovation
Competitivenessledgrowthinthehomemarket
Competitivenessledgrowthinexportmarkets
Costsofcertificationandinvestment
Customerrequirementofcertification
Constant
ObservationsF-testR-squared
Standarderrorsinparentheses*** p<0.01, ** p<0.05, * p<0.1Regressionmethods:OLS
0.21***(0.07)
0.28***(0.06)
0.27***(0.06)0.02(0.06)
0.27***(0.08)0.56(0.67)
31413.36***
0.18
64© Frenz Lambert 2021
Table3Regressionresultsfortypesofcertificationandoutcomes–profitsandsales
CLUSTER ANALYSISWethenuseclusteranalysis–atechniquethatgroupstheFBOsbytheirsimilaritiesanddifferencesacrossthefivetypesofcertificationuse.Thetablebelowliststhefiveresultinggroups(clusters)andtheircharacteristicswithregardstothefivefactors:Productandprocessinnovation;competitivenessledgrowthinthehomemarket;competitivenessledgrowthinexportmarkets;costsofcertificationandinvestment;andcustomerrequirementforcertification.
Table3.GroupingsofFBOsbytypologyofcertificationuseSource:owncalculations.
VARIABLES
0.47***(0.11)
0.46***(0.10)
0.43***(0.09)-0.19*(0.11)-0.09(0.13)
-0.50(1.15)0.03(1.12)1.19(1.09)
3.85***(1.12)
5.36***(1.13)
6.41***(1.15)
63.81***0.07297
(1)CHANGE IN PROFITS
(2)CHANGE IN SALES
Product and process innovation
Competitivenessledgrowthinthehomemarket
Competitivenessledgrowthinexportmarkets
Costsofcertificationandinvestment
Customerrequirementofcertification
/cut1
/cut2
/cut3
/cut4
/cut5
/cut6
LRchi2(5)PseudoR2Observations
0.37***(0.10)
0.50***(0.10)
0.50***(0.09)0.02(0.10)0.39***(0.12)
2.98***(1.08)
3.46***(1.06)
4.16***(1.05)
6.83***(1.10)
8.01***(1.12)9.25***(1.14)
77.46***0.08314
CLUSTERS
Group1
Group2
Group3
Group4
Group5
NO. OFFBOS
CUSTOMER REQUIREMENT OF CERTIFICATION
COSTS OF CERTIFICATION ANDINVESTMENT
COMPETITIVENESS LED GROWTH IN EXPORT MARKETS
COMPETITIVENESS LED GROWTH IN THE HOME MARKET
PRODUCT AND PROCESS INNOVATION
114
27
199
40
45
0.4
0.3
0.0
0.8
-1.9
0.1
-1.8
0.2
-0.3
0.1
0.3
0.2
0.3
-2.0
-0.5
-0.6
-0.9
0.6
0.3
-0.6
-0.8
0.9
0.2
-0.1
0.7
65 © Frenz Lambert 2021
Thevariablesfeedingintotheclusteranalysisarethesavedstandardizedfactorscores.Therefore,anegativevalueisindicativeofascorebelowtheaverageonatypeandapositivevalueofascoreaboveaverage.Scoresgreaterthan+/-1deviatealotfromtheaverage.Putdifferently,68%percentofallobservationsfallwithintheintervalof[-1;1].
Methodology for the cluster analysisTheclusteranalysisusedishierarchicalclusteranalysisusingWardlinkages.5clustersolutionwasselectedfollowinginspectionoftheclustertreebelow.N=425.
Figure1.Clustertree
0
100
200
300
400
500
G1G2G3G4G5G6G7G8G9G10G11G12G13G14G15G16G17G18G19G20G21G22G23G24G25G26G27G28G29G30G31G32G33G34G35
DISS
IMIL
ARIT
Y M
EASU
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