Santa Clara University

Building a Better Food Chain

In the Global Economy, It’s a Critical and Complex Issue

In a world where everyday food items can include ingredients from a dozen or more countries, how can a food producer ensure consistent safety and quality?

This question was addressed in a recent paper , “Unraveling the Food Supply Chain: Strategic Insights from China and the 2007 Recalls,” co-authored by Andy Tsay, Associate Professor of Operations and Management Information Systems at the Leavey School of Business.
Tsay said that the rash of recalls starting in 2007 of food and other products imported from China demonstrated the risk of outsourcing “with a focus on lowest possible cost” and called attention to the problems arising from fragmented supply chains involving long geographic separations or cultural gaps.

Written with Aleda V. Roth of Clemson University, Madeline E. Pullman of Portland State University, and John V. Gray of The Ohio State University, the paper was published in the January 2008 issue of the Journal of Supply Chain Management, a periodical aimed at supply management professionals.

Having spent significant portions of the last few years in China and other parts of Asia visiting factories and interacting with senior managers, Tsay contributed first-hand insights about the region and its business practices to the paper, complementing his coauthors’ expertise in such areas as the food industry and FDA inspection practices.

Views towards food safety can differ quite a bit across nations and cultures, he noted. For example, in some developing nations, there might be reluctance to invest in procedural safeguards for which the payback for the investor isn’t immediate and obvious. Also, food-safety expectations vary by culture, and many American health regulations can seem like overkill in a society that isn’t used to them and feels it has survived just fine without them.

“The U.S. Food and Drug Administration was created over a century ago, so we have a lot of instilled knowledge about food-safety oversight.  Even with that we still have our own struggles,” Tsay said. “China has emerged as an industrial world power only in the past 20 to 30 years.  An impressive physical infrastructure has been built seemingly overnight, but in many ways that’s the easy part.  Social infrastructure, which includes a robust regulatory system and a thorough internalization of the rule of law, takes longer.”

Tsay and his colleagues have identified the “Six T’s” — issues that must be incorporated into standard operating procedures to reduce safety risks.  Managing by the Six T’s entails:

Traceability: Developing the ability to trace a product all the way to its origin and identify where problems may have occurred.
Transparency: Making sure documents, information and goods are clearly visible and accessible across oceans and through multiple ports of entry.
Testability: Improving the reliability of testing and inspection practices strategically.
Time: Reducing the time products spend in transit; the time between discovery and reporting of problems; and the time needed to recover from supply disruptions.
Trust: Developing relationships along the supply chain in which all sides make good-faith efforts to honor commitments, be honest in negotiations, and not take advantage of the others, particularly where traceability, transparency and testing are limited.
Training: Providing technical assistance and transferring best practices to bridge the gap between supplier norms and customer expectations.
Tsay and his colleagues hope the articulation of these issues will lead to further research that will improve the safety of food and other products in the globalized manufacturing economy.

“This is a convoluted problem that will not have overnight solutions,” he said. “We’ve tried to provide a framework to guide the work that lies ahead, one that discourages demonizing of particular individuals, cultures, businesses, or nations.  Our best hope will be to dispassionately focus on the root causes, especially the motivations of the human actors along the supply chain, and then use that understanding as the foundation for systematic structural improvements.”