Editor’s note: This article is the first in a three-part series.
We have increasingly seen food safety issues negatively impacting marketers, growers, processors and manufacturers of food products in recent years, from the Peanut Corporation of America’s (PCA’s) salmonella outbreak in 2008 to the Jensen Farms listeria outbreak in 2011.

Editor’s note: This article is the first in a three-part series.

We have increasingly seen food safety issues negatively impacting marketers, growers, processors and manufacturers of food products in recent years, from the Peanut Corporation of America’s (PCA’s) salmonella outbreak in 2008 to the Jensen Farms listeria outbreak in 2011.

Salmonella-tainted eggs in 2010, e coli in strawberries in 2011 and listeria in Hispanic cheese last spring have all killed consumers. These incidents, combined with dozens of others during the last six years, have killed more than 40 people and made several thousand sick.

Growers saw cantaloupe consumption take a nosedive after the Jensen Farms case, which was one of the worst food-borne illness outbreaks in U.S. history as measured by the number of deaths, and they are only now seeing levels similar to those before the incident. The farm itself is bankrupt, so lawyers went after the companies that sold the disease-ridden cantaloupe — retailers. And now those retailers are settling with the plaintiffs. The same was true for peanuts after the PCA outbreak.

What’s more, a recent Google search of the term "food safety" resulted in nearly 40 million news hits, covering everything from the Food Safety Modernization Act (FSMA) and other regulations to recalls and food-borne illness reports. A broader search of the term for all Web postings revealed more than half a billion hits, with the top spots going to the Food and Drug Administration, the Centers for Disease Control and Prevention, and the Department of Agriculture (the Wikipedia entry for food safety was fifth on the list). There are even millions of food safety images and videos online, with as many as 10,000 new visuals added per day.

This is a critical turning point for suppliers to supermarkets and other retailers. They are being sued for millions of dollars and are settling those suits before going to trial because juries are likely to side against them. Those juries believe, for right or wrong, that food suppliers should know exactly where all of their food goes — and, as anyone who has been in the grocery business more than a month knows, they don’t.

Some other recent statistics relating to the state of food safety documentation between retailers and suppliers indicate that it’s worse than anyone thought:
• 65% of insurance certificates are missing or expired.
• Of those submitted, 11% did not meet the requirements (typically a dollar value minimum).
• 36% of Hold Harmless agreements are missing or expired.
• 75% of required third-party audits are missing or expired.

Making matters worse, these statistics have trended negatively over the past few years.
This does not paint a picture of suppliers who are on top of their business practices, and it has to make retailers wonder about how on top of their food safety operations they are. And, by virtue of the recent out-of-court settlement by Walmart on the Jensen Farms lawsuit, both suppliers and retailers are now responsible for everything they sell.

Almost as important as the potential lawsuits that threaten to destroy any brand that becomes entangled in a recall or other food-borne illness, growers, processors and manufacturers have a new round of federal requirements to implement as of August, due to the regulations in FSMA. The act mandates retailers and suppliers to have the documentation for regulatory compliance readily accessible for government inspection. Add these records to the business relationship records that retailers and suppliers should already be maintaining, such as indemnifications and certificates of insurance that help manage brand risk, and the content of the product supply and distribution databases starts to become very large very quickly.

The easy part of FSMA compliance is with top customers, which represent the majority of a retailer’s sales and are likely to have the processes and technologies in place to ensure they can digitally capture, store and retrieve the proper documentation. It’s really the other, smaller customers — which can represent as many as 1,000 or more companies — that may not have the sophistication to receive the data points required under the law. Managing the information with these customers can be costly and labor intensive.

The good news is that suppliers can do a lot to reduce their brand and financial liability and comply with FSMA regulations. Technology and best practices exist to help them not only prevent most outbreaks but also quickly limit the damage when they occur. There are technologies that enable marketers, growers, processors and manufacturers and others of every size to manage risk through product tracking and tracing in the extended supply chain. There are also technologies to address the market need for receiving, storing, sharing and maintaining regulatory, audit and insurance documentation all in one location.

The time for retailers and their trading partners to act is now. They must address food safety as an enterprise challenge that will negatively impact the company’s reputation and bottom line when, not if, an incident occurs.

Randy Fields is chairman and chief executive officer of Park City Group, a cloud-based software company that uses big data management to help retailers and their suppliers sell more, stock less and see everything. He can be reached at [email protected].