Who is liable?

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Supply chain management is a concept which is becoming more and more common and relevant to modern businesses. The chain begins with the simplest identifiable component, often raw materials, and finishes with the final product. In the Dasani case, one of the problems appears to have been that the calcium chloride added during the purification process produced levels of bromide that exceeded UK regulatory limits.

According to Ian Gray, litigation and dispute management partner at Eversheds, risk avoidance and limitation of legal liability are key elements for businesses to be aware of when managing the supply chain. Gray says: “Businesses can face real problems when an element of the supply chain is not fulfilled. For example, if the raw materials are found to be unsuitable, do you have contingency plans in place to ensure the end user still gets the product on time?”

Gray continues: “While it is usually up to the purchasing manager within a company to deal with the legal issues of supply chain management on an everyday basis, all company directors should be aware of potential pitfalls should a dispute arise so it can be managed effectively,”

There is a risk of significant cost to business if supply chains are not actively managed. Companies not only have to deal with the problems of contract fulfilment but may also face negative press and, in extreme cases, reduction in share value. According to Gray, businesses should have plans in place to deal with the press – the Dasani case shows how global media can impact on public opinion, with Coca-Cola opting to postpone its European launch of the bottled water.

“There are a few key points which can reduce the risk of supply chain disputes,” says Gray. As well as inspecting and auditing the production processes of your suppliers, it is worth reviewing your own “goods inward” quality control procedures. But perhaps just as important is an audit of procurement and contractual arrangements with your suppliers.”

And Gray warns: “At the beginning of any relationship with a supplier, it is imperative all contracts are clear and simple and have been agreed and signed by all parties. In the absence of a written agreement or product specification, it may be more difficult to resolve the question of liability.”

He says that purchasers should ensure that their terms and conditions govern the supply agreement, and that they spell out clearly the liabilities of the supplier in the event of a problem. “In conclusion, supply chains need to be managed efficiently at every stage from raw material to finished product to minimise liability and keep businesses running smoothly.”

So how can manufacturers and third-party logistics providers ensure that the supply chain is not liable to food scares?

Today, according to FDB Distribution’s Francis De Beer, the packaging of food, whether it be in glass or plastic containers, is safer than ever and stringent regulations enable manufacturers to store their goods with confidence. Even so, the general public remembers the horror stories in the press over the years about food contamination, especially the one concerning a well-known baby food which was contaminated with shreds of glass.

And it is with that in mind, says De Beer, that warehouse and storage providers to the food and drink industry must ensure that they meet and continue to meet strict legislation in order for them to supply manufacturers with a service.

Food grade approved

Many warehouse and storage providers are third-party multi-user storage and logistics companies, i.e. they can store a wide variety of products. By doing so, says De Beer, they must ensure that some products do not contaminate others. For example, a pallet of glass jars stored directly above a pallet of dried foods could be hazardous.

In order to eliminate any form of glass and brittle plastic contamination, companies such as FDB, have introduced a “Glass Control Policy”, and created zones totally glass-free in their warehouses, through which no stored glass products may be moved. The use of a strong and comprehensive Warehouse Management System helps to monitor the implementation of this glass-free policy.

De Beer explains: “With the increasing proportion of supply of products coming by sea-born containers, imported goods tend to come in cartons, using the full capacity of the 40ft or 20ft containers. This requires de-stuffing the containers of say 1,500 cartons of dried fruit, that are put on to pallets, barcode-labelled, shrink-wrapped and put-away onto racks until end-user calls-off the products.”

To deal with several containers a day, some warehouses have acquired an electric telescopic conveyor, increasing productivity significantly. A semi-automatic pallet stretch wrapper is also used, to improve the quality of the pallet configuration and stability.

One of the most important factors which many food and drink manufactures look for in a storage company is whether or not it is Food Grade Approved. Any warehouse needs to be of a high quality standard, and pest-controlled regularly by an approved contractor, who must demonstrate that he / she has the relevant liability insurance and uses non-toxic baits. Warehouses have to keep all records of inspections, possible incidents, with corrective actions taken in a pest control book.

De Beer says that under the Food Safety Act 1990, registration of food premises have to be applied for to the Metropolitan Borough Council. A Food Safety and Hygiene inspection of the premises is carried out by the Directorate of the Urban Environment who will ultimately deliver a report of compliance. “Obviously it is then up to each customer to work closely with their warehouse contractor, with a view to setting up their own standards, and ensuring the latter conforms to their expectations, through regular controls. Specific training might also be required,” De Beer adds.

Traceability is a sophisticated bespoke warehouse management system (WMS) supplied by ATMS, a firm that helps providers to improve the management of their warehouses and supply chains with an advanced tracking system called ‘StockTrack PLUS’. De Beer says that while this system is still relatively new to many warehouses, it enables specific storage locations to be individually barcoded. All goods ranging from food and drink, through to automotive parts that enter the building are barcoded.

This system incorporates real-time radio data terminals, which guide the operator to the best location for the pallet. The system records full traceability from receipt to complete despatch. A variety of details can also be recorded, for example, container numbers, batch codes, and more importantly for food and drink manufacturers, best before dates. n

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