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Achieving an Integrated Focus on Food Security
The food chain involves all the processes and activities to deliver food from the farm to the fork. The need for and the challenges associated with securing the food supply chain are numerous and require significant attention as was highlighted by a comment from U.S. Secretary Tommy Thompson as he resigned from his cabinet position. Not only is it necessary to maintain a secure food supply to provide ongoing nourishment, the North American food system also supports significant economic activity. As illustrated by the Mad Cow scare, which significantly impacted Canadian exports into the U.S., food safety concerns can impact industry viability and the value of enterprise brands as well as safety. To begin to systematically address these issues, the U.S. Department of homeland Security (DHS) desired to establish a Center of Excellence to investigate and identify methods to secure the food supply chain. Since effective supply chain security requires a cross functional perspective (supply chain, quality, security, packaging, and agriculture), any Center of Excellence requires a team of researchers with the technical knowledge to understand food safety combined with the business knowledge to understand the organizational and management requirements to process and move food from the farm to the consumer. This article highlights how combined teams of researchers from the University of Minnesota and Michigan State University (MSU) worked together to create a collaborative center.
In the food sector, the supply chain
is the combination of farmers and growers, commodity traders, manufacturers, wholesalers and distributors, and retailers that work together to bring food to North American consumers in the form, place, and time that they want to purchase it. This includes food consumed in the home as well as in restaurants and institutions. In addition to the functional members of the supply chain identified above, other critical service providers are transportation companies, government institutions, and port operators. While a majority of the food consumed in North America is grown in the U.S. or Canada, an increasing percentage is imported to allow consumers to purchase fresh produce at a lower cost or even when it’s “out-of-season.”
The genesis of MSU’s involvement began with a workshop sponsored by IBM. Two faculty members from two of MSU’s highly ranked programs held a joint government, industry, and academic conference in November 2003. Government participation included the Department of Homeland Security, U.S. Customs, and the Transportation Security Administration. Industry participation included representatives from automotive, chemical, electronics, food, furniture, retailing, and transportation. In addition to faculty from the departments of the primary researchers (Department of Marketing and Supply Chain Management in the Eli Broad College of Business and the School of Criminal Justice), the workshop involved faculty from Computer Science, Diagnostics, Engineering, Food Safety and Toxicology laboratory, and the School of Packaging. The workshop resulted in a special report titled Enhancing Security Throughout the Supply Chain published by the IBM Center for the Business of Government which included suggested methods for improving generic supply chain security.
The workshop involvement of the many MSU Colleges revealed an interesting observation to the research team. A combination of university faculty can provide unique perspectives, skills and capabilities to investigate supply chain security in general and food security in particular. While the workshop highlighted many differences in perspectives, it also demonstrated the need for cross functional teams to develop integrated and consistent guidelines. In the case of MSU, the University’s top ranked programs in criminal justice, diagnostics, food safety, packaging, and supply chain management could provide an ideal collaboration to address our nation’s food security needs. Subsequent sessions have revealed the multitude of different perspectives regarding the scope and depth of food security issues and the need for collaboration in refining the North American food system for security.
The Criminal Justice and Supply Chain Management team began to focus their efforts on evaluating current supply chain processes and security to determine which practices are most effective in security enhancement. As suggested above, supply chain activities include material procurement, manufacturing, warehousing, transportation, inventory management, and customer service. For the food industry, these activities amount to 30-50 percent of the retail cost of food products. The objective of these activities is to provide food for North American consumers when and where they want it at the lowest possible cost. None of us want to pay any more for quality food than we have to. While there has always been concern regarding food security and safety, previous efforts have focused on accidental contamination. Since September 11th, the focus had to expand to consider the potential for intentional contamination. Not only could the product itself be contaminated with bio-chemical agents at some point in the food supply chain, the vehicles and containers hauling the food could have their contents replaced with dangerous commodities or terrorists. The workshop results along with the Request for Proposal from DHS stimulated the integrated proposal development by the University of Minnesota and MSU along with other institutions and commercial firms (for more detail, see www.ncfpd.umn.edu).
Historically, the food supply chain has not focused major resources on improving security because of the low probability of such events and the trust between supply chain partners. For example, there has always been concern regarding the potential of an individual contaminating a product at a food processing plant, in a warehouse, on a transportation vehicle, or at a retail store. However, it was not generally believed that the incident could be at a scale large enough to have a major economic impact to consumers in terms of a widespread scare or reduced economic activity. Since September 11th, however, members of the food supply chain realize that not only could a terrorist incident have severe health implications for thousands of people, it could also have severe financial repercussions for the firm and the overall economy for reasons of legal liability and consumer confidence. As previously cited, a relatively small incident involving the import of an animal with “Mad Cow” disease from Canada and its substantial impact all along the food supply chain including reduced farm prices or even the ability for Canadian beef farmers to sell product in the U.S., reduced employment at processing plants and distributors, and reduced availability and/or increased price of beef to U.S. consumers. So, even though this incident was not intentional, it had a substantial impact on consumers and the overall meat supply chain. It is likely that an intentional event would have a much more significant impact in terms of health, mortality, and impact on the overall economy.
To minimize potential risk to both consumers and themselves, food firms have increased their interest in food supply chain security initiatives. While providing security at a specific location is enough of a challenge, total supply chain security requires that the security be maintained when the product is on the road or ocean 24/7 even when there are limited personnel watching over the product. Some of these initiatives include physical security of buildings and processes, increased inspections of equipment and processes, certification of domestic and international partners and carriers, application of technology to track and trace product movement and responsibility. The physical security initiatives extend the traditional focus of criminal justice through methods to keep unauthorized commodities and people out of facilities and away from product in addition to minimizing product theft. Increased inspections and standards are used to make sure that processes have not been compromised and that transportation equipment has not been compromised with contraband. Formal and informal certification and auditing processes are used to verify the integrity of other supply chain partners. This has become increasingly challenging due to international operations involving different cultures and business values. Finally, firms are applying new technologies such as Global Positioning Systems (GPS) and Radio Frequency Identification (RFID) to track the movement and location of vehicles and shipping containers. While these initiatives and technologies can generally increase security, they also increase the costs required to transport the food from the farm to the table. This would translate directly into higher food costs for the American consumer.
Improving the security of the food supply chain without requiring a substantial increase in food prices requires a critical assessment of the processes and technologies to determine which provide the best return on the security investment. This assessment requires consideration of trade-offs associated with security initiatives at each stage of the supply chain to determine where formalized processes, technology, inspections, and certifications can be used most effectively. Using interviews with managers involved in enhancing food supply chain security and statistical analysis of the relative security performance, collaborating researchers will help to identify the best use of resources to enhance supply chain security and provide direction for managers involved in the food chain. Such direction is critical to providing us with a safe, secure, consistent, and economic food chain. As recently cited in the Wall Street Journal (“In Global Food-Trade Skirmish, Safety is the Weapon of Choice,” December 15, 2004), North American food logistics managers will find security considerations as an increasingly important dimension of performance.