Losses Incurred Due to Inadequate Corporate Purchasing Programs and Practices

Good purchasing personnel are tremendous at negotiating prices but one can reasonably assert that they may not always be aware of other hidden costs in what they do. These costs insidiously erode the gains from hard-fought negotiated prices. Let's take a quick look at some of these hidden costs.

There are many losses and unrecoverable costs due to ineffective supplier assessment and approval. 

A large number of organizations have implemented supplier approvals but without adequate attention to the reality of “garbage –in-garbage-out”. Consequently, they do a very poor job of approving their suppliers. Permit me to restate the positive alternative to the understanding of “garbage-in-garbage-out”. Properly selected suppliers deliver safer and higher quality input materials consistently. This is essential in the delivery of safe and quality products to consumers.

TIME & RESOURCE WASTE:

There is usually a collaborative effort between the QA and purchasing departments in the supplier approval process. Even where the need is understood and such collaboration is established, many implemented supplier approval procedures woefully lack proper direction. After several years of auditing, I have found that proper supplier assessment techniques and assessment criteria are not used by many operations. Never mind the time and resources wasted in some redundant “supplier approval” activities. 

In response to or preparation for external audits, particularly the certification varieties, useless supplier approval update activities are common. Many operations request and receive documents from suppliers without ever really looking at these documents. Quality system managers fail to conduct proper and thorough follow up actions in response to supplied material failures because, "after all, the affected suppliers have certificates from reputable third party audits".  

As a specific example, what is the real value of requesting the suppliers’ allergen declaration document and simply placing this on file because “this is an audit requirement”? Copies of third party audit certificates are also requested from suppliers. To what end and how these are actually used remain an enigma. Countless purchasing and QA departments rest satisfied simply because their prospective suppliers have third party audit certificates. I can understand requesting the actual audit results because these contain more information than the plain certificates. At the same time, these audit reports often state that they are snap shots and do not represent or guarantee the continuing good performance of the audited parties. How much then, should purchasing personnel rely on these audit reports for their decisions to continue buying from the suppliers? Should these even be dependable criteria for purchasing decision making? In some organizations, little to no attention is given to other pertinent supplier assessment and monitoring criteria and activities simply because the suppliers submitted their third party certificates.

The supplier approval programs of several companies sadly constitute no more than waste bins for valuable resources. Purchasing and QA personnel are forced to spend valuable time in conducting activities that contribute absolutely nothing to preventing unacceptable materials from coming into their operations. The realities faced everyday are rarely examined and adequately addressed in the development of many supplier approval programs. I have reviewed many supplier approval programs that are no more than window-dressing schemes to impress third party auditors. They are often fanciful but ineffective. Some are not even so fanciful but ineffective all the same.

Purchasing and QA personnel also need to be aware that unrecoverable losses can be attributed to bad corporate purchasing programs and practices. Just to name a few: The time and money wasted in quality control (fire-fighting) activities due to bad materials purchased from bad suppliers; the time and money wasted due to recall events resulting from bad materials or products purchased from bad suppliers. In spite of the transferable blame, distribution outlets (wholesale, retail sale, food service, restaurants, etc.) suffer tainted reputations that drive customers away.

Summary: 

Suppliers: If you need paper certificates to prove to your customers that you are doing everything right, you are very likely not doing everything right.

Customers: If you rely on paper certificates from your suppliers as proof that they are doing everything right, you are very likely not looking at the right metrics. 

A robust supplier approval and monitoring program that looks beyond mere paperwork or third party audit requirements is essential for every operation. Obtaining the copy of a third party audit certificate is never sufficient. Even obtaining copies of third party audit reports is not sufficient. Holistic programs based on concepts like SSQA are essential. The SSQA Concept focuses on reality. The supplied products and/or services and the historical consistency of meeting desired safety and quality requirements form the primary bases for assessing the success of implemented control measures and programs.

All redundant elements need to be eliminated from the supplier approval process. Resources must be effectively directed and applied. Necessary and proper collaborative arrangements must be established and maintained. Properly designed and implemented supplier approval programs provide huge benefits to all, and I mean ALL stakeholders (purchasing and QA personnel, business operators, suppliers, customers, consumers, public health personnel, third party auditors, regulators – the world).

Posted By Felix Amiri

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Felix Amiri is the current Food Sector Chair of GCSE-Food & Health Protection

A Summary of SSQA Facilitator’s Qualifications and Role:

The SSQA Facilitator’s role largely depends on each prospective candidate and his or her on-going participation as a member of GCSE-Food & Health Protection. The SSQA facilitator is generally expected to oversee the development, implementation and maintenance of the integrated SSQA system; and to routinely communicate to relevant personnel all information essential to ensure the continuing effectiveness of the system. 

GCSE-FHP provides the avenue for the SSQA Facilitator’s role to be developed and performed but it does not directly hire persons for it. This is because the SSQA Facilitator role is a freelance or employer designated role that depends on the person assuming that role and the organisation participating in the SSQA project/program. The GCSE-FHP Team provides only requested guidance to both the SSQA Facilitator and organisations participating in the SSQA projects/programs.

Special certification is not required for this role. However, the prospective SSQA Facilitator must have the technical background and training relevant to the type of operation in which the participating organisation is engaged.

Advisable Pre-requisites:

The SSQA Facilitator should be a registered member of GCSE-FHP as this provides a ready source for helpful information that may be useful in carrying out the Facilitator duties. 

A Facilitator should be listed in the SSQA Facilitators Directory to enhance the recognition of prospective employers. The directory does not certify the Facilitator's expertise but it does provide a ready list from which prospective employers may select the person they wish to employ.

A Facilitator is expected to work with an enlisted SSQA project/program participant organisation on the basis of their independent agreement or contract. As a result of deliberately taking only the position of a helpful resource with a hands off stance in directing the affairs of the operations, GCSE-FHP shall not be involved and shall not have any responsibilities or liabilities in the contracts between operations and their Facilitators.

Necessary Qualifications:

The SSQA Facilitator's role can best be performed by technically qualified members of GCSE-FHP who have a very good understanding of the goals and objectives of GCSE-FHP and are actively engaged in the Coalition. 

Each prospective SSQA Facilitator shall have the technical background in the applicable field. This technical background may be acquired from and institution that offers formal education and/or training. In addition to the necessary technical background, it is advisable for the SSQA Facilitator to have a good understanding of the GCSE-FHP Guiding Principles. The Facilitator should also have a working understanding of the SSQA program that may be acquired through GCSE-FHP training sessions or through training provided by GCSE-FHP accredited training centers.

Examples of Qualifying Technical Background:

–     Food safety and HACCP

–     Food security (availability, sufficiency and equitable distribution)

–     Pharmaceutical products safety

–     Cosmetic products safety

–     Production Management

–     Production/Process/ Product Controls

–     Product quality management

–     Product distribution management

–  Product defense (protection of food, pharmaceutical or cosmetic against intentional adulteration or other criminal acts)

–     Regulatory Affairs/Compliance

–     Environmental protection

–     Customer/consumer relations

Write your story and leave a lasting legacy – join the GCSE-Food and Health Protection SSQA Program:

http://www.afisservices.com/gcse-fhp/gcsejoin.html

Economic Benefits of GCSE-Food & Health Protection SSQA Programs

To Consumers:

If you could have sustained confidence in your safety and satisfaction from the products you purchase, would you be interested? What if the possible financial, health and other costs to you of unsafe and poor quality products were actually reduced, would you be interested? What if the operators could afford to better maintain good safety and quality standards in providing the products that you buy due to the reduced systems management cost burdens on them, would this be of interest to you?

To Operators:

If your food safety programs could be made effective at the same time that your consulting and auditing costs were reduced by up to 50%, would you be interested? What if these and other costs could be reduced even further as your product safety and quality systems gained increasing effectiveness over time, would you be interested in finding out how?

To Customers:

If you have corporate or company purchasing responsibilities and you could participate in this program to benefit from the suppliers’ reduced costs, would you be interested?

To Audit Scheme, Auditing, and Consulting Services Providers:

If you are currently a reputable product safety and quality systems audit scheme, auditing and/or consulting services provider and you could be qualified and given the opportunity to provide SSQA Facilitation services, would you be interested? What if your continuing good reputation and service excellence were the only on-going requirements without other unnecessary impositions, would you be interested?

To Auditors:

If you are currently an experienced product safety and quality systems auditor and you could be qualified and given the opportunity to work as an SSQA Facilitator, would you be interested? What if your acquired experience and continuing practical demonstration of competence were the only on-going requirement, would you be interested?

To Regulatory Agencies and Inspectors:

If your activities were only seen as complementing rather than punitive and antagonizing to the industry, would you be interested? What if administrative costs and your stress levels were to be reduced due to the voluntary, effective and consistent self-monitoring strategies adopted by operators under the SSQA program, would this be of interest to you?

The GCSE-FHP Safety and Security Quality Assurance (SSQA) and other GCSE-FHP  programs provide opportunities and strategies with these kinds of economic, systems effectiveness and related benefits: