Merit Matters Blog

The cost of regulatory compliance can be significant, but the cost of failing to comply with legal requirements or mandates from customers can be far higher. An enterprise resource planning (ERP) solution that enables your business to respond to external requirements or changing business conditions—and that helps you prove that these requirements have been met—is a critical ingredient for business success in a changing economic climate.

Are you looking for a solution that can help you transform compliance challenges into business benefits and accomplish these critical objectives?

• Strengthening your ability to comply with regulatory legislation, such as the Sarbanes-Oxley Act, 21 CFR Part 11, the Food Safety Modernization Act, or Health Insurance Portability and Accountability Act (HIPAA).
• Enforcing compliance with company procedures or quality initiatives by automating workflows.
• Giving employees easy access to information tailored to their role within the company.
• Providing executives and managers with easy access to key risk indicators.
• Collecting and analyzing information from multiple departments and processes.
• Improving security and reducing risk by controlling access to sensitive information.
• Strengthening your auditing processes with automatic transaction recording.

Microsoft Dynamics AX provides the transparency, traceability, and accountability businesses need to comply with complex regulatory requirements, simplify compliance, and to manage risk. Here’s how:

• Providing easy-to-use tracking and tracing tools to ensure regulatory compliance.
• Giving employees an overview of business operations and role-tailored views of their work and tasks that need immediate attention.
• Creating internal controls to contain and monitor identified risks, while maintaining regulatory compliance.
• Providing one-stop access to key risk indicators.
• Ensuring compliance while speeding up approval processes by enabling remote users to enter electronic signatures.

Microsoft Dynamics AX Compliance Management gives you a cost-effective way to simplify the challenges of compliance by helping your organization improve internal controls and increase visibility into compliance-related processes and activities. By actively managing a balance between compliance requirements and agile business practices within the organization, organizations can realize the benefits of reduced risk, increased operational efficiency, and the continued building of a foundation on which to grow.

Compliance can be defined as observance, conformity, and obedience. In business, compliance generally designates the requirement to adhere to certain rules or laws, meet certain standards, and follow certain practices. Compliance standards can originate from external, as well as internal sources. A compliance requirement may be mandatory or optional and they can encompass virtually all aspects of the business environment – from financial and trade to regulatory and environmental. Customers and collaboration partners can also drive compliance adoption. Compliance becomes an important factor in a company’s ability to compete effectively as customers and collaboration partners increasingly require companies to follow certain practices or meet their specific standards. From tax reporting forms to how you place a label on a box for a customer, compliance requirements help drive the ways in which businesses operate.

Understanding the origin of compliance requirements enables appropriate prioritization and risk management. Compliance requirements that your organization must adhere to may be based on your ownership structure, management practices, location(s), and the market(s) in which you wish to participate, as well as your specific industry, customer, vendor, and bank affiliations.

External Drivers
External compliance requirements – whether they are driven by industry organizations, regulatory agencies, banks, trading partners, vendors, or customers – are top of mind among organizations today. Governments generate many regulations directed at businesses, too, and these regulations often provide the business community with the greatest challenges with regard to compliance. Many government regulations, such as the Sarbanes-Oxley Act, 21 CFR Part 11 and the Food Safety Modernization Act, target specific industries and businesses while some apply to all businesses. Government compliance regulations reach across the entire spectrum of business operation activities – from tax collection and reporting, to verification of manufacturing quality and material tracing capabilities, to corporate governance.

Internal Drivers
Managing internal compliance requirements is becoming even more important for organizations. The need to develop and maintain internal controls and corporate content policies and rules such as deciding what documents to save and what to delete, data and document access rights, email attachment rules and management best practices – to name just a few – is driving compliance adoption across organizations.

A complete understanding of the sources of compliance for your organization can help you plan ahead and adopt and retire compliance requirements as those requirements and your organization evolve. The next focus for compliance management then becomes: “How do I adopt a new, strict structure of compliance requirements and keep current compliance actions intact while enhancing my organization’s profitability, and its abilities to innovate, adapt, and optimize?”

Information Technology plays a key role in helping companies manage an effective compliance program and enforce compliance requirements internally and externally. Technology enables the collection, analysis and control of enterprise-wide data, delivering the crucial information needed for intelligent business decisions. Ideally, this means establishing a viable compliance program and having compliance requirements integrated into business management systems like Microsoft Dynamics AX - enabling companies to transform compliance requirements into business benefits and a competitive advantage!

The burden of foodborne illness is considerable. Every year, 1 out of 6 people in the United States—48 million people--suffers from foodborne illness, more than a hundred thousand are hospitalized, and thousands die.

The FDA Food Safety Modernization Act (FSMA), the most sweeping reform of our food safety laws in more than 70 years, was signed into law by President Obama on January 4, 2011. It aims to ensure the U.S. food supply is safe by shifting the focus from responding to contamination to preventing it.

However, many food and beverage processors are already becoming overwhelmed as they move towards compliance with the major provisions of the FSMA, including:

• Inspections and Recalls: The FDA now has the sweeping authority to inspect “high-risk” food products annually, and to initiate product recalls of suspected tainted foods. This is a significant transition away from relying on individual producers and distributors to voluntarily issue their own recalls.
• Penalties and Fines: The FDA has also been given the power to levy heavy fines and limit supplies to food companies that do not cooperate with FDA inspections and recalls.
• Food Safety Plans: Food processors are now required to develop comprehensive food safety plans, or Hazard Analysis and Critical Control Points plans, that are easily accessible by the government in case of an emergency. These Food Safety Plans need to include analyses of potential biological, chemical, and physical hazards, preventive controls and corrective actions to be taken after an event.
• Food Traceability: Over the next few years, the U.S. Department of Health and Human Services is required to create a food tracing system to streamline the discovery of contamination sources and accelerate the response times during an outbreak of food poisoning.

In order to meet the document management and traceability requirements of the Food Safety Modernization Act (and other Food Safety regulations), food processors need to choose innovative Food ERP solutions that provide more than just lot traceability and corrective actions. Today’s leading Food ERP solutions go beyond finance, accounting, and supply chain management - they enable you to identify, document, monitor and follow up on critical control points, thereby supporting compliance with even the most stringent regulations and reporting requirements, including FSMA, GFSI, and SQF protocols.

Here are five Food Safety software features that every Food processor must have in their ERP system to ensure that the company maintains the highest levels of quality, safety, compliance and profitability.

1. Traceability: The increasing demands for regulation and easy access to real-time data have made traceability programs and systems a necessity for any food manufacturing and distribution company. The capability to track (farm to fork) and trace (fork to farm) details per product or per lot is critical. Tracking and tracing is the core of most global regulations. The capability to track a product from farm to fork or using the one up and one down rule combines collecting appropriate information, organizing the information, and retrieving it as required. 
2. Recall Management: At any given moment, Food companies must be able to quickly and effectively recall products that have been deemed unsafe for the market. Failure to handle a recall successfully (either voluntary or mandatory) can have serious economic and legal consequences. Choosing an industry-specific ERP solution with comprehensive, end-to-end food recall management functionality positions a company to plan their entire recall process in advance, to perform mock recalls proactively or at a customer / regulator’s demands, to constantly measure and improve the recall process and, most importantly, to respond rapidly, accurately, and thoroughly if an actual recall is required.
3. Quality Management: Food and beverage companies are also required to detect and react to Food Safety incidents and non-conformances and ensure that appropriate actions are taken to correct and prevent future occurrences. Still, more than half of the FDA warning letters cite Corrective Action / Preventive Action deficiencies. Using a systematic approach to correcting and preventing issues, measuring the outcome and continuously monitoring the system can ensure that a company is compliant, effective and efficient. And, having a well-thought-out Food Safety Management system can result in successful audits, fewer investigations, less product loss, better customer satisfaction, and an increase in overall operational efficiencies.
4. Electronic Document Management: Today’s successful food companies are increasingly global. These organizations must sustain global manufacturing and distribution processes while addressing the potential operational risks, as well as overcoming the quality, safety and pricing pressures inherent in an already complex industry. As a result, many food companies seek to implement enterprise-wide food safety and compliance document management solutions that can quickly address customer and regulatory issues consistent with worldwide requirements, while simultaneously being leveraged to automate and enhance business processes. These companies need to manage unstructured data in a controlled manner and according to their food safety compliance programs - and do so efficiently without paper-based and people-intensive processes.
5. Inventory Control: Every manufacturer must plan production, purchase and manage materials, execute the manufacturing plan, and deliver products. Food process manufacturers however, require a unique set of capabilities, including management of co-products and by-products, multiple packaging configurations, lot traceability, item weight and specification variances, and product shelf life. Food inventory management must enable companies to track and manage raw materials while taking into account the complexities of multiple inventory characteristics such as weight, container type, and expiration date. In addition, companies must be able to define, manage, and cost multiple outputs, such as co-products and by-products, from a single production process.

MAXFood Safety ERP allows organizations to grow their business instead of spending time on manual tasks, redundant data re-entry, and people-intensive processes. It enables food processing companies to simplify compliance with stringent food safety standards - including FSMA, GFSI, and SQF. MAXFood streamlines and automates recalls, and helps companies identify, document, monitor and follow up on critical control points.

And with MAXFood Cloud ERP, employees can have real-time visibility and anytime, anywhere access to the critical business data they need to be successful - without compromising functionality or security.

Since President Obama signed the Food Safety Modernization Act (FSMA) on January 4, 2011, the Food and Drug Administration (FDA) has made significant progress in developing proposed rules to implement the sweeping food safety reform law, publishing mandated reports, and taking important steps toward increasing overall food safety capacity in the United States. Below are brief summaries of what FDA has accomplished to date.

Highlights of FSMA during 2011:

• Issued interim final rules on criteria for administrative detention and used this authority three times; issued interim final rules on prior notice of imported food.
• Issued guidance to the seafood industry on food safety hazards and to the dietary supplement industry regarding new dietary ingredients.
• Conducted extensive domestic and foreign outreach to all stakeholders to receive input in developing the proposed preventive control rules.
• Established the Produce Safety Alliance and the Food Safety Preventive Controls Alliance.
• Met the FSMA mandate for foreign food safety inspections, and is well on its way to meeting the 5-year inspection frequency mandate for high-risk domestic food facilities.
• Continued to build State-Federal and global partnerships.

Moving forward, the ability to track and trace ingredients is likely going to be a major focus for food manufacturers as the FSMA is rolled out. The days of brand recognition alone will be long gone; worldwide, all the major producers of food products will now need to focus on brand reputation as well as brand recognition. Government authorities will be requiring companies to track and trace all products to the original point of origin. Today, companies only track goods at convenient points in the supply chain, such as when one ingredient leaves the warehouse and when it arrives in the manufacturing plant. Expect the future to mandate much tighter controls.

From a systems perspective, none of the Tier 1 or Tier 2 ERP vendors have announced a system that supports the mandates of the FSMA. True winners in ERP solutions will be vendors that can provide material and routing information that identifies critical control points in the manufacturing process. Likewise, the system will also need to be made aware of potential new hazardous and other airborne bacteria identified as risks. To date, the only systems tool to support the food safety initiative that is approved by the GSFI is a document management system that is not integrated to the ERP or quality management systems. While many of the Tier 1 and Tier 2 ERP vendors are hosting Food Safety webcasts, none of them are proposing a resolution for the complexity that the FDA is now mandating.

Stay tuned in the coming weeks as Merit Solutions will offer a new perspective on how Microsoft Dynamics AX 2012 will support the Food Safety Modernization Act of 2012!

Customer demands and regulatory requirements relating to food safety are accelerating every day. The bar is going up and everyone in the industry will soon be scrambling to find and implement systems that satisfy these new demands... that is, if they’re not already panicking!

One new requirement is the Food Safety Modernization Act signed by President Obama in January of 2011, which mandates that all food companies must have Food Safety Management systems in place, including document control, HACCP and recall. This is the biggest change to Food Safety legislation in over 60 years.

Another is The Global Food Safety Initiative (GFSI), which is a collaboration between some of the world's leading food safety experts from retailer, manufacturer and food service companies, as well as service providers associated with the food supply chain. It is coordinated by The Consumer Goods Forum, the only independent global network for consumer goods retailers and manufacturers worldwide. It serves the CEOs and senior management teams of nearly 400 members, in over 150 countries. Most major retailers mandate suppliers follow one of the 8 protocols supported by GFSI, which includes SQF and variants of ISO22000. These standards are very similar to the FSMA recently set by the FDA.

The bottom line: you don’t want to be one of the food manufacturers caught without adequate Food Safety and Food Recall ERP systems!

That's why we're so excited about the MAXFood Recall Workbench.

The MAXFood Recall Workbench exists for one purpose – to go beyond lot track and trace to enable extremely fast recall functionality. A common challenge for organizations is the quick response to client requests for “test” recalls. Many companies are making the ability to perform a quick recall a key performance metric for their suppliers. You are probably subject to this testing from your customers. Non-performance during test recalls puts your customer relationship at risk. You could lose your customers if you are unable to perform.

We reduce risk to you if your firm is subject to recall testing from your customers. Imagine being able to answer a test recall within minutes – this should improve your vendor performance score and your customer relationship. The MAXFood Recall Workbench goes beyond the time consuming labor of either paper or system based lot track and trace functionality. It provides a Rapid Food Recall capability for:

• Recalling product shipped to customers.
• Stopping production for any affected in-process manufacturing orders.
• Finding and quarantining any on-hand batches subject to a recall.
• Quarantine and Vendor notification for problem raw material lots.

Normal lot track and trace works just fine, and is an improvement over paper-based lot tracking systems. But lot track and trace doesn’t save time when customers have to be notified or on hand inventory must be quarantined. It just gives you a list of orders or inventory – then someone has to print the list, and enter transactions.

The MAXFood Recall Workbench saves companies time and money by automating and streamling the entire Food Recall process!