Every link may trigger a chain reaction. Consumers reward brands that care. MANAGING RISK

Transcription

1 Every link may trigger a chain reaction. Consumers reward brands that care. MANAGING RISK

2 To meet society s needs. THE CHANGING ECONOMY IN A TRANSFORMING WORLD The world and its economy have been changing rapidly in recent years, bringing huge benefits but also many contradictions that raise social and environmental issues. The planet s population continues to grow, with a billion people added every 12 years. This is accompanied by both an increased demand for food and consumption of the planet s resources. In Asia, China and India in particular, we are witnessing not only population growth but fast-paced, turbulent economic development. This is also the case in other countries with emerging economies, including Brazil and Russia, where in the space of a few short years millions of people have moved from a rural, agricultural, sustenance economy to an industrial economy that has generated significant wealth. As a result, consumption and the need for energy and food products have all risen. HEALTH, NUTRITION AND QUALITY Improving the living standard and lifestyle of millions of people in emerging economies increases the number of consumers joining those in the industrialised West in stimulating demand for higher value-added products. These are consumers that are fully aware of health, nutrition and quality issues and how they impact their daily lives. As a result, the food and beverage industry, together with the energy sector, is at the forefront in dealing with challenges that have the potential to influence the future of the planet, the sustainability of economic growth and the availability of natural resources.

3 Global market, global brands, global risks. In a world turning ever more global, consumption is no exception. Trends and consumer behaviours are becoming increasingly standardised, and the demand for ready-to-eat meals is growing. While lifestyles, tastes and food products are becoming more and more similar across borders, there is also a growing demand for local and traditional foods. The high value of these products is linked to their protected and labelled origin or being grown organically. The food and beverage industry is moving to satisfy demands from international consumers and to open new market opportunities by operating across borders and on multiple continents, becoming global players and brands. The industry is becoming more competitive as well. New mergers, acquisitions and alliances are forged to make production more cost-effective and to increase efficiency through synergies. Companies work to find, qualify and include new suppliers from new places to reduce costs. This global raw material sourcing strategy has led to increasingly intricate supply chains. Operating with many new suppliers, producing in plants situated in different countries, and distributing products to retailers in a capillary manner creates a highly complex business model. CHAIN REACTION Expanding your supply chain creates new risks and supply chain management challenges. For each link added, the more interlinked your brand becomes to the suppliers and partners with which you work. Guaranteeing quality, safety and sustainability starts with the farmers, fishermen and growers and must be ensured at every stage thereafter by the food process industry, distributors, storage facilities and retailers all the way to the end product. One incident can quickly trigger a chain reaction, harming the consumer and ultimately your brand. While on the other hand, evidence of sustainable performance can have the exact opposite effect. A company s ability to be successful, competitive and responsible is only as strong as its weakest link. REAL TIME NEWS The number of media channels and other sources of information allow news to reach most corners of the world. Electronic technologies have made distribution practically instant. Consumers can follow breaking stories virtually in real time. As a consequence, national and international food incidents are amplified. As brands involved are exposed from the start, the impact is serious and damages at times detrimental. Thus companies are challenged in new ways to manage their entire value chain.

4 Products for a sustainable future. BEYOND QUALITY AND SAFETY Consumers consider food safety and quality fundamental and take them for granted. But managing food safety and quality risks is no longer sufficient. Consumers are demanding more; they want sustainable products. For the food and beverage industry, this has put Corporate Responsibility at the top of the agenda, requiring that they look beyond short-term gains to implement a strategic vision for the future that bears the next generation in mind. This means rising to the challenge on environmental and resource related issues, balancing a global market with local needs. Production of food in one country and consumption in another, further and further from its origin, raises the issue of food miles what were the total emissions of this product? The consequences range from increased energy consumption for transportation, in many cases by air, and increased CO2 emissions. Other issues to be addressed relate to water-resources, waste, recycling and sustainable agricultural practices. As health, nutrition and quality food is becoming an increasingly important element of sustainable products for modern consumers, considering the environmental side of agricultural practices is not enough. One must also consider the quality and nutritional value of ingredients already at a product s earliest stage. Companies are also evaluated on their performance on social and ethical issues. Human rights probably get the most attention, but food sustainability also extends to the critical issue of food security. Supplying food and nutrition in sufficient quantities at an affordable cost to humanity as a whole is a growing concern and issue where the food and beverage industry is a natural part of the solution and thus plays an important role. EVERY ACTION HAS AN IMPACT ON THE PLANET S ECOSYSTEMS Sustainable performance, from a social, environmental and economic point of view, has become an indispensable prerequisite for all businesses. As consumers make their selections based on environmental, health and ethical parameters, it is of particular importance to companies in the food and beverage industry to provide a managed, clear and transparent response to the demand for sustainable performance expressed by consumers and society at large.

5 Consumers buy responsible brands. Consumers are increasingly aware of the impact of what they eat and drink. While people are more knowledgeable about food risks, they are also becoming more aware of the relationship between food and well-being. FAST LIFE, QUICK MEALS Contemporary habits, lack of time to prepare food as well as eating out (50% of the meals in some countries and large metropolitan areas) have modified the behaviour of consumers and families. They forgo traditional sit down meals cooked at home in favour of grab & go and easy-preparation snack food with a standardised taste and appearance. These eating habits, involving the consumption of more high-calorie food and saturated fats than necessary, combined with a reduction in physical exercise, have led to an increase in health risks, with very high percentages of overweight or obese people. that have a gratifying appearance and taste, but that are also healthy from a nutraceutical point of view. THE LARGER PICTURE Consumers and public opinion also want to know how the products they consume impact the environment throughout their entire life-cycle and whether or not workers rights are respected. To satisfy consumer scrutiny, the food and beverage industry must also ensure the quality and safety of products and be transparent on the raw materials used, the conditions in which they were grown or reared, as well as the reliability of the technology used during manufacturing and processing along the entire supply chain. Consumers are increasingly looking for responsible brands that show they care. In part due to information campaigns implemented by governments and public authorities, public opinion is beginning to look seriously at all the nutritional and health issues related to food, and asking the food and beverage industry not only for products that are functional and

6 Today, humanity s ecological footprint is over 23% bigger than what the planet can regenerate. Source: Global Footprint Network Sustainable companies care. Consumers are well informed and know what they want. The increased consumer demands require you to manage your total risk picture. At the same time, globalisation of markets and production requires complex supply chains that involve a large number of suppliers in different geographical areas every link being a part of your brand. The food industry can only respond to these new needs if it adopts risk management methodologies and solutions that make the entire value chain not only efficient, but also as safe, transparent and sustainable as possible. Being in control at every step is a complex and challenging task, but proper risk management can turn risks into rewards for your company. This forces you to go beyond food safety and consider the impact your products have not only on the consumers, locally, but also on society at large. Consumers want to see how you contribute to their well-being but also toward a more sustainable future. The demand is that your footprint is positive.

7 Manage your value chain. Offering a comprehensive range of advisory, certification, training and technical services, DNV helps businesses manage the risks in their own operations and along the supply chain. Pro-actively managing your risks will effectively protect and build your brand, while communicating to stakeholders that you are committed to quality, safety and sustainability. RIGHT FROM THE START Food quality, safety and sustainability all begin at the farm. Whether on land or in waters, every sustainable product needs a good start. Sustainable agricultural practices are increasingly becoming a requirement to get market access and a way to demonstrate positive impact both environmentally and socially, and when it comes to health and nutrition. Covering crops, livestock and aquaculture, the GLOBALG.A.P. IFA standards help companies improve control on both environmental and food safety issues. It can be a requirement to become a supplier as retailers see it as a tool to reduce second party audits. The Marine Stewardship Council (MSC) Principles and Criteria for Sustainable Fishing help fisheries demonstrate good resource stewardship to consumers and stakeholders. Certification shows proof of sustainable operations and transparency on target stock, impact on the marine environment and effectiveness of the fishery s management system. It is linked to the MSC Chain of Custody Standard which enables companies to demonstrate to consumers that the seafood products they buy come from sustainable fisheries. For livestock and aquaculture, food safety starts with the feed they eat. The GMP+/PDV and FAMI-QS standards help ensure animal feed and feed ingredients safe impact on the end product. The two standards cover feed production, transportation and trade in addition to feed pre-mixtures and production of additives. FOOD SAFETY AND QUALITY ALONG THE SUPPLY CHAIN Retailers need to systematically address food safety at every step in the manufacturing of their products to prevent failures. They want to know that their suppliers deliver products that comply with current quality and food safety standards. For suppliers, compliance with these standards is not only a means to do business but also an opportunity to demonstrate excellence and strive for continual improvement. The food safety management system standard ISO enables a company directly or indirectly involved in the food chain to identify relevant risks and manage them efficiently. The internationally recognised operating method HACCP (Hazard Analysis & Critical Control Points) helps companies identify food safety risks, prevent hazards and address legal compliance. Both standards aim to help companies increase their food safety management efficiency through a system tailored to the company s actual needs. This will in turn help prevent food safety failures and associated costs, and increase the reliability for legal compliance.

8 For all management system certification audits, DNV uses the Risk Based Certification methodology allowing us to tailor each audit to your unique needs. By focussing on the most significant food safety issues which you identify, our audits help you identify key improvement areas and reach your company goals. Food safety in every link of the supply chain is critical. Retailers and trade organisations have therefore developed several standards on food safety which help them address their needs for efficient supply chain management. The GMA - SAFE program is designed specifically to meet the global food industry s audit needs, helping companies increase the overall supply chain reliability and efficiency. The audit by a third-party provides a comprehensive assessment of a company s entire food quality and safety system, which is widely accepted within the industry. This reduces the need for multiple audits. The BRC (British Retail Consortium) Global Standard for Food Safety helps ensure supplier compliance and secure retailers ability to guarantee the quality and safety of their products. It is a worldwide framework for retailers and processors that helps them produce safe food and select reliable suppliers. A common food safety standard with a scoring evaluation system, IFS (International Food Standard) helps retailers qualify and select suppliers. This helps ensure the food safety of their products and monitor the quality level of those who produce their retailer branded food products. The SQF 1000/2000 (Safety Quality Food Program) is a food safety and quality certification system. It meets the needs of suppliers and buyers to ensure their compliance with food safety regulations both in domestic and global market at all stages of the supply chain. The four standards BRC, IFS, SQF and Dutch HACCP (option B) are all recognised by the Global Food Safety Initiative (GFSI). FOOD SAFETY AND QUALITY IN EVERY LINK Packaging and logistics are links that can significantly influence food safety and quality. To close the gap between production and retailing, standards were developed to ensure quality and food safety in every link. The BRC Global Standard for Packaging and Packaging Materials (BRC IoP) provides safety and quality guidance primarily for the producers of packaging materials. This comprehensive standard covers areas of hygiene and product safety throughout the packaging industry. BRC Global Storage and Distribution and IFS Logistics intend to ensure product quality, safety and legality for the logistics steps in the food and beverage supply chain. The standards intend to help retailers fulfil the due diligence concept and applies to any player in the supply chain. Going beyond guaranteeing food safety and quality, Voluntary Product Certification highlights the specific characteristics that differentiate a product from similar ones. Thus it supports the product s credibility and quality attributes. SUPPLY CHAIN RISK MANAGEMENT BEYOND FOOD SAFETY Ensuring the resilience, efficiency and agility of supply chains, combined with the need to demonstrate responsible practices pose important challenges to today s companies. The ability to understand and respond to supply chain risks is essential to create a sustainable operation, brand and reputation. Proper risk management can help you address the source or outcome of risks that could impair your company s ability to supply a product or a service. Improving supply chain management, Food Chain Traceability facilitates both the tracing of food safety and quality. Upstream it helps differentiate and provide credibility to foods with undetectable quality attributes. Downstream a proper traceability system can make a product recall more efficient during an incident. Green & Efficient Supply Chain management blends managerial, technical and environmental elements to help you map the carbon footprint of your supply chain. It also helps you identify improvement areas and implement improvement projects.

9 In a sustainable world, society s demand on nature is in balance with nature s capacity to meet that demand. Certification to the generic management system standard for social accountability SA 8000 is a good way to prove to customers that you have taken steps to protect worker s rights and ensure ethical production of all goods made by your company. ARE YOU MANAGING YOUR BRAND? Food safety incidents but also inability to manage incidents related to your environmental performance or social and ethical aspects can impact your brand negatively. On the other hand, actively managing your risks can help protect your brand and company. Business interruptions impact your company, product and brand. Addressing Business Continuity/Emergency Preparedness can help you identify your risks and prepare for emergencies. It will help you build a more resilient supply chain, reduce cost of consequences and thus support your brand. Companies who have a prepared way to respond when hit by an incident are those best able to protect its people, assets and reputation. In addition, practicing Crisis Management can contribute to lowering the likelihood of an incident ever occurring. Your brand is only as strong as the weakest link. One poorly managed incident could cause considerable damage. Reputational management will help you understand your reputational risks and how to actively manage them, making you better prepared to protect your brand should an incident occur. OTHER WAYS TO IMPROVE YOUR SUSTAINABLE PERFORMANCE DNV also offers other services that can help your company improve your sustainable performance. Our Climate Change Services relate to the three Kyoto Protocol mechanisms (Emissions Trading, Joint Implementation and Clean Development Mechanism projects) and Voluntary Emission Reductions. The Corporate Responsibility portfolio includes Verification of Sustainability Reporting, Corporate Governance Assessment, Corporate Responsibility Assessment, Fraud & Corruption Resistance Profile, and ISRS7. In addition to those food and beverage specific, we provide Management System Certification Services to the environmental standard ISO and the occupational health and safety standard OHSAS Through our Training portfolio, we provide: Training with Impact. Knowledge for use. We deliver professional training courses within all areas of our expertise, including food and beverage specific ones.

10 Why partner with DNV? DNV is a leading provider of services for managing risk, combining in-depth technical expertise and industry knowledge to help organisations along the food supply chain enhance their performance responsibly. As an independent foundation with the objective of safeguarding life, property and the environment, we believe in a partnership approach toward sustainable business. Offering a comprehensive range of advisory, certification, training and technical services, DNV helps businesses manage the risks in their own operations and along the supply chain. Pro-actively managing your risks will effectively protect and build your brand, while demonstrating to stakeholders that you are committed to quality, safety and sustainability. We offer competence and expertise in all sectors and can therefore satisfy sector-specific requirements relevant for all food and beverage producers and operators. DNV s extensive local presence, consolidated experience and acknowledged competence in the field of risk management make us an ideal partner for companies in the food and beverage industry. Our risk management approach to certification guarantees optimisation of your resources to obtain results conforming to internationally recognised standards and best practices, giving you a competitive advantage. DNV is a market leader with a global reputation for excellence. We operate from more than 300 offices worldwide; our employees speak your language and know your local needs, customs and market.

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12 Det Norske Veritas (DNV) DNV is an independent and autonomous foundation working to safeguard life, property and the environment. We are a knowledge-based company and our prime assets are the creativity, knowledge and expertise of our people. As a world-leading certification body and a global provider of solutions for managing risk, we work to help our customers achieve and maintain sustainable performance. To learn more, visit Contact us at dnvfood@dnv.com