SECURING THE FOOD CHAIN

Michael Garry

When it comes to terrorist acts, contaminating or corrupting the food supply may not be as spectacular as taking out the World Trade Center. Yet the food industry is viewing threats to food security throughout the supply chain, from farm to table, very seriously.

As security regulations from the Food and Drug Administration come closer to taking effect on Dec. 12, the industry is continuing to step up its attempt to shape -- and at the same time prepare for the impact of -- the new rules. Both major trade associations, Food Marketing Institute and Grocery Manufacturers of America, are playing a lead role in these efforts. The rules are based on the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. (See sidebar, Page 40.)

Food companies, including manufacturers and retailers, who are affected by this issue in similar and different ways, are also getting involved. For example, Sara Lee Coffee & Tea Foodservice, a unit of Sara Lee, Chicago, is partnering with Unisys, Blue Bell, Pa., in a 12-month pilot launched last month to test ways to secure shipping containers from their point of origin abroad across a shipping route to the U.S. port of entry and final destination.

Each day, 21,000 containers, following multiparty transactions, arrive at U.S. ports, and only 2% are inspected (that will increase to 10%), according to David Jordan, president of Unisys Global Commercial Sector. The need to secure shipping containers became clear last year, he pointed out, when a member of Al Qaeda was discovered inside a container in Italy en route from Egypt to Halifax, Nova Scotia. Tim Hammonds, chief executive officer, Food Marketing Institute, said FMI would help fund port inspections so "food coming in meets the same standards as food produced in the U.S."

In the Sara Lee pilot, the route begins at Santos, Brazil, where Sara Lee sources its coffee, and continues by ship to the Port Authority of New York and New Jersey docks at Bayonne, N.J., and onto Sara Lee Coffee & Tea's roasting plant in Moonachie, N.J.

The Sara Lee/Unisys pilot is being funded by a $58 million grant from the Transportation Security Administration, an agency created in the aftermath of Sept. 11, 2001, and absorbed in March by the Department of Homeland Security. The project falls under the Homeland Security Department's Operation Safe Commerce, an effort to improve the security of containerized shipments entering the United States from overseas.

Jordan told SN that Unisys is participating in similar projects involving three other trade routes: one between Seattle and Hong Kong involving containers of supermarket promotional material; one between New York and Karachi, Pakistan, for consumer apparel goods; and one between Los Angeles and Taiwan for consumer electronics. He declined to name the vendors involved. By participating in the pilots, private-sector companies have an opportunity to shape any regulations that ultimately emerge, noted Jordan.

Sara Lee believes its participation is helping to protect "our country and our brand," said Bruno Velcich, director of communications, Sara Lee Coffee & Tea Foodservice. "Our concern is not that a person is going to tamper with the coffee, but that without a monitoring system, it would be easy to disguise and hide something in [one of the] millions of containers we import. We don't want anything to happen to a container that belongs to Sara Lee." The company markets such brands as Superior Coffee, Hills Bros., Chock full o'Nuts and Douwe Egberts.

Velcich said that Sara Lee will dedicate employees at its Moonachie facility to the project. If the food-service test is successful, Sara Lee "may well expand it" to its retail operations and to other U.S. ports and facilities, he added.

In line with protecting their brands, companies are interested in preventing product tampering, Jordan said, pointing out the impact that has had on companies like Johnson & Johnson and Perrier.

Unisys, which is working with about 20 technology vendors on the pilot, has a "holistic approach" to the security issue, encompassing "people, processes and technology," Jordan said. It starts with certifying foreign manufacturers, vetting their employees and physical security. "The best opportunity for disruption is at the pick-and-pack point at the foreign manufacturer," he said.

On the containers themselves, Unisys is coordinating the application of, for example, electronic seals, which if broken send out an alert that can be tracked via a global-positioning system. The ocean carrier's movements, too, can be tracked. In addition, chemical scanners will be used to detect explosives or contaminants, and carbon-dioxide detectors will pick up the presence of humans.

Jordan said that Unisys will also be employing radio frequency technology from Motorola; risk management software for assessing supply chain security and screening shipments, from GreenLine Systems; and track-and-trace software from Yantra.

Jordan stressed that in addition to the security issue, Unisys is approaching the project from an overall supply chain efficiency perspective. "If it's just security, we'll miss an opportunity to get manufacturers and distributors fully engaged," he said. "They want to know, 'What's in it for me?"' He pointed out the savings that would accrue to companies that were able to avoid inspections by employing monitoring technology. The technology will also help deter theft and product diversion.

Indeed, Sara Lee expects the pilot to result in "lower inventory, reduced wait times, higher service levels and improved risk management," said Gary Stopka, vice president, Sara Lee Coffee & Tea Foodservice, in a prepared statement.

Another company addressing the security needs of CPG manufacturers is Oracle, Redwood Shores, Calif. The company's latest release of its E-Business Suite 11i.9, announced last month, includes new capabilities to manage electronic signatures and secure audit trails, enabling them to meet the FDA's impending 21 CFR Part 11 requirements, noted Phil Friedman, Oracle's vice president, consumer products.

This week, Oracle is hosting a presentation for CPG manufacturers and retailers on the new regulatory environment at the Grand Hyatt in New York, featuring John Norris, former FDA commissioner; similar presentations will take place in Boston, Minneapolis and Chicago this month.

Distributors, Vendors Act

Food retailers and distributors are also acting to secure their supply chains. In the United Kingdom, Sainsbury's is employing an elaborate video security system at its new distribution center in Waltham Cross to deter criminals and terrorists. The facility, which has 300 employees and accommodates hundreds of daily deliveries, is equipped with 102 closed-circuit television security cameras.

In the United States, OMI International, Dallas, is making its Novopoint Exchange product, a business-to-business platform it purchased last year, available to its food distributor clients as a way to track and access product-history data over the Internet in a secure fashion. Dick Oksanen, president of OMI, told SN that two food distributors plan to use the system in the "near future."

The OMI system will serve as a useful means of meeting the FDA's impending regulations calling for food companies to document a product's movement, both where it was obtained and where it was sent, Oksanen said. It could also be applied to country-of-origin labeling and requirements pertaining to organic, irradiated and genetically modified foods. The network will reside as a private, internal exchange behind a company's firewall. "Stores, DCs, corporate offices and manufacturing plants will all need secure access to this information," he said.

OMI is also adjusting its warehouse management system (Triceps) and purchasing system (Biceps) so they can capture information such as lot numbers that will need to be available to meet government forward-and-backward tracking and tracing requirements. Though OMI is being proactive about the impending regulation changes, Oksanen said he finds most companies doing nothing about it. "They think the laws will be repealed or something will happen," he said. "But putting your head in the sand is not the right solution."

Another new technology may help retailers better manage the vendor representatives who come to and work in their stores. Last month, Eid Passport, Beaverton, Ore., announced the launch of this technology, its Vendor Passport Program, targeted to retail stores. At no cost to retailers, the program does background screening on vendor employees who work at stores, and then issues them an RFID-based electronic badge that automatically identifies them to the retailer as they enter the store. It also creates activity reports.

While intended to reduce shrink and promote vendor compliance, the system was designed with the nation's Sept. 11-related security concerns in mind, according to Eid Passport. The first retailer to test the system is Kmart, which confirmed that it has launched a pilot in five Chicago-area stores and plans to roll it out to 46 more. Steve Larson, chief executive officer, Eid Passport, said he is trying to develop an industry standard security system for retail, based on the input of a retail advisory board.

The industry associations have also been extremely active in addressing the supply chain security issue. FMI and GMA recently began compiling the FoodElert (Food Safety and Security Rapid Alert) Database, consisting of key contact information for the associations' members. The database is designed to allow emergency contacts to be readily made across a critical mass of the food industry.

Companies are signing up for the database at a "rapid rate," FMI's Hammonds told SN. The database will eventually include companies not in FMI or GMA, he said. After it is fully populated, FMI and GMA will conduct a "simulated recall" using the database, said Hammonds.

FMI also serves as the food-industry coordinator for the Information Sharing and Analysis Center (foodisac.org), and worked with the National Food Processors Association (nfpa-food.org) to develop a security manual for food processors and retailers. The NFPA has also formed the Alliance for Food Security, which includes more than 90 trade associations and groups representing the food chain.

GMA has also been busy. It has formed a Food Security Task Force to share best practices with its members, noted Susan Stout, GMA's vice president of federal affairs. GMA has also started a Trace-and-Recall Working Group to develop best practices on keeping records to meet impending FDA rules.

Challenging the Regs

As a result of the Bioterrorism Act of 2002, four sets of regulations have been proposed by the Food and Drug Administration, but trade associations are challenging some of their provisions.

The regulations, intended to give the government the ability to track and trace food products, include registration of food facilities, prior notice of importation, maintenance of records and detention of suspect products.

The final version of these regulations will be published in mid-October, followed by a 60-day period before going into effect on Dec. 12. (The detention rule is already in effect, and the recordkeeping regulations wouldn't go into effect for another 18 months after Dec. 12.)

Tim Hammonds, chief executive officer, Food Marketing Institute, pointed out that "the industry already has recall mechanisms in place, allowing companies to electronically poll stores on product issues. The government doesn't have to reinvent that."

Last month, in comments submitted to the FDA, GMA said the "cradle to grave" recordkeeping for food product lot numbers is "unworkable" and would "do little to maintain the safety and purity of the U.S. food supply."

Susan Stout, GMA's vice president of federal affairs, said, "It's too costly and risky to remove potentially affected products from stores by a lot number only." Food manufacturers would tend to take much broader measures, removing all related products to the one in question to ensure the safety of the food supply, she said. She also criticized the 24-hour prior-notice regulation as "overly rigid."