Compliance for Food Manufacturers

Challenges and lean solutions

Published: Tuesday, July 4, 2006 - 21:00

HR Nicholson Co., “pioneers in the juice industry,” has operated for nearly a century. The company has grown from 45 employees to 75 employees in just the past six years. The family-owned, Baltimore-based manufacturing and distribution company realized that, unlike the first eighty-plus years when products were manufactured and shipped from the same location, the need to set up distribution locations separate from the manufacturing plant created several challenges.According to Su Shaffer, senior executive with the fruit juice manufacturer, “When HR Nicholson started looking at solutions to manage the multiple-location scenario, production planning was critical to meet the growth.” Beyond growth, part of what drove the lean process and the search for technological solutions were the government regulatory demands of the food industry.

Similarly, Green Bay Cheese Co. faced significant challenges due to government regulations and customer-compliance issues. Green Bay Cheese needed an enterprise resource planning (ERP) software package that could:

• Track individual cheese lots from receipt of raw material through manufacturing, and on to shipment of the finished product to its retail and food-service customers.
• Manage special customer-pricing requirements based on the current market price for cheese
• Provide detailed costing of their manufacturing operations
• Prepare customer-specific private labeling of product, including product details and lot-analysis information

HR Nicholson faced other specific quality challenges from strong continued growth and, as a Platinum U.S. food service supplier, the company must access the kind of tracking and reporting required to meet government’s stringent requirements.

Food manufacturers and the bioterrorism act
Green Bay Cheese and HR Nicholson were required to meet the Public Health Security and Bioterrorism Preparedness and Response Act of 2002. These regulations enforce requirements regarding the establishment and maintenance of records by persons (excluding farms, restaurants and a few others) who manufacture, process, pack, transport, distribute, receive, hold or import food. The records facilitate the identification of immediate previous sources and immediate subsequent recipients of food, including its packaging, to address credible threats of serious adverse health consequences or death to humans or animals. This regulation implements the recordkeeping authority in the bioterrorism act. According to the Bioterrorism Act, failure to establish and maintain the required records or failure to make them available to the Food and Drug Administration, is forbidden and can trigger serious consequences. All food manufacturers must be compliant by the end of 2006.

Because lot-traceability documentation for food manufacturers is required by law, inventory control may be the most important function to consider. An integrated system is critical to justify the cost of the food ERP acquisition and achieve a rapid return on investment. With an ERP implementation, Green Bay Cheese Co. and HR Nicholson are better equipped to serve their customers.

FDA 21 CFR Part 11 drives lean choices
Created by the FDA in 1997, 21 CFR Part 11 requires FDA-regulated companies to adhere to a specific set of requirements for computerized systems, electronic records and electronic signatures. The scope of the regulation includes requirements for storing, transmitting and verifying electronic signatures. The regulation also dictates what conditions are needed to maintain data integrity of electronic information stored and modified in business management software packages or computer systems.

Compliance is required for any company involved in the development, manufacturing and distribution of products governed by FDA regulations. Examples include life-sciences products such as drugs, diagnostics and medical devices, chemical manufacturers, or food and beverage manufacturers. It’s also required of all companies operating under good manufacturing practice (GMP), good laboratory practice (GLP), or good clinical practice (GCP) guidelines.

Rebecca Gill, vice president of Toledo-based TGI, noted that companies must meet the following criteria to comply with the FDA 21 CFR Part 11 requirements:

• Unique identification and access of all users in the system
• User-specific log in IDs and passwords for system access
• User-specific access to a given area within the system defined at a module, program, command or field level
• User specific access to system data based on company, division, group or cost center
• Automatic audit trail created for entries and changes of data
• Audit trail by user ID
• Audit trail by date and time stamp
• Audit trail by data modified
• Data integrity protection
• Older data isn’t overwritten
• Older data is inactivated to prevent future usage
• Electronic signatures and approvals
• Procedural-specific password requirements
• Online standard operating procedures (SOP) availability
• Online system help
• Field level help
• Screen level help
• Procedure level help
• Online access of documents, which are stored by data field or transaction
• Flexible data archiving
• Aged data may be accessible online indefinitely
• Aged data may be archived in a controlled manner

The FDA specifically states that the “agency expects the magnitude of these benefits should significantly outweigh the costs of making these systems.” In other words, the cost of purchasing an FDA-compliant system is easily obtained in the system’s return on investment (ROI). The benefits of adhering to 21 CFR part 11 regulations include:

• Reductions in system vulnerability and abuse
• Lower regulatory or compliance-driven costs
• Shorter validation time
• Reductions in entry errors
• Reduction in costs related to record retention
• Improved data integration and modeling capabilities
• Advanced search capability via a decision-support system and data warehouse
• Increased speed of information exchange

HACCP regulations drive lean principles

The system is known as Hazard Analysis and Critical Control Point (pronounced hassip). FDA has developed regulations that establish HACCP as the food-safety standard throughout the food industry, including domestic and imported food products. This regulatory standard started in the mid-90s and five years ago reached all aspects of the food and beverage industry, greatly affecting technology selection.

Lean technology solutions
Shaffer noted, “We first selected Technology Group International’s (TGI) Enterprise 21 because it takes the lean concept beyond manufacturing and extends it throughout the entire organization. A competitive edge is obtained by including the factory floor in the lean model, not by focusing solely on the plant floor for the continuous improvement efforts.”

Some of the key lean functionalities achieved included:

• Customer-driven demand planning
• Value-stream mapping of the entire manufacturing and distribution network
• Continuous improvement throughout the organization
• Waste elimination by focusing on the simplification of people, materials and processes
• Cycle-time reductions from order processing to manufacturing planning and scheduling to shipment and delivery
• Error proofing and quality improvements
• Information sharing

Enterprise 21 also delivers:

• Increased information flow and visibility across departments
• Reduced lead times in manufacturing
• Reduced cycle times for customer orders
• Reduced work in process (WIP) and finished good inventory levels
• Reduced scrap, obsolescence and waste
• Reduced operational costs
• Leveled production scheduling
• Greater machine and plant capacity utilization
• Flexible planning and execution
• Increased productivity in manufacturing
• Increased inventory turns
• Improved customer communication and information sharing
• Increased customer satisfaction

HR Nicholson has achieved lean efficiency with co-packaging partners—the purchasing and distribution transaction is seamless and invisible to their customers. Regional managers now have real-time access to viewing data, product availability and production capacity. Similarly, the lot-tracking feature available in their technology is central to HR Nicholson’s role as a United States Department of Agriculture audit partner. This lean technology has made Shaffer confident as the company will soon have more than seven distribution centers and has grown domestically and internationally.

Gill said, “Green Bay Cheese was able to address their requirements by electronically storing womb-to-tomb lot tracking of cheese so that a given lot of cheese can be traced to all customers who received material produced from that particular lot; interactively calculating online customer pricing based upon cheese market price and customer pricing factors; and automatically generating customer-specific labels, which included not only customer logos and barcodes, but also the retail customer’s price to the consumer."

Lean technology is required in the food sector
From HACCP to the Bioterrorism ACT to FDA 21 CFR Part 11 Compliance, to mention just a few regulatory compliance requirements, the rigors imposed to manufacturers and distributors of food products make lean technology solutions rather axiomatic and deeply valuable to continued operations, as well as the fundamental lean principle of continued process improvement.

About The Author

Thomas R. Cutler

Thomas R. Cutler is the President and CEO of Fort Lauderdale, Florida-based, TR Cutler Inc., celebrating its 21st year. Cutler is the founder of the Manufacturing Media Consortium including more than 8000 journalists, editors, and economists writing about trends in manufacturing, industry, material handling, and process improvement. Cutler authors more than 1,000 feature articles annually regarding the manufacturing sector. More than 4,500 industry leaders follow Cutler on Twitter daily at @ThomasRCutler. Contact Cutler at trcutler@trcutlerinc.com.