Supply chain risk management concerns are central to the current frozen food Hepatitis A health scare in Australia.

Earlier this month, Australian frozen food company company Patties Foods recalled its one kilogram bags of Nanna’s frozen mixed berries over a potential Hepatitis A contamination.

It is now believed 18 people have contracted Hepatitis A from eating the berries.

Berries sourced from supply chain partners in China and Chile were deemed responsible for the contamination, with widespread calls for more stringent accreditation for imported products.

So what can the risk community learn about supply chain management best practice from the Nanna’s incident?

Sheri Wilbanks, senior manager regional casualty risk consulting at AIG, explains that the Nanna’s incident highlights the complexity of today’s international supply chains.

“Companies are being exposed to new risks which are not covered under current, generally accepted, risk control strategies,” Wilbanks says.

“With regards to the international supply chain, there is an ever-growing need for knowledgeable, reliable resources on the ground.”

Dr Tom Ross, associate professor in food microbiology for the University of Tasmania’s Food Safety Centre, warns that seeking to negate supply chain risks with testing at the distribution destination would not have worked in the Nanna’s incident.

“It is reasonably well-established that control of the risk from a food-borne hazard like HepA cannot be assured by testing of end-products for the presence of the hazard,” says Ross.

“It helps, but it is not the best risk management approach. This is because the organism is, technically, hard to isolate and detect, and because quite low levels of contamination can still cause outbreaks if the volume of contaminated product is high.”

‘Farm-to-fork food safety risk’

Ross advises businesses to implement systems to ensure hazards are being appropriately controlled and managed throughout their supply chains.

He says the idea of “farm-to-fork food safety risk assessment” provides a more objective basis for supply chain risk management, and is gaining credence internationally.

“This approach seeks to understand where food safety risks can arise in food production, processing, and distribution systems,” he says.

“It does this by analysing the system, based on knowledge of the system and its effects on food-borne hazards, to identify those steps where risk control will be most influential on end-product integrity.

“You then implement actions and strategies to limit those risks at relevant points in the supply chain.”

 Claire Richards, crisis management manager at AIG Australia (pictured), says it is imperative that any business sourcing components, or products from international suppliers, has a robust risk management plan in place.  

“An approved supplier program, including an auditing process, can ensure that suppliers are HACCP [Hazard Analysis and Critical Control Points] certified and working towards local food safety and regulatory guidelines,” says Richards.

Wilbanks adds that any firm with a sourcing strategy overseas should do extensive research of the food safety resources available and ask “tough questions” of those suppliers.

“Finding reliable experts on the ground can assist with the first phase of sourcing. This works best when followed by long-term supply engagements with a trusted relationship encouraging the supplier to maintain the high quality,” says Wilbanks.

Due diligence

Chuin Howe Eric Lee, manager at Singapore based risk consultancy Protiviti, advocates the implementation of quality contracts with supply chain partners, featuring well-worded sections on responsibilities and rights, to protect the obligations of all parties.

“Manufacturers should perform proper due diligence on their business partners to ensure that standards which they impose will and can be executed on the same levels than if done internally,” says Lee.

The Nanna’s berries incident also highlights the importance of educating supply chain partners to minimise these risks, says Lee.

“Companies who are outsourcing their supply chains should be on top of the risks and ensure that they have a minimum level of visibility, and educate their suppliers to ensure that proper standards are adhered to,” he says.

Wilbanks says businesses are certainly already educating their supply chain companies.

“When a business requests a product designed a specific way, or manufactured to certain standards, they may need to educate the supplier on how to achieve that. They consult on sourcing of components, manufacturing processes and test methods,” says Wilbanks.

“What may get missed in this education is points of liability, recalls and reputation as exposure.”

Contractual obligations

David Tribe, senior lecturer in food safety and microbiology at the University of Melbourne, says supply chain partners should already know about most essential requirements because it is part of their supply contracts.

“What they [supply chain partners] might need educating about is the effective enforcement of their contractual obligations and management practices, and there is possibly a need for stronger and more frequent third-party auditing to verify that good agricultural practices (GAPs) are consistently in place,” says Tribe.

Steve Hather, director of Entamio Education Group, agrees that suppliers have to understand the risks associated with their supply chain and actively manage that risk.

“That means educating suppliers on the expectations and the ramifications of getting it wrong from both a consumer safety and a reputation risk point-of-view,” Hather says.

“It means working with them to build in a high level of safety at every step of the process.”

Hather states that in the drive to reduce costs, some companies accept certificates as “proof” that a supplier has good systems in place.

“Every step of the supply chain will impact on a company’s reputation. Companies had better understand those steps, and the risks associated with them, to be actively managing those risks,” he adds.

Five key supply chain risk take-homes:

  • Implement a robust risk management plan. When dealing with food products, consider using a “farm-to-fork food safety risk assessment” for this plan.
  • Find reliable overseas experts on the ground to assist with the first phase of sourcing.
  • Ensure well-worded and detailed contracts are in place with supply chain partners.
  • Perform due diligence on supply chain partners. Ask tough and detailed questions about their processes.
  • Educate supply chain partners over potential risks and the implications of an incident.