The document discusses how Community of Interest (COIN) networks can be used to more efficiently manage supplier compliance documentation by allowing buyers and suppliers to post policies, procedures, certificates and other documents to a shared network, reducing duplication and improving visibility of compliance information in real-time. It notes that currently most organizations rely on inefficient manual systems to track thousands of compliance documents from numerous suppliers. COIN networks aim to address the challenges of insufficient time, budget and resources that many organizations face in effectively managing supplier compliance.

1. The emerging use of COIN (Community of Interest) networks to manage compliance reporting within the supply chainPresented at the 17th Australian HACCP Conference and 5th SQF International ConferenceAugust 2010Melbourne, AustraliaNigel Dalton-Brown, iCiX Asia

2. The SQF Code requires Compliance Communication4.3 Specification and Product Development4.3.2 Raw Materials4.3.3 Packaging4.3.4 Contract Service Providers4.3.5 Contract Manufacturers4.3.6 Finished ProductDistribution4.4 Attaining Food Safety4.4.5 Incoming Goods and Services4.4.6 Corrective and Preventative Action4.6 Product Identification, Trace, Withdrawal and Recall4.6.2 Product Trace4.6.3 Product Withdrawal and Recall5.3 Water and Ice Supply5.3.1 Water Supply5.3.3 Ice Supply6.8 Monitoring Water Microbiology and Quality6.8.3 Analysis6.10 Supplier Approval6.10.1 Selecting Approved Suppliers6.10.2 Approved Supplier Program6.10.3 Monitoring Approved Suppliers6.10.4 Register6.10.5 RecordsSupply6.13 Allergen Control6.13.2 Risk Assessment

3. How does it work in practice?Corrective actions also need to be sent out and actionedAlso need to collect Certificates of Analysis from Laboratories and testing housesBuyer sends copies of policies and procedures to all suppliersWe also need to carry out mock recalls and Product WithdrawalsDistribute Policies and ProceduresCollect Compliance CertificatesCertificates of Analysis and AuditsCorrective ActionsProduct Withdrawals and RecallsNow need to store and manage multiple certificates from multiple suppliers all with different expiry datesNow have multiple copies of policies and procedures across all suppliersBuyer sets up relationships with suppliers

4. The duplication across the industryAcross an industry, over 90% of all copies of compliance documents are waste.What is the cost to an industry in terms of Time wasted looking for information

5. Time wasted filing documents

6. Cost of storage

7. Missed informationiCiX Global Survey on Compliance ManagementAs a knock on effect of drowning in paperwork, 64.2% of respondents said they were not aware or partially aware of all their self regulatory and regulatory responsibilities for managing supplier compliance. iCiX/IPcubed Global Survey into the perceived importance of compliance management – May 2010

8. Some open responses from our global surveyA number of respondents expressed concern that Supplier Compliance Management was not getting the attention it deserved.....Supplier Compliance is an issue that is at times neglected when minor issue are ignored. However it is the minor issue that eventually contribute to major fallout'sTotally ignored till it is too late.As part of the contract commencement, we request the required docs/certs before the contract is signed. Where we are not so good, is managing the document expiry during the life of the contract.My company does not have a central repository for tracking contracts let alone compliance. Each department is allowed to manage or not manage as they deem appropriateA real time system would be very helpful but cost is a constant constraintiCiX/IPcubed Global Survey into the perceived importance of compliance management – May 2010

9. Some research resultsWhat type of system do you use to manage your suppliers compliance?79.6% of organisation have no system or a manual system for managing thousands of compliance documents Approx how many compliance documents do you believe your organisation needs to manage?60.4% of organisations are trying to manage over 1,000 compliance documents each with different expiry dates. 28.9% of companies are dealing with over 10,000 documents44.0% of companies are dealing with over 5,000 documents60.4% of companies are dealing with over 1,000 documentsAs a result, almost 50% of companies responded that they did not remove suppliers for non-compliance because they could not track it well enough. These organisations are definitely at risk!iCiX/IPcubed Global Survey into the perceived importance of compliance management – May 2010

10. It’s expensive

11. And it’s expensiveIn 2003 Food Standards ANZ reported example recall costsMajor retailer conducting national recall of 17,680 cartons of frozen processed chicken: press advertisements $51,521stock costs $75,709cost of recovery $119,425labour costs $4,000other associated costs $7,217 Total cost of recall $257,872FSANZ did not account for consequential loss such asLoss of revenueDamage to brandData from Food Standards ANZ, 2003

12. The current way of tracking complianceDistribution64.2% lack coherent standards of what documents actually required79.6% use a manual, labour intensive, paper based system (excel or a database)44% deal with over 1,000 documents50% do not remove suppliers for non-compliance because they could not track it well enough. Staff waste hours chasingmissing documentsout of date documentsGenerallyinaccuratecostlylower quality due to lack of tracking of COPQexposes the organisation to riskSupply

13. A day in the life of....“It’s a mind numbing, soul destroying, never ending task”

14. The four stages of Compliance ManagementThe UninformedAre we supposed to be tracking supplier compliance?Why?

15. Isn’t that the responsibility of our suppliers?

16. What should we track anyway?The Grudgingly CompliantWe track supplier compliance butit’s very expensive

17. It’s time consumingThe Risk TakersWe know we should track it but we don’t. It’s too expensive

18. It’s too time consuming

19. We’re not sure what we need to track

20. We keep our fingers crossed nothing goes wrong

21. We hope the auditor doesn’t notice all the missing supplier informationThe SortedWe are COINing it.It’s inexpensive

22. It takes very little time.The top three reasons for inactionInsufficient timeInadequate budgetInsufficient administrative resourcesTo counter the “no time”, 86% of respondents have decided that someone else (i.e. suppliers themselves or an independent third party) should take on the actual day to day grind of driving supplier participation in the purchasers ethics and compliance initiativesTo circumvent the “no budget”, 75% of respondents have decided that suppliers should share or bear the cost of participating in the purchasers ethics and compliance initiativesThe emerging solution has a great deal to do with collaborationSource: Building an ethical supply chain. Michael Levin, 2008 Integrity Interactive Survey, 2008

23. Community of Interest (COIN) networksCOINing It

24. The COIN ApproachBuyers post all their policies and procedures to their secure site. May also post technical specifications for suppliers to reference.Only ONE copy is posted on the COIN network. This single copy is then made available to relevant suppliersEach organisation, buyers and suppliers, joins and creates their own secure siteThe COIN network exists to provide many-to-many connections between trading partnersDocuments are no longer stored and collected. The key metadata is used to generate reminders and reports in real time.In the same way, suppliers post ONE copy of each relevant compliance certificate, PLUS key metadata, e.g. Type, expiry date, alergens/nutritional data, product specifications...

25. The COIN – COA’s and AuditsAuditing and certification companies and laboratories are also part of the COIN.Buyers can request audits with the results posted onto the suppliers sites for viewing by the buyer.

26. The COIN - RecallCustomers also join iCiX.This allows for recalls, CAR’s, smartforms, etcBuyersCOINA many to many Community of InterestThird Party AuditorsCertification bodiesLaboratoriesCustomersSuppliers and subcontractors

27. Key CharacteristicsEach organisation has it’s own siteThe responsibility changes from “Buyer collects” to “Supplier publishes and shares”Communication paths created with third parties: Auditors, Laboratories, Customers and RegulatorsDocuments are loaded only onceCosts are shared across the industry

28. Follow on benefits of COIN networksReal time reports with high confidenceBroadcast messages to suppliersProduct Recall/Withdrawl in hours not days or monthsCorrective action requests with COPQ claimsPDF online forms for compliance related work

29. Cost Savings

30. The top three reasons for inactionInsufficient timeInadequate budgetInsufficient administrative resourcesTo counter the “no time”, 86% of respondents have decided that someone else (i.e. suppliers themselves or an independent third party) should take on the actual day to day grind of driving supplier participation in the purchasers ethics and compliance initiativesWith COIN, suppliers carry out the day to day grind of publish documents. COIN also reduces unnecessary copies by approx 99% To circumvent the “no budget”, 75% of respondents have decided that suppliers should share or bear the cost of participating in the purchasers ethics and compliance initiativesUnder COIN systems, everyone pays and so the costs are spread.The emerging solution has a great deal to do with collaborationCOIN networks are by definition collaborativeSource: Building an ethical supply chain. Michael Levin, 2008 Integrity Interactive Survey, 2008

31. Analysis

32. Recalls, Withdrawals and CAR’s on iCiXRecalls and Withdrawals1,426 recalls covering over 111,000 products with over 540,000 items pulled off shelvesCorrective Action Requests (CARs)22,950 CAR’s from 12 October, 2005IV-Critical 748III-Major 11,922II-Minor 9,920Urgent Class 1 recall

33. Urgent Class 2 Recall