Strategies for Managing Risk in Global Food Supply Chains

Ocean Cargo and Stock Throughput Insurance

Managing risks in food supply chains, through insurance coverages like Ocean Cargo and Stock Throughput, involves several strategies and considerations.

Ocean Cargo Insurance Strategies:

• Recording Devices in Containers: It’s recommended to install recording devices in reefer containers to track temperature changes. The recording devices help in determining when and where in the supply chain custody damages occurred, which is crucial for assigning liability.
• INCOTERMS Usage: Agreements under INCOTERMS transfer product ownership early in the supply chain. This approach is beneficial.
• Choosing Freight Forwarders: Use only reputable freight forwarders. Ensure they have a freight forwarder liability insurance policy to reduce losses.
• Grasping Insurance Policies: Collaborate with your ocean cargo insurance carrier. Understanding your policy and available risk mitigation resources is essential.

Stock Throughput Insurance Strategies:

• Continuous Risk Coverage: A Stock Throughput Policy (STP) is a marine cargo policy designed for companies that import, distribute, or export merchandise. This policy provides continuous risk coverage as goods are transported and stored throughout the supply chain.
• Protection for All Stock Stages: It safeguards raw materials, other stocks, and finished products or commodities, whether in transit, work in process, storage, or otherwise.
• Flexibility and Tailored Coverage: The policy can be tailored to unique supply chain needs and evolving risks, offering flexibility.
• Streamlined Risk Management: The policy allows for a simplified approach to supply chain risk management by providing a single policy and rate.

Supply Chain Risk Management in the Food Industry

A thorough approach to supply chain risk management involves creating a list of all ingredients, products, and packaging, and performing a hazard analysis. Companies should evaluate risks associated with each supplier and ingredient, focusing more resources on the areas of greatest risk. This approach involves assessing risk from the ingredients, supplier behavior, and their use in products. Efficient collaboration with suppliers and tracking their performance are crucial for effective risk management​

Key Risks and Mitigation Strategies

Global food and beverage companies face key risks. These include conflicts between grain exporters, energy costs, supply chain disruptions, and extreme weather events. One specific risk is the use of flammable materials like expanded polystyrene (EPS) panels in food production facilities. Companies can mitigate risk by knowing their combustible materials, properly placing switchboards, and removing ignition sources.

Supply Chain Management System Effectiveness

A significant percentage of companies believe their approach to supply chain risk management is not very effective. Many focus only on Tier-1 suppliers and rely on these suppliers to manage their own supply chains. A comprehensive approach includes conducting risk audits of key suppliers and creating a supplier risk register. It also involves formally mapping suppliers and introducing a supply chain management system. Implementing effective third-party risk management systems can yield substantial returns and help mitigate the impacts of supply chain disruptions

Regulatory Compliance and Food Safety Standards

Compliance with international and local food safety and quality standards is crucial. This involves understanding and adhering to regulations in different markets and ensuring that suppliers and partners also comply.

In the food sector, strict regulations govern production to ensure safety for consumers. Quality control of food and its ingredients is dictated by both local and global standards, aimed at improving quality and efficiency. These regulations are influenced by consumer demands, like calls for lower sugar and salt content and sustainable production practices. Adherence to international standards like ISO, FDA, or USDA is crucial for legal compliance, although some countries have their own methods. Food safety management systems aligned with ISO standards manage hazards throughout the production process, benefiting the entire food supply chain. Understanding these complex regulations, which vary by food group and region, is key for industry compliance. Dive further into industry regulations related to food safety standards HERE.

When it comes to industry regulations, ISO 22000 sets the standard for food safety management systems, outlining essential guidelines and practices for organizations to mitigate food safety hazards and ensure food is safe for consumption. FSSC 22000 builds upon and incorporates the requirements of ISO 22000, enhancing its scope and application. Go HERE for industry regulations by Food Group.

In terms of industry regulation by food group, explore information on food and beverage industry regulations, categorized by food groups such as dairy, meat, plant-based alternatives, and various beverages, and learn how these regulations vary across different global regions.

In the realm of food and beverage, regulatory standards vary by country, even with the presence of global guidelines. Each region, including North America, Europe, Asia, and Australia, has its own specific regulations for importing and producing food and beverages. Go HERE for a comprehensive summary of regulatory bodies specific to these regions, providing insights into their respective food and beverage regulations.

Essential Insurance Strategies for Risk Management 

Insurance coverage plays a crucial role in managing risk in global food supply chains. Insurance provides a safety net against unforeseen supply chain disruptions, including natural disasters, transportation accidents, and geopolitical issues. It helps mitigate financial losses from these disruptions, allowing businesses to recover more quickly and maintain operational stability. This coverage is crucial for food industry importers and exporters. Timely, safe delivery of perishables is key for business continuity and trust.

Mastering Import-Export Regulations

For food distributors operating globally, mastering import-export regulations is a daily endeavor. These regulations, often diverse, are your roadmap to seamless international operations. It’s about more than compliance; it’s about understanding the intricate legal frameworks that govern global trade. This knowledge is crucial in avoiding costly delays, fines, or seizures of goods.

Discover Essential Insurance Insights with Us!

Since 1947, Coughlin Insurance has steadfastly stood by distributors, importers, and exporters, ensuring they are protected against the unpredictable nature of the food trade industry. As specialists who understand the nuances and vulnerabilities of the global food distribution network, we’ve fine-tuned insurance solutions to cater to this industry’s evolving dynamics. Our affiliations with the Association of Food Industries (AFI), National Frozen & Refrigerated Foods Association (NFRA), and the Peanut And Tree Nut Processors Association (PTNPA), reinforce our commitment to safeguarding your business with unparalleled expertise. We ask you to consider a partnership where understanding meets action.

You may have been recommended to us by one of our many satisfied customers, or you may have searched online for “ocean cargo insurance near me.” However you found us, we’re happy to welcome you. To discuss your needs and objectives and how we can help your company, please contact JJ Van Aman, Vice President of Sales email: jj@coughlinis.com tel: 973-598-5884 or  reach out for a free insurance quote today!