DAIRYREPORTER.COM SPECIAL: DRIVING UP QUALITY, DRIVING DOWN COST
Product rejection: Quality and safety assurance drives down cost – FrieslandCampina
Herman Ermens, managing director of FrieslandCampina Domo – the Dutch dairy giant’s ingredients business – told DairyReporter.com editor, Mark Astley, that dairy product manufacturers need to get "into the mind-set that good quality drives down cost.”
“In the current economic environment people in all industries are looking to reduce their outgoings and increase their margins,” said Ermens. “As well as asking us to help them develop new products and to optimize supply chain processes, our customers are constantly asking us to help them reduce their overall formulation costs.”
But according to Ermens, manufacturers should be looking to improve quality assurance across their businesses to reduce costs, not only look for cheaper alternatives to currently expensive ingredients.
Rejection rate? Cause? Cost?
“There are a lot of ways to reduce cost without having to replace an ingredients or a product commodity with a cheaper alternative,” said Ermens. “The quality and safety of the finished product is the priority. In the end, quality also drives down costs.”
“It is very important to look at possible cost savings and mutual benefits in the supply chain and relate them to quality.”
“We ask our customers, ‘What is your finished product rejection rate? How much does it cost? And what is the cause?’ From there we can help them establish how to help them bring down their costs,” he said.
Food recalls, which have previously been labelled the ‘biggest threat’ to food industry profitability, can be a costly affair.
Taking into account the disposal costs of a rejected or recalled product, any loss of profit claims, and any resulting lawsuits, the costs can run into the millions. In addition to that, reputations can be tainted.
Food manufacturers “demanding traceability”
Ermens’ colleague, FrieslandCampina’s director of quality affairs, Suzan Horst, also moved to highlight the important of a good traceability system.
“Our customers are also demanding traceability,” said Horst. “They demand to know where the ingredients we are supplying them with are coming from.”
“We can show our customers the origin of the ingredients we supply them with – from the cow in the field right through the final product.”
“This concept of traceability is worth great value to food manufacturers,” added Horst. “For many markets, such as China, traceability is a unique selling point.”
