Monthly Archives: September 2012

It’s All Happening at the Fair

It’s that time of year again. Much to the chagrin of many summer-loving kids, a new school year is just around the corner. The waning days of summer also might mean something that could bring a few more smiles to the kids’ faces, and definitely is a thrill for many adults: county fair season. The food industry is inherently connected with these yearly events. An American institution, county fairs date back to the early 1800s, when “the first agricultural fairs gave rural families an opportunity to see first hand the latest agricultural techniques, equipment, crops, and livestock. Over the course of the nineteenth century, fairs also incorporated a wide range of educational, recreational, competitive, and social activities into their programs.”

Livestock shows, agricultural workshops, cheese-making contests, and don’t forget fried things on sticks, and some deep fried cheese curds are all examples of the connection the food industry has to these American celebrations. Competition, community, and identity spring from these yearly events, where diverse populations are brought together for a few hot summer days.

Michael T. Marsden, in an article in The Journal of American Culture*, states that within an advanced technologically-driven culture where agriculture can be somewhat forgotten, county fairs especially are a place to bring agricultural insiders and outsiders together, where one can “see the blending of rural folk culture with the popular culture of the midway and the carnival” (25). Even if everyone involved may not be completely connected to one or the other, the two have produced a healthy tension that pulls people in and creates a shared experience. Still, he affirms, there is a need amidst the “popular,” for the county fair to earnestly pull in audiences into the rural values associated with this successful American tradition, in order for the tradition to truly survive (29).

So, if you find yourself on the midway this summer, consider how these events become primary showcases for agricultural, dairy, and many other food industry interests. If you can’t make it this year, think about stopping by next summer. Food industry support of these showcases of fun, education, and competition can only help this great tradition remain viable for the next two hundred years.

Finding and Funding Excellence

A lack of federal dollars has delayed (until now), amongst other projects, the implementation of a major component of the Food Safety Modernization Act (FSMA): the establishment of five Food Safety Integrated Centers of Excellence.  Section 210 of the Act stipulates that the Center of Disease Control (CDC) will be in charge of creating these five centers, that will “serve as resources for Federal, State, and local public health professionals to respond to foodborne illness outbreaks.”

The estimated cost of the centers would total approximately $2.75 million dollars, and federal funding has not come through to foot the bill. An article from Food Safety News this past March stated that the centers were to “be modeled on the close working relationship among the University of Minnesota School of Public Health, the Minnesota Department of Health, and the Minnesota Department of Agriculture, which has been credited for helping trace Salmonella outbreaks in 2009 to peppers and peanut butter.”

Indeed, the CDC stuck VERY closely with this model, as it was recently announced that the Minnesota Department of Health and the University of Minnesota’s School of Public Health were charged with creating a Food Safety Center of Excellence. The CDC awarded $199, 970 to fund the operation. The Center in Minnesota, like other forthcoming centers are meant to “create partnerships with health departments and schools of public health to leverage resources to improve foodborne illness outbreak surveillance and investigations”

Though the Jan. 4, 2012 due date to designate all of the centers has long since passed, the CDC states that it will continue to plan for the centers as soon as funding does become available. With the recent news that The House Appropriations Subcommittee on Agriculture “approved funding for the U.S. Department of Agriculture and the U.S. Food and Drug Administration for the fiscal year 2013 with no new funding for food safety”  the future of other centers remains unclear. For more information on the FSMA and food safety concerns, check in with your local inspector or check out information from the CDC and FDA.

Featured Column: Lower Costs and Leverage Opportunities Hidden in the Supply Chain

For the next two months, “The Wide Line” blog will feature a series of columns authored by Dan Strongin, a well-known name in the food industry.

An obsession with cutting costs can actually wind up costing you more; buy low, sell high is an oversimplification. Let’s cast catchphrases aside and explore this beast called the supply chain, with an eye to make more money.

Commonly called a “chain,” it links the steps to move a product from farm to table.  For our purposes, think of it more as a pipeline; it makes it easier to understand the overall flow, which is where you find the magic.

The supply pipeline begins at the farm, and at the other end, is the consumer.

Imagine product flowing in one end as raw material, and money flowing back from the other end, backwards from the consumer.

Rules of the Pipeline as We Know It

  • Money exchanged within the pipeline merely changes hands; the overall amount remains steady, (more money in the pipeline can only come from the consumer, barring a sweet deal with Congress for subsidies).
  • The law of supply and demand applies only to a point, as people can only eat so much.
  • Everyone in the pipeline but the consumer has to fight among themselves to gain an advantage, or so they think…
  • So they upstream costs by squeezing their supplier (except the poor farmer who has no one upstream to squeeze!).
  • They also try and downstream sales, sometimes bypassing their customer.
  • In other words, they shorten the distance between them and the source, or between them and the consumer, therby shortening the supply chain. Less players, more profit! Makes sense, right? Wrong!

In the process of trying to outsmart each other, something interesting happens:

  • To get a better price, buyers cherry pick, or buy direct, in bulk,
  • diverting the flow of money into inventory,
  • Standing inventory, like water, stagnates, it ties up money,
  • in the end, robbing the pipeline, so everyone ends up fighting over an ever smaller flow.

While some inventory may be necessary, excess inventory is evil. It…

  • loses quality every minute it sits,
  • loses value every minute it sits beyond when ready to use or sell
  • has to be managed, so you have to
  • rent space, or use what space you have, which could be used for productive, revenue generating purposes
  • takes people to manage the inventory… and they make mistakes!
    • Goods don’t get rotated; are lost; damaged; or ….
  • is date stamped, and the clock never stops ticking.
  • has to be counted.
  • Suddenly, rather than focusing on products and selling them, you spend valuable resources moving boxes around, writing reports, and putting out fires!
  • With less money available in the pipeline, no one really ever wins for long, despite continuously trying.

    Money socked into unnecessary inventory cannot pay for things like salaries, electricity, or more raw materials to do your magic on and sell, (items that are moving, not sitting in a lump waiting). It has to come from somewhere, and too often it comes from credit. Now multiply these costs by everyone in the pipeline except the consumer. Not only is it hurting everyone –it is hurting you as well. Spreading inventory around is not the same as generating wealth.

    If you are a buyer, you have to admit, you barely rest, always trying to stay ahead of the eight ball. It is a Catch-22, like that finger puzzle made of straw where you stick your fingers in and try and pull them apart. As you pull, it only squeezes with ever greater force, the harder you pull.

    Despair not, there is hope! Distance is not the only resource: there is time as well. To shorten the time in the pipeline means shortening the time raw materials stay in the pipeline from farm to consumer, who, by the way, consumes the product. It is the theoretical basis of “Just in Time.” (Google™ it!)

    The shorter the amount of time between the purchase of the raw material and the final sale, the more money from that purchase remains in the pipeline. Since it is unlikely the cow will be milked or the grain grown the same day the product is made, sold, and consumed, some inventory has to be maintained in order for it to work.

    Don’t take my word for it: Sam Walton revolutionized the supply chain and built the largest company in the world understanding it. Apple computer is profitable not only due to its snazzy design, but the current president figured out shipping iPods® in small amounts by air would cut overall inventory and shorten the time in the pipeline to where it would make them much more money, though air freight is infinitely more expensive than shipping in ocean containers. When you buy an iPod at an Apple Store, the computer sends a message to the factory in China for one iPod to be added to a purchase order. As soon as they have enough, iPods are manufactured and shipped, same day, cutting Apple’s supply time to less than two weeks, avoiding the burden of managing inventory. Continue reading