Guest Columns

Perspective:
Dairy Marketing

The ‘ONEDOC’ initiative

Edward Zimmerman

Edward Zimmerman is president of The Food Connector, a sales and marketing company focused on the needs of food manufacturers and distributors. He contributes this column exclusively for Cheese Market News®.

About a year ago I started telling friends, I’m not in the food business anymore, I’m in the paper business.
The mountain of papers, certifications, insurance and third-party audits has become so massive that it takes weeks to navigate them before anyone can even consider seeing samples and pricing. I’m not alone in this problem — it’s YOUR problem too.

As little as five years ago, two companies could discuss a cheese deal, cut samples, quote a price, complete a credit application and sell product. Not anymore. The legalities, insurance, FSMA and general product liability are far more important than how cheese tastes and performs. Don’t get me wrong. I agree that companies need protection and safety standards are the top priority. My complaint is that every transaction is a new trail to cut from virgin forest.

It’s time to standardize onboard documents.

The healthcare industry is not the food industry, and I don’t want to get into a political discussion of healthcare. But managers in healthcare frequently point to the rise in the cost of paperwork.

“Administrative costs account for 25 percent of total U.S. hospital spending, according to a new study that compares these costs across eight nations. The United States had the highest administrative costs; Scotland and Canada had the lowest. Reducing U.S. per capita spending for hospital administration to Scottish or Canadian levels would have saved more than $150 billion.” (http://www.commonwealthfund.org/publications/in-the-literature/2014/sep/hospital-administrative-costs)

The healthcare industry is desperately attempting to standardize intake forms. Everyone can remember the process of completing forms to see a new doctor. The smiling person behind the desk hands you a clipboard and pen and asks you to hand-write the answers to questions that they already have. Name, address, healthcare policy, etc. Imagine if the cheese industry had one set of forms that would be accepted by all participants; the reduction in cost and hassle would be huge.

When a new relationship between companies begins, we are familiar with the experience of receiving the “packet” of documents or the links to the SAP site. The task of completing these documents has become so daunting that many cheese companies today have dedicated staff to manage all the requests. These include the onboard forms, insurance, spec sheets, COAs, organic, non GMO, kosher certificates and third-party audits. In this past year, I met with a large frozen food manufacturer who told me they are on their third QA manager in two years because the pressure to respond and submit documents is so intense, that these very senior level managers quit.

We’re not in the food business; we’re in the paper business. Given we all want protection and some CYA too, how can the cheese industry develop a system where we all use the same documents? Once a company completes these documents, onboarding simplifies to submission of standard documents with updates on the most recent third-party audits. No more handing “clipboards” over to discover if our cheese plant has a new address. How to do it?

• First, there has to be agreement that cutting administrative costs by standardizing documents is a worthwhile goal. This should be easy — everyone benefits.

• Second, the reality is that the biggest companies have to lead. The requirements for multinational, publicly traded companies are larger and more complete than smaller companies. This leadership includes buyers and sellers. I am calling on the heads of the largest cheese producers and buyers to form a committee to agree on what documents would be required. Some smaller companies should be included in order to offer that perspective. Once agreed, a single set of documents serves for all participants. The process needs a moniker; I recommend “ONEDOC.”

• This committee would not set parameters for approval; each company maintains the right to buy and sell based on their own standards. As an example there are no requirements for SQF Level 3. ONEDOC is for administrative approval only. The goal is to have a single set of documents approved so that once a seller completes them, all buyers will accept them.

• Top attorneys, sales managers and QA people would participate. Committee meetings would have to be held publicly so that charges of price fixing or other market segmentation are not leveled.

• Beyond the standard documents, companies can, in addition, have specific documents for their individual needs. The standard documents would satisfy the 90 percent that everyone requests now.

• There would be no cost to comply.

• Finally, companies that do not want to participate can opt-out. This process is done voluntarily in an effort to cut administrative costs.

Let’s all agree that administrative costs are too high. As in the healthcare example above, 25 percent of costs are admin. I think administrative costs in our industry are far less. If all of us could cut 10-20 percent of the cost to administrate our business, we all make more profit. Even more important is that the industry reduces the stress of buying and selling and becomes more competitive globally.

The final benefit is that this “ONEDOC” initiative comes without the government compelling the industry to act. This ingenuity we can take on ourselves to make OUR industry better.

Everyone I talk to in the business has too much work to do and has a common complaint regarding administrative compliance. Solving this should be easy. You can read this, be cynical and think, “that will never work,” or we can all come together and decide that we CAN do it.

CMN

The views expressed by CMN’s guest columnists are their own opinions and do not necessarily reflect those of Cheese Market News®.

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