Implementation of Quality Control
If implemented correctly it improves your product, revenue, and profits. Quality control application that is integrated with an ERP system can provide an annual $220,000 ROI to a small food manufacturing FSMA compliant facility and $310,000 annual ROI for their certified (BRC/SQF) facility.
On your financials, quality control is a cost center. But quality control is strategic and adds revenue and profit to the value of a food and beverage plant. Quality Control will provide the company greater sales opportunities and increase the size of the market you can address. And it will significantly reduce the risk of a recall. These two numbers are not included in the ROI.
Food Safety Modernization Act of 2011 (FSMA)
FSMA is the most fundamental change to food safety regulations. FSMA impacts every step of the supply chain, and it gives the FDA the power to prevent rather than react to food safety crises. The FDA can request manufacturing, processing, packing and distribution records at any time, invoke a mandatory recall, and restrict the company from distributing if it isn’t following the regulatory guidelines. The FDA can stop your production; thus, it is critical to implement a comprehensive, written food safety plan that includes documentation of product shipping information, sanitation guidelines and the steps to follow in case a recall were to occur. FSMA is focused on preventing problems before they happen.
Food withdrawals, rejections and recalls cost the food industry $7 billion dollars annually. The majority of these costs aren’t just from “worst case” recall scenarios where people fall ill and lawsuits occur.
Industry research generally puts the average cost of a food product recall at around $10 million. This is only the direct cost of the recall. For the full cost, you have to include the immediate lost sales as well as the long-term damage caused by consumers perception of your product. The damage from a recall is severe and persistent with both your customers and the consumers. A shipment of an ingredient, e.g. flour, that has made it into the stores as a finished product, e.g. frozen pizza, can turn a $4,000 sale into a $20 million direct cost from the recall. Recalls can quickly get into the hundreds of millions.
Quality Control Benefits
Key benefits of achieving British Retail Consortium (BRC) certification for your operation include:
- Increased market access in the global supply chain
- Brand protection
- Reduction of food safety and liability risks to your company
- Demonstrated commitment to food safety and quality
- Reduced audit redundancy
Quality Control Options
There are three options to quality control. The majority of the facilities track everything manually “on-paper”. Paper is labor intensive to create, maintain, and harder to find. It also does not alert management of an issue, nor will it stop someone from doing something wrong. The second most common method is either purchase a third-party quality control app or develop one inhouse. This is also very labor intensive since everything in the accounting system must also be in the quality control app (lot codes, purchase and sales records, lab tests, etc.). The advantage of an app is quick visibility to issues, immediate corrective action, alerts, and a defined process.
Now there is a new app called Quality Control AnyWare that is fully integrated Enterprise Management (Sage Enterprise Management (X3) ERP / Accounting system). Enter the information in one time, paperless, business intelligence, with all the features of a third-party app.Click here to learn more about Quality Control Anyware →