GFSI: Cost of Doing Business

If your company supplies Wal-Mart with private label snacks or baked goods, it’s going to cost you more to do business next year. Heck, if you sell branded products at any number of major retailers, it’s likely the cost of doing business in 2009 will go up.

And sorry, I don’t think you’re going to be able to pass your additional expenses on to consumers.

That’s because your company will need to complete one of the four Global Food Safety Initiative (GFSI) certifications that are being pushed not only by Wal-Mart, Albertson’s and other chains, but also by retailers across the world with an estimated $750 billion in annual food sales.

As the name indicates, the GFSI audits, like the CSI TV shows, are comprehensive processes, except that GFSI documents that a company meets fundamental food safety requirements, has a Hazardous Analysis of Critical Control Points plan and offers a full food safety and quality management system. The four schemes currently benchmarked to the GFSI requirements are BRC, SQF, IFS and Dutch HACCP, or an alphabet soup of acronyms that stand for VTS (very technical stuff).

These audits involve review of organized paperwork that validate everything from nutrition claims, shelf life trials and identity preservation of organic products to product recall procedures, calibration of equipment and even written procedures to prevent the spread of infectious disease by anyone who comes near the production floor.

And I haven’t even gotten started yet.

Every food facility that supplies major retailers, as well as some foodservice distributors, needs to be certified through GFSI schemes. For producers of bread, biscuits, custard, cookies and crackers, full certification must be completed by next July.

Of course, that deadline may be delayed for a number of reasons, including a logjam caused by too many companies scrambling to get audited and not enough trained people to conduct the audit.

Ultimately, the initiative’s intentions are good, notes Brian Soddy, vice president of sales and marketing at the AIB International, which currently is training auditors to conduct the BRC and SQF certifications.

“If you have one standard that’s universally accepted worldwide, then it cuts down on the audit load for manufacturing facilities,” he says. “So even as tough, long and quite extensive as these audits might be, they may replace dozens of separate audits that they’re doing.”

Unlike a typical AIB inspection, which is mostly conducted on the plant floor, 75% of the GFSI audits involves sitting in a conference room going over paperwork on nearly every detail involving production and food safety in the facility. Bundling the GFSI audit with an AIB inspection will cover all bases for any operation.

Although the GFSI audits cost a few thousand dollars for the certification process, training employees at the corporate and plant level will add to that price, adds John Kay, AIB’s certification schemes director.

Depending on the type of audit chosen, there are varying levels of in-plant training that may be required. For the SQF approach, a hypothetical company with 20 facilities will need to train one to two corporate managers who will work extensively on how to fulfill the audit’s requirements. Then, the company needs one trained person at each plant who will spend time gathering documentation and organizing it for the audit.

Next, for all GFSI schemes, facilities will go through a pre-assessment to determine what additional documentation they need and what areas in the operation they need to fix before they go live with the audit, Soddy says. For the BRC certification, those who pass the audit in the top two tiers, or get an A or B grade like in school, only have to do a maintenance audit every 12 months. Those facilities with a C grade must be recertified every six months. With a D grade, there’s no certification and say “bye-bye” to your business with many retailers.

Fortunately, Kay says, many large companies just need to organize the documentation. However, Soddy adds, it’s a different story for the intermediate baker with, let’s say, $45 million in sales, of which a big chunk of their business involves Wal-Mart or another retailer.

“The big companies have experts in place and will get up to speed quite quickly,” he notes. “Ultimately, this could cause stress with smaller companies, and I’m sure they’re worried right now because the process is complicated.”

For more information, contact AIB at www.aibonline.org, the American Bakers Association at www.americanbakers.org or your industry’s association.

Dan Malovany, editor

malovanyd@bnpmedia.com