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Food Safety and Brand Protection
through Technology
November 2011Process Expo
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“Will the defendant please rise…”
CEO’s from Con Agra Foods, Bumble Bee Foods, Dole Foods,
Butterball and Westland Hallmark Meat Co. in front of
the House Energy and Commerce committee
hearing, titled: “Contaminated Food:
Private Sector Accountability”.
2/26/2008
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A new level of Executive accountability?
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A new level of Executive accountability…Round II
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Food Safety in China, and the Risk to the U.S.From the FDA’s “special report” Pathway to Global Product Safety and Quality (June 2011)
Imports from China =
*10-15% of all food eaten in US households*60% of fruits and vegetables*80% of seafood*50% of medical devices*80% of active pharma ingredients in medications
The FDA cannot keep up:
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The new instances of Brand imagery…
Peter Hurley comforts his son Jacob at the House Energy and Commerce Committee hearing on the salmonella outbreak.
(Mark Wilson/Getty Images) Associated Press / February 12, 2009
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Risk communication and control are now key elements of Brand Protection
Risk = Hazard + Outrage problems are worse than they actually are…reputation problems are better than they actually are…L/T damage problems blamed on others… “a plague on both your houses!”
“A brand promise can be unmasked as a shallow boast at almost any point during a customer experience…”Making Every Employee a Brand Manager, Heaton & Guzzo
“Brand damage is one of the major business risks of the 21st. Century”Lloyds of North America
Actionable info is needed, especially to leverage “Ownable Elements” that consumers can see & hear as well as taste…
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ththtiFood Safety Has Become A Serious Public Health Issue That Isn’t Going Away
Statistics at-a-glance Food recalls have increased 76 million Americans get sick per year 5,000 deaths per year 89% of voters support food safety legislation
More government attention than ever before:
FDA Office of Foods – enhancing ability to address food and feed safety.
Federal Trade Commission – increased enforcement and monitoring of Quality claims.
Better cooperation between federal, state, and local governments and agencies.
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ththtiOne Incident Can Be Crippling
The Numbers Speak For Themselves Average cost of one recall is $10 million There are immediate and long-term impacts on
share price
One bad apple spoils the whole bunch After the spinach recall, consumers stopped eating
all bagged spinach, not just the impacted brand. Lag effect: Some consumers never return to the
category. Spinach eaters: 5% said "never again"* Many consumers stopped all bagged salad items.^
Sources:
* DailyFinance.Com August 20, 2010.
^ Food Institute Policy Report 2007.
1,470 reported illnesses- actual cases probably higher
500 million eggs recalled 3 law suits
Aug 2010Nationwide Egg Recall Salmonella Enteritidis
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Detect, assess and respond to demand and supply altering events:
Process shift or upset
Quality issue or material shortage
Customer preference or pricing concerns
New customer or supplier
Emerging market opportunities
New product introduction
Delay in response time
Rel
ativ
e Im
pact
The longer it takes to respond to such an event, the greater the magnitude of impact
of that event on the business
Speed with Confidence
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ththtiTime is a Critical Factor in Every Recall
The Time-Value Factor On Day 1 after recall announcement: 2.3% decline
in share price compared to sector index On Day 14 after poor handling of recall: 22%
decline compared to sector index
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ththtiNew Food Safety Legislation is here
Hurry Up and Wait Broad agreement in Congress that
food and feed supply must be safer. Opinions differ on best approach and
right timing.
Key Components of Major Federal Draft Legislation
Reporting of Test Results Performance Standards HACCP
Protection Against Intentional Adulteration Traceability Inspection Frequency
Produce Safety Standards Imports Notification and Reporting
Mandatory Recall Authority Civil Penalties Fees
Record Keeping Records Access Security
© Siemens AG 2011. All rights reserved.Page 15
ththtiNew Food Safety Legislation is here
Hurry Up and Wait Broad agreement in Congress that
food and feed supply must be safer. Opinions differ on best approach and
right timing.
Key Components of Major Federal Draft Legislation
Reporting of Test Results Performance Standards HACCP
Protection Against Intentional Adulteration Traceability Inspection Frequency
Produce Safety Standards Imports Notification and Reporting
Mandatory Recall Authority Civil Penalties Fees
Record Keeping Records Access Security
Areas addressed by existing Siemens
technology
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“Un-Common” Food Supply Security Challenges
• Employee Violence• Tracking of contractors & visitors within the facility• Disaster response • Identifying and protecting Sensitive areas of the facility• Protecting the employee, vendors, contractors and visitors to the facility• Protecting the assets of the company• Protecting the brand• Etc.
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Additional Questions for Establishing a Food Defense Program
• How do we Control of Facility and Personnel (establish a secure perimeter)
• Have we Checked the background and character of those who work in the facility
• Have we taken the steps required to identify and control additional potential vulnerabilities
• Do we have the tools required to investigate, report and mitigate security breaches
• Have we developed plans, policies, procedures and training to support these goals
• Are our mitigation strategies consistent across our organization
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Level of Integration
Solu
tion
Com
plex
ity
Food Defense: Levels of Integration
Level 1 Installation Limited physical
security May include burglar
alarm
May include multiple standalone security systems
Security systems integrated with business systems (e.g., Human resources, production)
Managed centrally from Command & Control
Multiple brands and technologies
Systems managed from one location
Level 1 Integration
Level 2 Integration
Level 3 Integration
Level 4 Integration
Limited or no physical security
Keyed entry
Level 0 Integration
Organizations balance their risks, their impact and the cost to mitigate
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Results: TraditionalSecurity & Risk Mitigation
Result: Business ProductivityImprovement
Level of Integration
Solu
tion
Com
plex
ity
ROI
Food Defense: Business Impact
Limited physical security
May include burglar alarm
May include multiple standalone security systems
Security systems integrated with business systems (e.g., Human resources, production)
Managed centrally from Command & Control
Multiple brands and technologies
Systems managed from one location
Level 1 Integration
Level 2 Integration
Level 3 Integration
Level 4 Integration
Limited or no physical security
Keyed entry
Level 0 Integration
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Call to Action: ththtiCall to Action: Focus on Protecting the Franchise
Taking Food Safety to the Next Level Speed: Reduction in time to root cause Transparency: All points in the supply chain Integration: All plant operations can be rapidly and
accurately associated with production events
Siemens brings intelligence to the food and beverage manufacturing process to help make food production safer to begin with and help customers solve problems more quickly and save precious resources in the event of contamination.
© Siemens AG 2011. All rights reserved.Page 21
Appendix
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Food Safety: The “Mandate” Conundrum
GMA
Consumers
Congress
IndustryA. RegulatoryB. Secy’s: FDA
Agr.
Do Something: Eroded confidence
“I won’t buy” is a mandate!
when self-regulation ≠ successful
Brand Mgt. approach
“Don’t mandate to me!”
More than compliance is needed
It’s going to cost you!
“We will mandate!”
Election year
Industry must step up
We don’t want to mandate, but we will if necessary!
Hearings & Publicity
“Will the defendant please rise…”
11
3A
3A
5
2 32
3
4
3
5
3
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Key Requirements of Each Component
Protection Against Intentional Adulteration All registered food facilities would be required to have a "written Food Defense Plan."
TraceabilityFDA establishes a tracing system for all food, to identify each person who grows, produces, manufacturers, processes, packs, transports, holds, or sells food within 2 business days.
Record Keeping and Record Access
During an inspection, FDA would have access to and the ability to copy all records relating to the production, manufacture, processing, packing, distribution, receipt, holding or importation of an article of food needed to determine whether such article of food is adulterated or misbranded, or in violation of the Act, including all records relating to preventive controls and food safety plans and product and environmental testing. A written request for records would not be required.
HACCP
Each registered facility would be required to conduct a hazard evaluation to identify known or reasonably foreseeable hazards,” including “biological, chemical, physical, and radiological hazards, natural toxins, pesticides, drug residues, decomposition, parasites, and unapproved food and color additives,” as well as “hazards that occur naturally, may be unintentionally introduced, or may be intentionally introduced by acts of terrorism” and implement preventive controls (including at critical control points, if any) to provide assurances that the identified hazards would be significantly minimized and that the food would not be adulterated or contain an undeclared allergen.
Security The physical security of food production facilities must maintained at all times.