Small Suppliers: Risk or Opportunity?

Departments - From the Advisory Board

April 8, 2016

by Jorge Hernandez

Having responsibility for food safety and/or quality assurance at any food company is a rough and complex job, full of pressures and risks. Risks that start with your suppliers. After all, it is challenging, and often impossible, to make safe, quality products unless you start with safe, quality ingredients. Therefore, your relationship and the programs you develop with your suppliers are critical elements to the job’s success.

But the suppliers’ relationship can be challenging, and often contentious, as food safety and quality programs can impact the way the suppliers manufacture, verify, store, rotate, deliver, test, or document their programs. In fact, when a supplier doesn’t have strong food safety and quality programs, it is not unusual for that to impact their business and price models — something not usually appreciated by your own organization.

None of these supplier relationships can be more difficult and contentious than those with “small suppliers.” By small suppliers, I’m not necessarily referring to size (although many meet the FDA definition for “small” or “very small business”), but to suppliers that, in general, have a lack of understanding and appreciation for food safety and quality assurance. It is a lapse usually compounded by a lack of technical sophistication and a belief that their food is very safe, and food safety and quality requirements just add unwanted and unnecessary “costs” to the business.

It doesn’t help that many of these suppliers have very limited regulatory oversight and, in fact, some are actually exempt from many food safety regulations. To complicate matters, a good number of operators of these businesses are passionate and emotional about their products and become offended at the mere suggestion that they might not be safe or have the quality they believe they do.

On the business side, over the past few years, customers have been flocking to the locally made, sustainable, healthy, simple, natural, organic, “on-trend” products made by many of these small suppliers. This has caught the eye of the food industry, and many of these small suppliers are becoming known as the “innovators” of the business and the “darlings” of marketers. So it is no surprise that the food safety and quality folks are often compelled to work with the small suppliers and approve them “at all costs.”

MANAGING SMALL SUPPLIERS. Therefore, knowing how to manage small suppliers to ensure they don’t present a food safety or quality risk is essential. In the past, when I worked for large companies with significant pull, I managed small and large suppliers the same way, by focusing on my food safety and quality goals, and remarking that meeting a large company’s requirements would make them a better, more profitable supplier (something I was able to validate). However, this approach had limited success as the small suppliers required, for the most part, large amounts of my resources and attention for long periods of time, and most continuously rated on the higher risk tier of my program.

The only difference in risk between large and small suppliers is the approach we take with them.

I recently joined Wholesome International, an up-and-coming restaurant company with a strong small-supplier base. So I had the opportunity to work with a few small suppliers who are key to our brand. Without the leverage of my previous company, I decided to take an approach that focused on the product and the business first (unique characteristics, and why it is key to the brand and our mutual success). This approach allowed me to connect with the operators on an “emotional” level before we even discussed any food safety or quality. Once the connection was established, I discussed recent foodborne outbreaks and used examples of similar products and brands with problems that were featured in the media.

The conversations were open and honest, and only then did I share my concerns of safety, quality, traceability, and regulatory compliance for their products, promising them that I wouldn’t ask them to do or change anything until I was able to understand their processes and procedures. To my surprise, all the operators responded well to this approach; they were not only welcoming of my input and requirements but they helped me create workable solutions to issues such as source and lot level traceability (something that had eluded me before).

At this point, it is too early to determine if my approach with small suppliers will make them accept and implement my requirements, if they will provide safer, quality product consistently, or if they’ll be in the lower-risk tier of my program. However, I’m not only encouraged by the conversations to date, but I believe I may be able to find a simpler, better, more cost-effective process in areas such as source verification and traceability.

In the end, nobody wants to make people sick, so food safety and quality are essential to everyone in the food business. So, in my opinion, the only difference in risk between large and small suppliers is the approach we take with them. Small suppliers are different than large suppliers, have a different perspective and approach to the food. However, if we are able to approach them in a way that we connect with them, we can all benefit from their innovative perspectives, not only in food business but in food safety and quality.

Jorge Hernandez is Chief Food Safety Officer, Wholesome International.