Approved Supplier Management

About Ethical Sourcing Standards

Ethical Sourcing Standards are applied across international food industries to ensure sourcing is carried out responsibly, to ensure suppliers continually improve their social and environmental practices, and to protect retailer and brand confidence.

Ethical Sourcing Standards are a general expectation of consumers who, over time, have become increasingly aware of purchasing goods and services that are sourced in a manner that does not exploit humans, wildlife or the environment, and does not represent a danger to the health or safety of humans, wildlife or the environment.

To provide food items and general merchandise at competitive prices, retailers continually source items from a variety of international locations, including lower-income countries. Exposed instances of poor working conditions and environmental degradation have, over time, led retail businesses to develop and implement targeted social responsibility requirements for their suppliers.

Common elements of Ethical Sourcing Standards policies implemented by progressive retail businesses include:

• Using suppliers that source, manufacture and package their products responsibly;
• Working with suppliers to improve their social and environmental practices.

The basis of Ethical Sourcing Standards is commonly linked to recognised Ethical Trading and Labour Initiatives, which are often used to define the guidelines mandated by retail companies. Examples include the Ethical Trading Initiative (ETI) Base Code, Sedex and its SMETA audit, and amfori BSCI. Many countries also have modern slavery legislation, such as the United Kingdom Modern Slavery Act 2015 and the Australian Modern Slavery Act 2018, which require larger businesses to assess and report on supply chain risks. Requirements vary by jurisdiction, so confirm those that apply to your business.

Suppliers or Service Providers

Within modern food businesses, there is generally a clear distinction between suppliers of raw materials and service providers.

Suppliers are businesses that supply a “physical” element into a food business, including but not limited to:

• Ingredients;
• Finished products;
• Packaging;
• Chemicals;
• Onsite testing equipment;
• Onsite analytical testing supplies;
• Equipment and utensils;
• Premises construction.

Service Providers are generally classed as businesses that supply a “service” into a food business, including but not limited to:

• Analytical testing;
• Calibration of measuring and testing equipment;
• Consulting;
• Pest control;
• Cleaning and sanitation;
• Maintenance and repairs;
• Sub-contract manufacturers;
• Sub-contract processors;
• Sub-contract packers;
• Transport providers;
• Logistics and storage providers.

Within the following content, we use the term “suppliers”, and the requirements should be considered equally for both product suppliers and service providers.

Procurement Protocols

Before purchasing agreements are initiated with specified suppliers, it is important to obtain as much information as possible about the products and raw materials to be supplied. Product information from the pending or existing supplier will outline basic product specifications. It is also important to consider any additional details that may affect the potential of the product to become unsafe for use within your business.

The following factors may be considered:

• The shelf life of the product: Will the product be used before organoleptic (sensory), chemical and microbiological changes render the item unsafe or unacceptable for use?
• The product availability: Will the product be available for the duration for which it is required by your business?
• The product specifications: Are your specifications for the product maintainable? Is a record of specifications for the items supplied kept within your business? (See Specifications Management.)

Procurement Process: Logical Sequence

1. Supplier Invitation: Provide potential suppliers with a questionnaire regarding their products and services. The supplier questionnaire must include questions regarding product safety, product traceability, HACCP plan review, and Good Manufacturing Practices;
2. Supplier Input: The potential supplier provides samples and information for assessment. Samples, information and supplier quality details are reviewed;
3. Supplier Technical Review: Purchasing team members review all materials submitted by the potential supplier and indicate conditions of supply, including audit schedules and hazard rating. At this step, ensure that the proposed products or services are suitable for their intended scope and use for foodstuffs;
4. Supplier Price Review: The potential supplier’s products and services are compared with those of current or other potential suppliers regarding quality and price;
5. Supplier Acceptance: The supplier is accepted and added to the nominated supplier listing. A file should be created for the supplier if one does not exist;
6. Use of Supplier: The procurement process is complete. Continue use of approved suppliers and initiate reviews and auditing as scheduled.

The Approved Supplier Management and Procurement Processes are commonly managed on an ongoing basis with scheduled verification activities and reviews to ensure the effectiveness and currency of the established systems.

Approved Supplier Program

The suppliers that you choose to use for your business should:

• Demonstrate, as a minimum, a proactive commitment to currently recognised good manufacturing practices;
• Meet all relevant certification criteria as suppliers for their nominated range of products;
• Have made a commitment to a minimum of HACCP-based food safety within the entirety of their business operations.

Confirming Supplier Suitability

The following methods may be considered when assessing a prospective or existing supplier for approval:

• A desk audit of the suppliers’ quality and food safety programs regarding adequacy and suitability. The aim is to locate essential components of recognised GMP and HACCP-based food safety, and the associated identification and control of significant food safety hazards;
• The risk category of the goods being supplied and the supplier’s reputation for quality service;
• Reports of microbiological analysis of the suppliers’ potentially hazardous products from accredited sources that show adherence to legislative and/or internationally recognised microbiological guidelines;
• Ongoing random testing of delivered items by appropriate methods to confirm microbiological safety and suitability;
• Confirmation that all relevant staff have undergone personal and food hygiene training appropriate to their duties;
• Auditing of the supplier (including the gathering of objective evidence by a suitable person from your business or a reputable third party), including the ability of the suppliers’ operations to identify and control significant food safety hazards, and compliance with GMP and HACCP guidelines. The outcomes of such auditing should result in the close-out of any non-conformances rated above minor (that is, major or critical) before proceeding with supplier approval;
• Current and relevant certification of the supplier by an accredited certification body, such as a certification scheme benchmarked by GFSI (for example BRCGS, FSSC 22000 or SQF).

Should an approved supplier fail to do any of the following:

• Adhere to the seven HACCP principles as set out in the Codex HACCP guidelines;
• Maintain internationally accepted food industry GMP;
• Maintain sufficient control over monitoring and corrective actions at any CCP within their food safety program;

there may be sufficient grounds to remove that supplier from the approved supplier program, based on the objective evidence of the non-conformances above. Records of supplier performance must be maintained.

Commodity-Based Supplier Risk Assessment Criteria

It is important to consider the varieties of foods being supplied regarding their potential to contain or cause food safety hazards. The acceptance of suppliers and their products should be approached accordingly, applying different approval criteria for different levels of food risk.

Suppliers with products that contain:

• Food of animal origin, including red meat, poultry, fish, shellfish, crustaceans, eggs, milk and dairy products;
• Food of plant origin that has been heat-treated and has a history of foodborne disease, including potatoes, squash, pumpkin, rice, processed beans, mushrooms, onions and tofu;
• Untreated food of plant origin with a history of foodborne disease, including seed sprouts, cut fruits or vegetables, cut leafy greens, cut melons and unpasteurised juices;
• Processed fruits or vegetables, including variations of marination, drying or cooking;
• Composite or manufactured foods, including cream-based and custard-type fillings.

Foods that are potentially hazardous and not generally subjected to further cooking may require more scrutiny for approval than foods with a lower risk of contamination.

Foods of lower risk are those that do not have a history of contamination or the normal ability to support the growth of microbiological pathogens. They include grains, nuts, confectionery, carbonated and alcoholic beverages, jams and preserves, and commercially canned and bottled products. Lower risk does not mean no risk: grains and nuts, for example, can still present Salmonella, mycotoxin and allergen concerns.

Whilst traditionally “High Risk” foods are of major concern within Approved Supplier Management systems, it is of utmost importance that suppliers of all raw materials and services are assessed for risk and treated accordingly.

Packaging variants should also be considered within risk-based assessments of suppliers. The origin and “food grade status” confirmations for packaging should be defining factors within any risk assessment process. It is important to confirm that packaging will conform to the legal requirements of the country in which the packaged products will be sold.

Geography- or Status-Based Supplier Risk Assessment Criteria

Within modern food industries, information moves rapidly across borders. This provides substantial opportunities to manage approved supplier systems by considering issues that arise in similar products or food industry sectors in other parts of the globe.

Using awareness of foodborne illness or contamination in other countries or continents to apply additional requirements or controls to existing suppliers of materials or services is increasingly common practice. Supplier status, such as certification status, regulatory standing or audit history, can be assessed in the same way. The following example shows a logical sequence for geography-based supplier assessment:

1. You review an email news report stating that a contaminant has been identified in a vegetable product manufactured and packaged in country “X”;
2. You receive a similar vegetable product from an approved supplier. Although it is not the same brand as the contaminated product, you review your product specifications to confirm the country of origin;
3. You see that the country of origin for your supplied vegetable product is country “X”, the same as the contaminated product;
4. You immediately discuss this detail with the relevant persons within your food business;
5. Because you are not confident that the vegetable product you are receiving is free from contamination, you contact the supplier or manufacturer and request testing results to confirm that their product is not contaminated;
6. You receive and review the testing results and decide whether to continue use based on the outcomes.

This scenario highlights the importance of “real-time” interactions within your Approved Supplier Management systems, so that decisions are made on current information.

Supplier Assessment Considerations

As part of a supplier assessment, it is necessary to address all information appropriate and relevant to the capability of the supplier to consistently supply products to the required standards.

Information that may substantiate the supplier’s claims includes:

A certified food safety and quality management system, which may include:

• Certification registration number;
• Certification standard;
• Agreement to grant access to quality records at any time for inspection and verification of the supplier’s quality system;
• Substantiation by a certification certificate and capability statement from a government authority or third party;
• A letter of Substantial Implementation, or equivalent written confirmation, from an appropriate government authority or third party. Relevant details may be substantiated by a copy of the letter.

Details of a documented and operational quality system that may gain a letter of Substantial Implementation (or equivalent) after auditing, which may include:

• Details of quality system elements that are currently documented and operational;
• Details of target dates for the certification of each of the above-nominated elements;
• Details of the quality standard on which the elements are based;
• Details of the suppliers’ suppliers, being the suppliers of input materials into the processing and production of items supplied to your business. Do they have documented and operational quality systems in place?

Copies of the suppliers’ quality system documents, which may include:

• Quality Manual;
• Quality System Procedures;
• Internal and external quality audit schedule;
• Contact details for the quality system contact;
• Details of external consultants, if applicable;
• Documented specifications, including all critical product formulation, organoleptic and physical parameters.

Supplier packaging and labelling requirements, which may include:

• Packaging and labelling of goods to appropriate legislative standards and/or to specifications of the buyer;
• Delivery of goods in appropriate condition, free from damage and easily inspected upon receipt;
• Sufficient labelling and invoice details to include batch/lot number, use-by/best-before date, purchase order number and other relevant information;
• Substantiated ability to comply with all appropriate legislation and guidelines as a carrier of food items;
• Appropriate identification of allergenic ingredients and allergen cross-contact (cross-contamination) risks, with allergen information and controls confirmed (see Allergen Management).

Risk and property, which may include:

• Title of goods passing to your business only upon acceptance at the point of delivery;
• Insurance of the goods and delivery capabilities with a reputable insurer to the full value of the goods, including product liability and public liability insurance covering damage or injury to the staff or property of your business during delivery.

These terms are commercial and legal matters. Seek legal advice when drafting supply agreements (see Contract Review).

Supplier guarantee, which may include:

• That all goods supplied will be new upon delivery;
• That all goods supplied will be of agreed and acceptable quality;
• That all goods supplied will be fit for their intended use;
• That all goods supplied will conform to any specifications or sample provided by the supplier;
• That all goods supplied will be free from defects in materials and workmanship;
• That all goods supplied will conform to applicable product standards.

Mutually Beneficial Supplier Relationships

Businesses rely on their suppliers to provide the products and services required to produce outputs. Together with other inputs, this gives the business the ability to generate income, which is the primary objective of most commercial businesses.

The benefits of mutually beneficial supplier relationships include:

• Increased and maintained market share through strategic and beneficial supplier relationships;
• The ability to optimise the use of budget and resources to create “added value” for both the food business and its suppliers;
• Capability to balance short-term gains with long-term opportunities;
• Opportunities to share resources, technical expertise and beneficial partnerships with suppliers through structured interactions.

Approved Supplier and Commodity List

A document containing all approved supplier details and the goods that they supply should be readily accessible. Hazard ratings (such as high, medium or low) for each commodity, approval status, and audit or approved supplier review dates should also be recorded. Consider including nominated alternative suppliers for emergency supply.

If your food business supplies foodstuffs manufactured to a customer’s specifications, it is important to consider any specific Approved Supplier Management Development requirements in relation to their items.