Best Practices for Managing the Food Supply Chain

  • by Rajesh Ray, Senior Managing Consultant and SCM Product Lead, IBM Global Business Services
  • December 4, 2012
The food supply chain one of the largest industries in the world. It provides employment to millions of people directly or indirectly. It is also one of the industries that has seen a high use of SAP solutions. Take a look at the challenges this industry is facing and the functionalities that SAP provides to meet them.
Key Concept
Food safety is becoming increasingly important for companies managing the food supply chain. For certain segments of the industry, such as dairy, food safety is critical as a good percentage of outputs are consumed by infants and children below six years of age. The concern is becoming global with recent reports of massive meat and poultry recalls, guidelines from the World Health Organization, controversy over genetically modified crops and raw materials, and increasingly stringent controls by the U.S. Food and Drug Administration.

The food supply chain has a number of unique processes that set it apart from other industries. For SAP users and administrators, adapting an SAP system to these processes can be a challenge. I take a detailed look at a number of these unique industry features, and pair them with appropriate SAP solutions.

Safety and Compliance

The ultimate aim of a food supply chain is a safe product delivered to the end customer. A number of entities play major roles. Food manufacturers need to design, develop, and make products that conform to specifications and are safe for consumers, logistics providers need to ensure that the products are stored in perfect condition and there is no contamination during transport, and finally retailers need to ensure the right storage condition so that there is no contamination in the retail store. These days food companies are regulated by the U.S. Food and Drug Administration and other authorities, as well as regulations that include:

  • Hazard Analysis and Critical Control Point (HACCP)
  • EU (Article 18 of Regulation 178)
  • US (U.S. Bio Terrorism act of 2002)

HACCP is a system for analyzing production or product handling processes to detect hazards and risks of contamination within those processes. HACCP is increasingly recognized as the reputable and effective vehicle for ensuring food safety. It covers the entire food production process, from the purchase of raw materials through end use by the consumer.

SAP has a number of solutions to meet safety and compliance standards of the food industry. For example, the SAP Employee Health and Safety (EHS) suite includes the following: 

  • Product safety solution to ensure safety during the entire product life cycle
  • The Registration, Evaluation and Authorization of Chemicals (REACH) compliance solution to meet a set of compliance standards as enforced by different regulatory authorities around the world
  • Industrial hygiene and safety
  • Occupational health
  • Global label management
  • Waste management to ensure the safe handling of waste generated during the manufacturing process or at the end of a product life cycle

Rajesh Ray

Rajesh Ray currently leads the SAP SCM product area at IBM Global Business Services. He has worked with SAP SE and SAP India prior to joining IBM. He is the author of two books on ERP and retail supply chain published by McGraw-Hill, and has contributed more than 52 articles in 16 international journals. Rajesh is a frequent speaker at different SCM forums and is an honorary member of the CII Logistics Council, APICS India chapter and the SCOR Society. 

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