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Kelly Kuchinski

FDA Compliance

Nestlé Takes a Bite Out of Unnecessary Additives

Creating a simpler chocolate bar requires some complicated planning

Published: Wednesday, April 8, 2015 - 14:57

Nestlé USA has officially announced its plans to replace the artificial flavors and colors in its chocolate candy products with natural ingredients. This decision will affect more than 250 chocolate bars across 10 brands. The first three modified candy bars—Baby Ruth, Butterfinger, and Crunch—will appear on store shelves by mid-2015.

The United States is not the first country to see this particular change in recipe. In 2012, Nestlé was the first major confectionery manufacturer in the United Kingdom to remove all artificial colors and flavors from 79 candy products. The decision to switch to natural ingredients was fueled by the growing demand from consumers for fewer artificial ingredients. The change didn’t happen overnight. It took researchers and developers in the UK seven years to find a way to fully replace 80 artificial ingredients with natural alternatives. Nestlé worked hard with its suppliers to ensure the quality and taste of the original products were uncompromised.

Big change equates to big risk

Many times big brands have altered a formula only to revert back to the original due to consumers’ outrage and complaints. Does anyone remember the launch of “New Coke” in 1985? What would drive a leader in the industry with beloved products around the world to risk customer loyalty and market share by changing the recipe?

Nestlé has been monitoring consumer trends and preferences to create new products and answer an unmet need in the marketplace. Findings from the Nielsen 2014 Global Health and Wellness Survey showed that more than 60 percent of Americans prefer to buy products without artificial colors or flavors. Nestlé’s own research has reinforced these data, and found that U.S. consumers tend to prefer candy brands to be free of artificial flavors and colors.

The challenge begins internally

This drastic change in formula isn’t an easy transition and affects several different areas of the organization. For starters, it’s on the R&D team to discover a way to duplicate the candy’s original taste and texture to maintain customer satisfaction. Because the European division of Nestlé successfully completed the transition a few years prior and has been leveraging revised recipes, new ingredient suppliers, and best practices for some time now, its U.S. counterparts can follow in its footsteps and transition more efficiently.

The product management and regulatory affairs teams need to update packaging and labeling accordingly to comply with evolving regulations that may require declaration of ingredients, nutritional facts, and allergen risks. Marketing is also needed to support this process for packaging needs to meet brand guidelines and also to highlight the change in ingredients.

The operations team must define and document the new standard operating procedures for production processes, sanitation requirements, and hazard analysis to ensure safety, quality, and consistency in the finished products.

The purchasing team that’s responsible for bringing new suppliers onboard will need to add new suppliers, vendors, and information on the company, products sourced, lead times, country of origin, and other relevant information to existing systems. The purchasing and product management teams will work together to provide suppliers with demand forecasts for each product, and update contract pricing in an enterprise resource planning system to ensure the “perfect order,” i.e., the right product, in the right quantity, at the right price, at the right time.

The quality team needs to agree on details such as product specifications, documentation and certificates, testing requirements, and the supplier’s quality processes. Since most organizations only have limited visibility into their tier-one supplier and contract vendors, more companies are looking for ways to connect to tier-two and tier-three suppliers, and even their suppliers’ suppliers. New cloud technologies have enabled greater transparency across the entire value chain, and allow for faster issue resolution to reduce costs and inefficiency within the partner network.

The challenge moves outside the organization

Nestlé is not new to mastering supply chain complexity. Nestlé has been on Gartner’s Supply Chain Top 25 list for years—mostly due to its willingness to expand into new markets and an ongoing focus on supply development, plus high ratings from retail customers.

Despite its many accolades, Nestlé’s success has not been easy to achieve or maintain. The company has 447 factories, operates in 194 countries, and works with 165,000 direct suppliers and 680,000 individual farmers. So, how do global companies like Nestlé transition new and existing suppliers to an effective supplier program?

First, companies need to verify that their own internal quality processes are within regulatory compliance and company standards. Doing so will enable organizations to have a closed-loop quality process in place to address complaints, internal audits, hazard analysis and critical control points (HACCP), corrective actions, and change management. When these processes are automated and managed efficiently by using enterprise quality management system (EQMS) software, companies can enforce the same requirements and process standards within their partner networks in a central hub for cross-functional communication throughout the entire organization.

Another key ingredient to success is selecting the right partners. When companies source ingredients from low-cost suppliers to reduce costs and increase profits, they can potentially increase the risk of poor quality in the finished products, which can lead to safety and health concerns. With more than half of quality issues and recalls being attributed to supplier and contract manufacturer issues, it’s imperative that companies put standard processes in place to ensure quality, safety, and compliance. You’ll often find that leading manufacturers establish proactive supplier management programs using automated software solutions that include supplier scorecards, risk-based audits, and complaint-resolution procedures to resolve issues quickly and ultimately protect consumers.

Notably, chocolate manufacturers tend to be faced with greater levels of risk than other industries; there are usually more opportunities for contamination from sanitation issues and equipment calibration, which can result in disposal or recall expenses. To address this risk, industry leaders have established risk management policies to reduce issues that could affect consumer safety and brand reputation. By testing incoming material, manufacturers can contain a contaminated ingredient before it is used in production, and therefore expedite replacement material to stay on schedule with production. Organizations also leverage their hazard analysis plans and internal shop floor audits to identify and manage critical control areas and equipment to prevent biologic, chemical, or physical hazards from harming the product at any stage of the production process.

To determine if a supplier or contract manufacturer is in compliance with ISO 22001, Global Food Safety Initiative (GFSI), and Food Safety Modernization Act (FSMA) requirements, it’s crucial to perform site audits and review the supplier’s HACCP plans. By performing audits and reviews using an EQMS solution, suppliers can provide transparency into current processes and how incidents and corrective actions are managed. Moving forward, companies will be able to share data through the use of cloud technologies for real-time issue resolution and documentation of corrective actions in the event of an audit.

So, again, how do global companies like Nestlé transition new and existing suppliers to an effective supplier program? They should implement an integrated software solution, such as TrackWise, to combine all of these tasks into one centralized database. There are so many pieces to the supplier puzzle that it can be difficult to keep track of them all.

Change is the only constant

Global food and beverage manufacturers are challenged by consumer trends, new products, new markets, global regulations, and a diverse supplier and vendor network. But a product change is an opportunity to modify processes to create more efficiency.

Many food manufacturers are looking at how EQMS solutions can connect the disparate processes of quality, supplier management, operations, and regulatory compliance to create a continuous improvement process that is sustainable and protects product quality, safety, and brand reputation.

EQMS solutions can enable users to automate manual paper-based processes for visibility across the partner network via a cloud-based portal. An EQMS also creates a centralized repository of data with easy-to-use analytics tools and dashboards for actionable information to mitigate risk and improve operational efficiencies. Information is easily integrated with data from existing disparate IT systems for enterprisewide communication and better business decisions.

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About The Author

Kelly Kuchinski’s picture

Kelly Kuchinski

Kelly Kuchinski, Quality and Document Control product marketing manager at Cority, has 20 years of product management and marketing experience with a focus on CPG, chemicals, life sciences, and technology. Prior to joining Cority, she led marketing and industry solutions for enterprise SAAS and quality management software solutions across multiple industries to enhance functionality, increase efficiencies, and reduce costs. She also held product management and marketing positions at Merck Chemical, Checkpoint Systems, and GE Capital. Kuchinski has an MBA from LaSalle University and earned her Six Sigma Green Belt certification while at GE Capital.