Are You Attending the NACD Central Region Meeting?

Kestrel is looking forward to seeing many of you in St. Louis—and to continuing our conversations about your business/compliance needs and how Kestrel is helping chemical distributors more effectively manage management system requirements (e.g., Responsible Distribution, ISO 9001) and ongoing EHS&S and Food Safety Modernization Act (FSMA) compliance obligations.

NACD Central Region Meeting
June 11-13, 2018
The Ritz-Carlton
St. Louis, Missouri

Connect with Kestrel
Jake Taylor (Kestrel’s Responsible Distribution Adviser) and Liz Hillgren will both be on-hand at the Central Region Meeting. Please reach out—introduce yourself, get to know Jake and Liz, share your compliance concerns, and learn more about how Kestrel is committed to serving NACD as a strategic partner. We look forward to seeing many of you soon in St. Louis!

This is the first in a series of articles on food product recalls.

Salmonella outbreak in eggs; E. coli breakout in romaine lettuce. Both are getting a lot of attention right now. Unfortunately, no food company is immune to encountering situations like this that may lead to government warnings or a food product recall. Even plants with the best controls are at risk—human error, mechanical breakdowns, or sampling failures can happen at any time.

Growing Epidemic

The number and magnitude of product recalls has increased significantly in recent years. According to U.S. Department of Agriculture’s (USDA’s) Economic Research Service report entitled Trends in Food Recalls 2004-2013, the average number of food recalls between 2004 and 2008 was 304/year; the average number between 2009 and 2018 increased to 676/year.

Interestingly, the study does not cite riskier foods as the reason for this upward trend. Rather, the increase of food product recall events can be attributed to the following:

• An increasingly complex and global food supply chain system,
• Technology improvements in the detection of health risks, and
• Passage of two major food policy laws—FALCPA and FSMA—particularly related to the dramatic increase in undeclared allergen recalls.

Product Contamination Consequences

A full-scale recall involving food products can be detrimental to a food manufacturer or retailer. According to a survey conducted by the Grocery Manufacturers Association, 29% of companies that faced a recall within the prior five years estimated that the direct cost of the recall was between $10 million and $29 million—and that cost can be even greater when accounting for indirect costs.

There are three primary consequences of a major product contamination/recall event:

• Product recall expenses – product replacement costs, recall and redistribution expenses, product destruction costs, related crisis management consultation fees
• Business interruption – financial loss due to product unavailability, decontamination downtime, government action, brand damage, and loss of contracts
• Third-party liability – financial loss due to third-party property damage and bodily injury

In many cases, a recall event will result in decreased profits over the short run of 6-18 months. The long-term brand damage, however, can impact earnings over an even longer period. Given these trends and the potential associated impacts, every food business should be concerned with potential contamination risks.

Read:

• Part 2
• Part 3

The 20^th Annual Food Safety Summit, held earlier in May, proved once again to be an engaging and informative meeting for all in attendance. During the four-day event, food safety professionals participated in interactive sessions focused on food safety in the supply chain.

Throughout the Summit, Kestrel’s food safety experts observed several common themes and challenges that the food industry is facing — challenges that your business may be encountering today. Here are some of our key takeaways:

Key Topics

This year’s Summit featured a supply chain focus. Every company in the food supply chain—those that produce, handle, or distribute food-grade products/ingredients—has an obligation to its customers to provide safe and quality food. The Summit began with six certification programs related to food safety across the supply chain, including Preventive Control for Human Food, Foreign Supplier Verification, Professional Food Safety Auditor Training, Seafood HACCP, HACCP Training, and Certified in Comprehensive Food Safety.

The focus on food safety throughout the supply chain was discussed in lessons learned from recent food safety case studies, as well as in four afternoon workshops focused on departmental cooperation, traceability, effectively managing food safety, and global regulatory systems. In addition, the new Community Cafes provided attendees the chance to meet with the subject matter experts, including experts from Kestrel, for more in-depth conversations about topics focused on the supply chain.

Industry Trends

As is evident from the key topics covered at the Summit, the current trend is a much stronger focus on food safety within the global supply-chain, particularly coordination of various global regulatory systems, requirements, and agencies. Steve Mandernach of the Association of Food and Drug Officials (AFDO), Dr. Robert Tauxe of the Centers for Disease Control (CDC), Paul Keicker of the U.S. Department of Agriculture (USDA), and Stephen Ostroff from the U.S. Food and Drug Administration (FDA) participated in sessions on how the agencies are working together on food safety initiatives and the impact food safety. This included a conversation on whole genome sequencing of pathogens as a game changer for disease monitoring and response.

Ongoing Challenges

A major concern and ongoing challenge within the food safety community involves training regarding food safety responsibility across all levels of the organization. This not only includes large organizations with individuals who are directly responsible for food safety programs, but also smaller organizations where these responsibilities must be understood and followed by everyone at all levels. This corresponds to the need for food organizations to establish a much more comprehensive and effective food safety culture. The lack of this training, organizational responsibility, and overall culture is considered one of the primary causes of continued contaminated food outbreaks.

Regulatory Updates

In addition to the discussion regarding the use and benefits of whole genome sequencing, enforcement of FSMA and the expanding rules of Intentional Adulteration and Food Fraud Prevention Programs continue to be top areas of regulatory concern. Inspections and investigations related to supporting Food Safety Plans under these requirements will continue to expand, as evidence of compliance is required by all food organizations under the law.

Food Safety Summit 2019

Plans are already being made for the 21st Anniversary of the Food Safety Summit, which will again be held at the Donald E. Stephens Convention Center in Rosemont, IL from Monday, May 6 through Thursday, May 9, 2019. Mark your calendar. Kestrel looks forward to being an active sponsor and participant again next year.

It’s time to “Discover the Possible” at the AFPM National Occupational & Process Safety Conference. Beyond the program of interesting industry presentations and learning opportunities, Kestrel Management is looking forward to connecting with many of you in San Antonio.

AFPM National Occupational & Process Safety Conference
May 15-16, 2018
Grand Hyatt San Antonio

We welcome the opportunity to learn more about your needs and discuss how Kestrel helps our clients improve occupational and process safety performance; manage EHS and quality risks; and achieve regulatory compliance assurance. See you in San Antonio!

Since it was launched in May 2000 following a number of major food safety scares, the Global Food Safety Initiative (GFSI) has aimed to “provide continuous improvement in food safety management systems to ensure confidence in the delivery of safe food to consumers worldwide.”

Recognized Schemes

GFSI is not a scheme in itself, nor does it carry out any accreditation or certification activities. Rather, a benchmarked scheme (e.g., BRC, SQF, IFS, FSSC 22000) is recognized by GFSI when it meets the minimum food safety requirements, as set out in the GFSI Guidance Document.

Strategy for Certification

Companies have the flexibility to choose which GFSI-recognized scheme they want to adopt, and can achieve certification through a successful third-party audit. Under GFSI’s concept of “once certified, accepted everywhere,” certification to any GFSI-recognized scheme is accepted by many international, national, and regional retailers and suppliers.

The following factors should be considered to ensure a successful GFSI strategy:

1. Adequate knowledge of the GFSI standards (e.g., BRC, SQF, IFS, FSSC 22000) and how they work within food manufacturing and packaging companies
2. Ability to use and implement document and records management and control
3. Training to implement the chosen standard and ongoing training in the standard/key program areas, including Hazard Analysis and Critical Control Points (HACCP) and internal audit
4. Meeting the building requirements of the GFSI standard
5. An integrated pest management system that meets the requirements of the standard
6. Dedicated role of a qualified plant sanitarian
7. A strategy that includes management commitment and allocation of budgets and resources
8. Proper management review meetings and records
9. Compliant food safety and security
10. A corrective and preventive action (CAPA) process that meets the requirements of the standard
11. Approved supplier programs
12. Control of non-conforming product through disposal
13. Change management and acceptance by the organization
14. Product specifications that meet the requirements of the standard
15. Sanitation and chemical control programs
16. Deviation and variance tracking, reporting, and response
17. Product and raw material storage
18. Food-level Good Manufacturing Practices (GMPs), operating prerequisites, and compliance
19. Calibration of measurement devices
20. Emergency response and contingency plans

The GFSI system provides a high degree of confidence that food safety management systems are adequately designed, implemented, and maintained. Certified companies tend to be more efficient and profitable and have more effective shared risk management tools for brand protection. Ultimately, certification results in improved consumer confidence, simpler buying, and safer food throughout the supply chain.

In recent years, companies have been generating vast and ever-increasing amounts of data associated with business operations. This trend has led to renewed interest in predictive analytics, a field which focuses on analyzing large data sets to identify patterns and predict outcomes to help guide decision-making. While many leading companies use predictive analytics to identify marketing and sales opportunities, similar data analysis strategies are less common in occupational and process safety. Although the use of predictive analytics is less common in the field of safety, the potential benefits of analyzing safety data are considerable.

Just as companies are currently using customer data to predict customer behavior, safety and incident data can be used to predict when and where incidents are likely to occur. Appropriate data analysis strategies can also identify the key factors that contribute to incident risk, thereby allowing companies to proactively address those factors to avoid future incidents.

Predictive Analytics: In Theory

Let’s take a step back and look at what predictive analytics is and what it does. Predictive analytics is a broad field encompassing aspects of various disciplines, including machine learning, artificial intelligence, statistics, and data mining. Predictive analytics uncovers patterns and trends in large data sets for the purpose of predicting outcomes before they occur. One branch of predictive analytics, classification algorithms, could be particularly beneficial to industry, especially when it comes to avoiding incidents.

Classification algorithms can be categorized as supervised machine learning. With supervised learning, the user has a set of data that includes predictive variable measurements that can be tied to known outcomes. The algorithms identify the relationships between various factors and those outcomes to create predictive rules (i.e., a model). Once created, the model can be given a dataset with predictive variable measurements and unknown outcomes, and will then predict the outcome based on the model rules.

Predictive Analytics: In Practice

Like many in the transportation industry, this railroad had experienced a number of derailments caused by broken rails. Broken rail derailments can have particularly severe consequences, since they typically occur on mainline tracks, at full speed, and with no warning of the impending broken rail. Kestrel was asked to create a predictive model of track-caused derailments on a mile-by-mile basis to identify areas of high broken rail risk so the railroad could target those areas for maintenance, increased inspections, and capital improvement projects.

Penalized Likelihood Logistic Regression

As described above, classification models learn predictive rules in an original data set that includes known outcomes, then apply the learned rules to a new data set to predict outcomes and probabilities. In this case study, Kestrel used a logistic regression modified by Firth’s penalized likelihood method to:

• Fit the model
• Identify eleven significant predictive variables (based largely on past incidents)
• Calculate broken rail probabilities for each mile of mainline track based on track characteristics

Final Model

The final model calculates a predicted probability of a broken rail occurring on each mile of track over a two-year period. The results suggest that the final model effectively predicted broken rail risk, with 33% of broken rails occurring on the riskiest 5% of track miles and 70% occurring in the riskiest 20%. Further, the model shows that the greatest risk reduction for the investment may be obtained by focusing on the 2.5% of track miles with the highest probability of a broken rail. This ability to predict where broken rails are likely to occur will allow the company to more effectively manage broken rail derailment risk through targeted track inspections, maintenance, and capital improvement programs.

Implications for Other Industries

The same general approach described in the above case study can also be applied to other industries—using KPIs to determine predictive variables and incidents as the outcome. The process is as follows:

• Measurements for defined variables would be taken regularly at each facility or unit. Precision increases as the measurements become more frequent and the observed area (facility/unit) becomes smaller.
• Once a sufficient number of measurements has been taken, they would then be combined with incident data to provide both the predictive variable measurements and the outcome data needed for training a model. This dataset would be fed into a logistic regression or other classification algorithms to create a model.
• Once the model has been created, it can be applied to new measurements to predict the probability of an incident occurring at that location during the applicable timeframe.

Once predicted incident probabilities have been found, management would be able to focus improvement resources on those locations that have the highest probabilities of experiencing an incident. The classification algorithms also identify which factors have predictive validity, so management will know how improving those factors will affect the predicted probability of incidents occurring. In other words, they will know which factors have the strongest relationship with incidents and can focus on improving those first.

Data-Driven Decisions

Industrial companies are generating and recording unprecedented amounts of data associated with operations. Those that strive to be best-in-class need to use that data intelligently to guide future business decision-making.

The versatility of predictive analytics, including the method described in this case study, can be applied to help companies analyze a wide variety of problems. In this way, companies can:

• Explore and investigate past performance
• Gain the insights needed to turn vast amounts of data into relevant and actionable information
• Create statistically valid models to facilitate data-driven decisions

Companies grasp the importance of using technology to create business efficiencies. Integrating technology into traditional processes allows companies to stretch and empower limited resources. It offers ways to provide more value to company operations and management systems.

Traditional Solutions

When it comes to technology integration, however, companies traditionally look for an isolated solution to a single problem—a find-it, fix-it approach. A simple example of this would be creating an Excel spreadsheet to manage data from multiple sources. While this creates an improvement beyond the traditional hard copy binder, it is a linear, isolated solution to one issue that offers minimal additional business value.

Consider the data on that spreadsheet and consider how business systems work. Does the data stand alone or does it impact other parts of the business? Does the business system operate in a silo or are there common elements with other business systems? In most cases, there is overlap between data, information, systems, platforms, etc. As a result, building a patchwork of technology solutions to address individual problems is only a short-term fix.

Relational Approach

Truly valuable technology solutions take a relational approach that considers the immediate issue within the context of the overall business need, and then integrates multiple platforms/systems, as required, into an aligned system.

A forward-thinking, relational technology approach takes a solution perspective that thinks beyond the singular project need to the big picture and then designs backward. It’s a shift in mindset from “How can I use technology to make this efficient?” to one that asks, “Ultimately, what does the big-picture, desired state look like…and how can technology get us there?”

A relational approach such as this follows these steps:

Case Study in Technology Integration

The following case study provides a real-world example of how a global chemical distributor is following these steps to create a relational technology solution that will improve business efficiencies across the company. Initially, this distributor wanted to pull data from facility reports for 150+ locations into one database—that was the “simple” problem. The old system had facilities entering data into Excel forms. That information was then pulled into Access so the data could be manipulated.

Understanding that the facility data is intertwined with many aspects of the business, Kestrel looked beyond this singular issue at the bigger picture. The forward-thinking solution would be to create a technology platform that would solve this facility data problem and could easily be expanded to other business needs, particularly since facility data is tied to most aspects of the business.

To do this, Kestrel built the facility form into SharePoint as the base application for the company’s overall system. SharePoint houses all data previously input into Excel documents for each facility broken up by 11 regional operating companies with multiple locations under each. The form requires that each facility contact fill out quarterly information on the facility (e.g., permits, fleets, transportation, personnel). Beyond the facility form, the SharePoint system currently has the following modules, which all feed into the facility form:

1. Facility images
2. Storage tanks
3. Facility audits
4. Sustainability

The SharePoint system is continuing to be expanded to integrate other systems into a single source that will create significant business efficiencies. This approach is creating many benefits across the company:

• The company is able to collect multiple levels of data and then associate that data to the individual facility or provide a composite report (i.e., data required for storage tanks, sustainability efforts, audits conducted).
• The look and feel of the forms in SharePoint are very similar to the original Excel documents, so it is an easy transition and very intuitive system to use. Little training has been required.
• The company can easily track information on all facilities. Management can export data to Excel and create reports. The company has complete ownership of data and deliverables.
• The system can create alerts for overdue items and generate real-time metrics and dashboards. Many additional options can be further customized based on ongoing business needs.
• Additional data from other systems being used across the company (e.g., auditing program) can be integrated and aligned into SharePoint as users become more familiar with the platform.

Why SharePoint?

SharePoint is a dynamic solution tool that can be customized and designed to capture data and provide consolidated reporting to all levels of management. Because of SharePoint’s flexibility, the possibilities of what it can do are virtually endless:

• Creates a single, familiar platform that simplifies access
• Provides functionality for continual adaptation to meet future data management and reporting needs
• Adapts to the needs of the business, rather than the business adapting to the capabilities of the program
• Maximizes efficiency and connectivity between many field and corporate groups
• Allows information to be shared and tracked in multiple ways
• Allows users to easily create complex databases that are both manageable and flexible
• Gives the ability to manage sites/facilities/plants/departments for compliance purposes
• Simplifies the data entry process by providing user-friendly functionality
• Consolidates reporting
• Provides a dynamic solution – updates made to the tool are reflected immediately
• Allows local users to control and build sites to their specifications
• Allows all levels of users to work with it easily due to its intuitive nature

By having so many features and applications on a single platform, it is easy to tie them all together into an aligned system and to create multiple functions/uses for the data being collected from so many sources. With an aligned system, then, achieving the big-picture, desired state (rather than the short-term fix) becomes entirely possible.

Kestrel is pleased to be growing our resources to the food industry with the addition of Senior Consultant Melody Ge.

Melody brings a diverse background to the Kestrel team. She started her career in product development, including production and quality control of a vegan “chicken meat” product. She then transitioned to a Compliance Specialist at SQF Institute, where she established and developed the SQFI Compliance Program and maintained the integrity of the SQF certification; and developing the SQF Code.

Immediately prior to joining Kestrel, Melody served in a number of quality management and business development roles at Lidl, an international grocery chain. As the Deputy Quality Assurance Director, she oversaw suppliers, food safety control, and product quality monitoring and management to maintain quality and safety of product routine tasks.

At Kestrel, Melody will be serving as project manager for food safety-related projects. She will be supporting clients in developing and implementing GFSI schemes and supplier approval programs, and sharing her expertise in GFSI, FSMA, FSVP, HACCP, GMP, SQF, IFS, FSSC 22000, and ISO.

Melody holds a Master’s Degree in Food Science from the University of Maryland, College Park, and a Bachelor’s Degree in Food Science and Technology from Shanghai Ocean University, and is fluent in English, Mandarin/Cantonese Chinese, French, and German. She is a member of the Institute of Food Technology (IFT) and holds certificates in HACCP, Extrusion Processing and Technology and Commercialization, and Commercially Sterile Packaged Foods.

EPA Announces Chemical Safety Milestones

To celebrate the one-year anniversary of the Frank R. Lautenberg Chemical Safety for the 21st Century Act, EPA Administrator Scott Pruitt announced on June 22, 2017, that the Agency has met its first-year statutory responsibilities under the law. This includes the following actions:

• Issuing a rule to establish EPA’s process and criteria for identifying high-priority chemicals for risk evaluation and low-priority chemicals not requiring risk evaluation. http://www.epa.gov/assessing-and-managing-chemicals-under-tsca/prioritizing-existing-chemicals-risk-evaluation
• Issuing a rule to establish EPA’s process for evaluating high-priority chemicals to determine whether they present an unreasonable risk to health or the environment. https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/risk-evaluations-chemicals-under-tsca
• Issuing a rule to require industry reporting of chemicals manufactured or processed in the U.S. over the past 10 years. https://www.epa.gov/tsca-inventory/tsca-inventory-notification-active-inactive-rule
• Releasing scope documents for the initial ten chemicals for risk evaluation under the amended law. https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/risk-evaluations-chemicals-under-tsca#ten
• Releasing guidance for external parties interested in submitting draft risk evaluations to the EPA for consideration. https://www.epa.gov/assessing-and-managing-chemicals-under-tsca/guidance-assist-interested-persons-developing-and

Read the EPA press release: https://www.epa.gov/newsreleases/epa-marks-chemical-safety-milestone-1st-anniversary-lautenberg-chemical-safety-act

The Food Safety Modernization Act (FSMA) Foreign Supplier Verification Program (FSVP) imperatives require companies to assess their foreign supply chain of food production and implement new programs to meet and achieve compliance. These programs must be implemented and ready for inspection under FDA FSMA enforcement by the compliance date. For many companies, that date was May 30, 2017.

FSVP Requirements

Effective May 30, 2017, impacted companies are expected to follow the FSMA FSVP legal requirements or face a disruption in supply, business impacts, possible fines, and penalties. In short, this requires that companies ensure that receipt of foreign food includes the necessary information to be adequately inspected and verified.

Key areas to demonstrate FSVP compliance include the following:

• Determine the receipt information under FSVP to verify approval of each shipment of each product by lot identity.
• Confirm the existing information that may already be required for each shipment, including COA by product lot and FDA registration number (with expiration date).
• Document the actual site of manufacture of the foreign-supplied product, including the location, contact information, operator, and Qualified Individual overseeing the Food Safety Plan.
• Require declarations with each shipment stating that the supplier is in good standing with FDA and their foreign government’s food safety regulations. Provide a list of all programs under FSMA (Food Safety Plan and Section 17 cGMPs) with each shipment under an authorized signature.
• Include any additional information that is required under the FSVP that adequately confirms compliance to the company’s program, product requirements, and FSMA.
• Establish and maintain receipt records on all information that can be accessed and inspected at the request of inspection authorities for at least two years.

Compliance Challenges

At first glance, the FSVP requirements seem basic—foreign supplied food product is approved by meeting the FDA requirements and the requirements of U.S. companies receiving these products. It looks to be the same as existing supplier qualifications for U.S.-supplied food product.

However, the FSVP rule provides much information on “what” is required of companies but not “how” or how to validate and verify these programs. Many FSMA training programs, including the FDA-funded FSPCA, really do not provide a level of guidance for companies to develop and meet the anticipated inspection process, which could include shipments stopped at a foreign port or at the U.S. port of entry. Concurrently, established importers have programs to communicate import shipments based on the requirements prior to FSMA and the FSVP, but many have expressed confusion in determining the changes now required.

Leading up to the May 30th compliance date, many companies of all sizes and scale began to seek ways to best establish their programs to meet the full regulatory requirement. Much of the focus has been on establishing practices that informally address what is really required under the FSVP while making a casual determination of compliance. Other companies have developed programs consistent with the procedural requirements of the FSVP rule, as published.

Some companies have taken the requirements to an extreme by determining new supplier requisite information for each shipment to prove compliance. This has resulted in generating a significant amount of information for each shipment by each product. This level of information is not what FSMA intended. Much of the required information for FSVP is already in the established supplier qualification program and must be maintained but is not required in its entirety with each shipment. In fact, there are issues with the approach of requiring all information with each foreign supply shipment, including:

• Sheer volume of information
• Time required to assemble the information
• Inability of inspectors to assess all the information for compliance

All of this leads to the confusing situation that exists in the market today concerning the FSMA FSVP, where compliant practices have not been developed and newly established requirements have not been tested by enforcement. As a result, reports indicate that many foreign suppliers of varying company size, scale and sophistication are not openly willing to respond without clear, simple instructions from their U.S customers.

Establishing Reasonable Plans

Ultimately, many of the FSVP practice requirements will be developed and refined through the regulatory inspection actions of the rule. That being said, the industry cannot wait. Companies need to have reasonable plans established for all current shipments being made under the FSVP.

Companies should focus on the more fundamental aspects of the FSVP—those requirements that must be verified, recorded, and evident in the documents supporting all foreign shipments of food product under the rule. This information does not need to include the entire policy manual but select summary information.

An important consideration involves understanding how this law is expected to be inspected. Knowing this provides a basis to develop and implement an effective program. The premise is that the foreign shipments may not be stopped for inspection at the border level, but that inspections will more commonly occur at the receiving party location of the product shipment at delivery to their U.S. locations. Regulators will expect to inspect verified, recorded, and legal receipt of the foreign-supplied food product.

Areas to focus on to ensure compliance with the FSVP requirements includes the following:

Receipt of RSVP Products. Focus on verification of the necessary information for receipt of FSVP products based on the law and the company’s defined program. This does not mean all program information but information that adequately meets the level required for compliance.

Shipment Information for Receiving Records. Establish lists of shipment information for all shipments, which includes all products being received under FSVP, as summary forms with current and validated information. Summary information that can be effectively inspected as part of and aligned with the shipping paperwork will provide the necessary information as part of an FSVP receiving record.

Compliance Actions. Establish procedures and work instructions to ensure that compliant practices are approved, verified, and meet the minimum requirements. This will include modifying some existing documents and forms that are specifically required under the FSVP. This level of approved summary information must reflect the documented policies and procedures developed in the company’s FSMA Food Safety Plan and FSVP.

Internal Programs. Maintain internal programs, with oversight verification conducted diligently. All required information must be accounted for and records must be completed and maintained with a high level of accuracy and integrity. Verification must include oversight and multi-level signed approval.