Evaluating and Approving Suppliers

Ingredients, processing aids, and packaging materials are the foundation of finished food products. Your relationships with the companies who supply these materials are a critical part of your mission to provide safe, quality products. Becoming proactive and developing working relationships with your suppliers gives you confidence that the materials received meet your standards. This requires an ongoing supplier approval and evaluation process.

The first step of a raw material supplier approval program is to develop a list of your current suppliers. Your control and procurement department will be a key resource that is likely able to generate a list of everyone who has provided materials over the past couple years.

Once you have the list of your suppliers, you may need to contact each one to obtain additional or missing information. Explain that you are initiating a supplier approval and verification program and that they are automatically grandfathered as existing suppliers, but that their status will change to approved, conditionally approved, or disapproved as key information is received and reviewed. Coordinate with purchasing, research and development, quality, and other relevant departments to determine the information that is needed from your suppliers.
 

Key Supplier Information

The key information needed from every one of your suppliers includes contact details, FDA registration numbers, various signed agreements, and food safety inspections:

• Supplier Name. The legal name of the supplier, which may be different than the commonly used name, e.g., Joe and Family LLC vs Joe’s.
• Activities. Is the supplier a broker, importer, distributor, repacker, or manufacturer? You may discover that a supplier is not the actual manufacturer of the materials purchased. If so, you need to ask the supplier how they chose the manufacturer as well as additional information you may need from the specific manufacturing location.
• Address. Both the physical location and, if different, the mailing address for:
  • Manufacturing sites, specifically the locations where the product you purchase is repackaged or made. Approval is facility specific rather than companywide. For example, if an organization owns three manufacturing facilities, each supplying location would need a separate review and approval.
  • Corporate location.
• Emergency Phone Number (24/7). The telephone number during non-business hours in case you need to reach the supplier during an emergency.
• Key Contacts. Name, telephone, and email address for:
  • Manufacturing location quality.
  • Corporate quality.
  • Sales/customer service.
• Confirmation of FDA Registration. If the purchased material is to be registered with the FDA (packaging suppliers are exempt), you need confirmation that the company is successfully registered and re-registered every even numbered year. Many companies may not provide their actual registration number, and even if they do, you cannot confirm if the number is accurate. Registration confirmation should be signed by a director or a higher-level executive.
• Letter of Continuing Guarantee. A letter of continuing guarantee (also known as a pure food guarantee) states:
  • The supplier recognizes that you manufacture food or packaging materials used for food.
  • The material supplied meets all federal, state, and local regulations (such as the Food, Drug, and Cosmetic Act and all amendments).
  • The document should be signed by a director or a higher-level executive.
• Liability Insurance. If there is a problem with the material, what is your resulting cost? Consider the cost of the materials, as well as the impact to the finished product and the company. Most insurance companies require that each customer of the supplier to be covered is individually listed on the policy. Request that the insurance company send a copy of the insurance policy directly to you if your company is listed on the rider.
• Heavy Metal Warranty. Packaging material suppliers need to certify that heavy metals are not intentionally introduced to the materials and that the combined incidental level of heavy metals does not exceed 100 ppm. Heavy metals to include in the warranty are arsenic, barium, cadmium, hexavalent chromium, lead, mercury, selenium, and silver. Heavy metals are typically associated with recycled packaging materials and some inks. Food-contact packaging material includes nonfood items that directly touch food/beverage, including containers, caps, adhesives, labels, inks, dyes, corrugated, stabilizers, and coupons. Glass jar suppliers do not need to provide a warranty since potentially present heavy metals are bound, and leaching to the product is unlikely.
• Regulatory Inspection. A copy of the most recent regulatory food safety inspection of the facility (e.g., FDA, state health, or state agriculture) is needed.
• On-site Inspection/Third-Party Inspection. You may determine that a representative from your company should conduct on-site inspections for key/critical suppliers. This is a very expensive program to initiate and maintain. It also can be difficult to determine a qualified person at your company who has the skills to conduct an inspection. Most companies accept an inspection conducted by a reputable third-party inspection firm. Question and further investigate any inspection that is done by a company of which you have never heard or one conducted by an independent inspector.
• Internet Search. Make it very clear to your suppliers that they need to immediately inform you if they have a recall situation, even for a material that you do not purchase. They should notify you of the recall and how the root cause was resolved. During the initial and annual approval/assessment process, conduct an Internet search that includes the company’s name and key words like recall, foodborne illness, or suspension.
• Emergency Supplier. For the rare occurrence where an emergency supply of a material is needed, clearly identify the individuals who can determine if the emergency supply is equivalent to what has been approved.
  
   

Approval Categories

Once the program has been initiated, ongoing review and updates of the suppliers’ performance should be conducted annually and any time there is a significant concern. Rating the suppliers will help you streamline preferred suppliers and highlight suppliers of concern.

• Historic Supplier - has been a satisfactory supplier in the past, but the steps outlined in the supplier certification program have not been completed. All historic suppliers should be incorporated into the supplier-approval program within three years of program implementation.
• New Supplier - has met all expectations; however, there is no historic information about the supplier’s compliance with the specifications or customer service. A new supplier will be assigned an approval status (conditional or approved) within one year of the initial approval or use.
• Conditionally Approved/New - has not met all of the expectations; however, has been determined that the missing components are not critical at that time. Typically, these suppliers are given a timeframe for full compliance.
• Conditionally Approved - an existing supplier that has had issues that have adversely affected the finished product or are of concern. The identified issue may cause the facility to eventually become a disapproved supplier.
• Approved Supplier - has had a satisfactory record of complying with the specifications and customer service expectations.
• Preferred Supplier - has an exceptional history of compliance with specifications and customer service and provides additional, value-added services.
• Disapproved Supplier - did not meet the expectations during the approval process or has had significant issues or lack of satisfactory corrective action to issues of significance. Materials are not to be purchased from disapproved suppliers.
  
   

Identify Roles

Follow-up and annual assessment make all the difference in a successful supplier-approval program. Make certain the team identifies the person(s) responsible for each of the following steps:

1. Who develops the supplier questionnaire and ensures it is current?
2. Who tracks the responses and follows up with the suppliers to ensure that the required documents are submitted?
3. Who reviews the submitted documents and assesses that the required expectations are met?
4. Who is responsible for clearly communicating concerns or approval status back to the supplier?
5. Who is responsible for conducting on-site inspections or determining if additional requirements are necessary for key/critical suppliers or those who have a questionable status?
6. Who gathers and coordinates historic information for ongoing supplier review? Areas to consider include:
   • Material safety and accuracy of COA or other requirements (typically quality).
   • Product performance/quality (typically operations and/or quality).
   • Customer service (accuracy and timeliness of delivery; typically receiving and/or procurement).
   • Billing accuracy (controller).
   • Ongoing status of a supplier (typically quality).

Assess and Communicate

Think of the customers with whom you are most pleased to work. One characteristic of a great customer is one who communicates his or her satisfaction level and provides positive feedback when appropriate. How can you become that appreciated customer to your suppliers?

This does not need to be a formal process. A simple phone call reporting that the most recent shipment was on time and in great condition is one building block. If you periodically test incoming materials, report your results to the supplier. This provides feedback to suppliers and lets them know that you are monitoring their performance. At least once a year, provide a documented summary of your supplies’ status, including any compliments as well as any issues that they may or may not have resolved.

Unless you prefer that all communication is through your procurement department, make certain that your suppliers know your key contact for providing any value-added service or to report potential issues.

Become proactive in building your supplier relationships. Don’t wait until your product is at risk to open the line of communication. Ensure that your suppliers understand your expectations. This will improve productivity, ensure potential supply safety concerns are understood and handled appropriately and that expectations and regulations are being met.

The author is Food Safety Professional, AIB International.