Transcript The new NSF-CMi Brand Identity

Overcoming the Challenges of Local
Sourcing
Development of Local Suppliers for
International Businesses
Peter Bracher – Managing Director NSF-CMi Asia Pacific
February 2011
Why are we sourcing more food from developing countries?
 International retailers and branded restaurants moving into
developing countries to provide growth
 Lower cost sourcing opportunities
 Human population growth 6.5
9 billion by 2050
 Food sourcing will increasingly move to less
developed countries and smaller suppliers
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The Business Opportunity …..
 Rapid growth of retail brands – international brands and
investment combined with local knowledge from the regional
franchisee results in fast growth
 KFC – from one restaurant in Kuwait to 450 in 74 cities throughout the
Gulf and Middle East
 The franchisee - American Group - has over 1000 restaurants in 15
countries
 Starbucks – 300+ restaurants in 8 countries in the region
 Alshaya – 50 retail brands and over 20 million customers
 Costa Coffee – 11% growth and the fastest growing Coffee shop chain
 Tesco – 5% Y on Y growth
 Local suppliers into the rapidly expanding
hypermarkets businesses can experience
1000% growth in the
early years
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The Challenges for the Branded Retailers …….
 Under-developed logistics, import controls, short life
products, local taste preferences and regional legal
requirements drive a need for local sourcing
 But ……
 Difficulty in finding local suppliers who can meet the
required food safety standards
 Local suppliers may lack the capacity to supply major
retailers
 New entrant businesses do not have the buyer power
they experience in their home markets
 Local suppliers will have less investment in their brands
than the international retailers ……
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Hierarchy of Business Needs
 Investment in safety and ethics becomes essential only when the
investment in the brand justifies the costs
Brand equity
tipping point
Ethics
Food Safety
Brand Image
Failed
SME Path
Growth
Profit
Survival
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The Challenges for local suppliers…….
 Supplying an international brand requires more investment
and a higher risk than supplying the local retail marketplace
 The balance of power shifts to the retailer from the
supplier
 Higher standards of design, construction, hygiene and
documentation requires more investment
 Documentation and systems are critical
 Payment terms can be a challenge!
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Relative Standards
 Food Safety Standards by Country
Standards
U.K
Thailand
U.S.A
UAE
China
India
Middle
East
Our auditors have found suppliers with comparable standards to UK and US
in all countries within Asia - but the range and the average varies
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Peanut Butter Supplier – South Asia
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Drinks company – South Asia
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Street food – SE Asia
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Manufacturing ….
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Summary of Supplier Audit Finding in Developing Markets
 Top 5 issues found during food safety audits of suppliers in
Asia:
1.
2.
3.
4.
5.
Traceability and recall systems
Understanding of hazard analysis
Pest control and proofing
Water treatment system maintenance
Staff hygiene facilities
 Lack of effective traceability will limit effective action when
something goes wrong, lack of HACCP systems will hamper
effective management
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Some solutions to the top problems …….
 Smaller suppliers in developing markets should
try to keep their systems simple and practical
 Traceability – choose a large batch size – day of
production rather than each shift rather
 HACCP – divide your products into groups that have
similar characteristics and make sure the CCP’s are really
critical to keep the system practical
 Pest control – concentrate on keeping them out rather
than killing them once they are in
 Working towards a recognized international food safety
certification system will help you to manage all of these
issues effectively …..
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Some comments from buyers and suppliers ….
GFSI is the right direction
for food safety in the
international supply chain
…… However, I feel there is
vast room for improvement
in rapidly developing
markets like China and the
Middle East
We do not buy ingredients out
of China and are hesitant from
most of Asia
Most concerned about food safety in
China, India, Middle East
It most likely will come down to an
independent third party audit that can be
trusted to ensure quality and food safety
from these foreign markets
We are in the process of implementing
SQF and the requirements are difficult due
to the size of our operation and our
vendor options
Intensive "paperwork" requirements pull
company resources off of the production
floor and into the office
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GFSI Food Safety Certification Schemes
New GFSI Global
Markets
Standards for
entry-level
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International Food Safety Certification
 BRC – Strong in UK, Asia and US – practical,
comprehensive, comparatively simpler documentation
 SQF – Strong in US and Australia, good for agricultural
and primary suppliers, practical and comprehensive
 FSSC 22000 – new so limited use so far, but good for
businesses that already have ISO quality systems.
 IFS – very comprehensive but complex documentation
and limited availability due to auditor qualification
process
 Dutch HACCP – process based and practical but limited
take up – may be replaced by FSSC 22000 in the future
 ISO 22000 - Not a GFSI standard. Only covers
processes but a good entry level standard to lead onto
full GFSI
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Growth of GFSI Certification in Asia ….
800
700
600
500
400
300
200
2009
100
2010
0
2010
2009
Example of BRC Certification numbers; 1,170 to 1,438 from ‘09 to ‘10
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Supplier Development Roadmap
Customer’s
Sales
Benefits
Programme Costs
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Thank you …….
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