[Advisory Board] Opportunities for Private Third Party Auditors

The landscape for food safety is going through some of the most significant changes ever in the context of legislative action, regulator enforcement, consumer wariness and industry accountability. With this changing landscape comes changing expectations and greater risks of damaged brands and significant legal consequences when something goes wrong that results in illness or death. Reaction in the food industry to the changing landscape and shifting expectations is varied. Some firms have genuinely embraced a food safety culture and made food safety a high priority. (As a caveat, one never hears a food company not say "food safety is a high priority," but talk comes easy while culture shift and real change is more challenging.)

One of the private sector reaction's is the growing use of third party audits. Some food firms and retailers see the use of such audits as offering a "guarantee" that all is good with their supply chain. Should there be a problem, they have a certificate to prove that their supplier was audited and passed with a high grade. The certificate has to be good, because it was done to exacting standards that are overseen by an international body of experienced food safety experts. But who actually did the audit? What was the relationship between the auditor and the firm being audited? Does the auditor’s living depend on being asked back to do the next audit? Does the firm being audited really want to identify problems or just get the critical certificate for the least cost and disruption?

While it is easy to be cynical and negative, third party audits can play a very valuable role in improving food safety and reducing risk—when they use appropriate standards and are executed responsibly and impartially. Third party audits, at least in theory, are an excellent way to send a clear signal to one’s supply chain that certain criteria have to be met before goods will be accepted. Firms with the right culture expect the audit to find real or potential problems before they lead to foodborne illness. Third party audits can be great way to raise the standards for producing safe food.

Recent history has demonstrated repeatedly that even very large multinational food companies undergo recalls when a supplier did not have a food safety culture or was ignorant of important risks. This could be several steps upstream in the supply chain. To check your own recall risk, ask yourself:

Do I know the food safety culture of all my suppliers and their suppliers all the way up the chain?

Do I know of risks that have been identified and controlled in my upstream supply chain?

Was every certificate generated with the food safety culture in mind or to simply provide a piece of paper allowing an ingredient to be shipped to me?

Do I really want an auditor to find problems in my facility? Do I want to improve my ability to produce safe food, or do I just need that certificate?

Changing D.C. Dynamics. The changing legislative and regulatory dynamics in Washington, D.C. have clearly indicated that third party audits can be an important part of food safety. The FDA has signaled that it is willing to entertain the use of third party audits for imported foods. It has not signaled a willingness to use those auditors for domestic food safety, but would rather use a combination of federal, state and local regulators in that role. The agency has recognized that it simply does not have the resources to address imported food, hence the opportunity for third party auditors. This sounds positive for those auditing firms, but FDA is very wary of ensuring that adequate standards are being used and, just as importantly, that the audits are conducted to those standards.

Congress and consumer groups tend to say that the use of third party auditors to augment regulators is inherently problematic and not trustworthy. The reality is that FDA has to use tools such as foreign governments and private third party auditors to meet the legislative mandate for inspection frequency that is in the pending food safety legislation. While this represents a fortunate opportunity for private third party auditors, it will take only one situation in which an auditor seriously drops the ball for a quick reversal of fortune and for Congress to legislatively close that opportunity.

Changing expectations and regulations around food safety bring opportunity for many, including private third party auditors. The setting of clear standards is a great start but like basic food safety, if the firm does not have a food safety culture, there will be problems at some point, and if the auditor is not doing the audit well—however painful that may be for the firm being audited—the system will unravel, opportunities will be lost and trust will be hard to rebuild.

Food safety is in the spotlight like never before. If you are a private third party auditor or a facility that gets audited, it is critical that you take heed of the changing landscape. Being in the spotlight can bring new opportunity, but it can also reveal gaps and the cutting of corners that have the capacity to destroy a brand in a matter of hours.