Supply Chain Software Aids Quality and Safety
Subway's Independent Purchasing Cooperative uses its supply-chain technology to monitor food quality in real time.
By Mary Boltz Chapman, Editor-in-Chief -- Chain Leader, 11/1/2008 12:00:00 AM
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"Eat Fresh" is its slogan, and the supply chain takes it seriously. Subway uses its Internet-based supply-management system to not only bring product into its stores but to give all steps in the supply chain visibility into the process to ensure it's safe and consistent.
Subway's Independent Purchasing Cooperative, or IPC, which is owned by the chain's North American franchisees, has been using supply-chain software since the end of 2001 and rolled out the food-quality component, called Qualitynet, in 2004. While Milford, Conn.-based Subway owns the brand, Miami-based IPC manages the supply chain from manufacturers through the distribution centers and into the 24,000 stores. Its responsibilities include negotiating pricing, maintaining relationships and managing quality.
"Food safety is extremely important to this brand," says IPC Chief Information Officer George Labelle, adding that it's important to protect customers so they don't get sick, protect franchisees and their investment, and protect the Subway brand.
No Need to Fight
Labelle explains with a hypothetical situation that in the past, a franchisee might receive a case of lettuce that is brown. The store would notify the distributor center. The distributor would say they would issue a credit. Sometimes the franchisee would have to argue for the credit, which might come six or eight weeks later. Meanwhile, IPC didn't know about each situation.
IPC worked with its supply-chain vendor to build and house Qualitynet so the company could leverage the Internet to see the issues and respond when they happen.
With the online system, using the same lettuce example, the franchisee logs the complaint into the Internet. The distribution center receives a notification and will have to respond. Once the complaint is recorded, the distribution center can acknowledge the problem with a credit or work with the supplier to resolve it. If they issue a credit, the franchisee is notified within a few days and receives the credit within seven or eight days, Labelle says. Neither the franchisee nor IPC have to follow up.
"Before, when we tried to collect these complaints manually, we would say, 'We believe this is the supplier's fault. Supplier, you issue the credit,' not really knowing and just taking a very heavy-handed approach," Labelle explains. "And it created a certain level of animosity in the supply chain. What this tool does is, it allows collaboration."
If the distributor can show the lettuce was held properly, it can pass the complaint to the supplier. If the supplier rejects it, it goes to mediation, and IPC gets involved. "The beautiful thing about Qualitynet, and the thing we never envisioned happening is, fewer than 2 percent of complaints go into mediation," Labelle says.
Advance Notice
The program also sends alerts about foreign objects in food and product recalls, enabling the supply chain to respond immediately.
Beyond easing individual complaints, the system also reveals trends. For example, if a few distribution centers are having problems with lettuce, IPC can see that the supplier has a problem.
It also helps drive continuous improvement. Labelle explains that all the suppliers of turkey, for example, can see how they stack up against the other turkey suppliers. "If there are seven turkey suppliers, and I'm number seven, I'm not feeling too good about that, especially when it comes time to renew my contract," he says.
Labelle says he expected some pushback from suppliers when rolling out the system, but they like it because it gives them visibility into the supply chain and it enables them to make service decisions rather than being dictated to.
"You quickly find out who your good partners are and who's committed to quality and safety," Labelle says. "They want their product to be healthy and safe. And when they get a tool to help achieve that goal, they really embrace it."
He says franchisees, who no longer have to chase after their credits, have embraced it, too.
And while Labelle is certain that it has reduced the number of food-safety issues, waste and the resulting food costs, and time spent dealing with distributors, he can't provide a direct correlation and quantify.
But he does feel strongly that it works: "We use a lot of tools that track product through the supply chain. We have a lot of tools that track and manage inventory. We've got a lot of IT initiatives out there. This by far has been our biggest success."
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