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Supply chain transparency: A practice of trust through legitimacy, from ‘farm to fork’

Supply chain transparency A practice of trust through legitimacy from farm to fork

How important is supply chain transparency to supplement brands? The level of its importance determines the level of the business’ growth and success. Supply chain transparency builds trust through legitimacy across the board–trust with suppliers, employees, customers and oversight agencies. Are you transparent in the chain? Are others transparent with you? More importantly, how high is the trust level within the chain? Have you ever suspected “deceptive documentation?”

Supply chain transparency is the disclosure and transfer of credible, accurate and truthful information from one supplier to another through the chain of products and services down to the end user. Specifically, in the dietary and food supplement industry, this could mean raw material originating from a farm; shipped or delivered to a raw material supplier or processor, then to a manufacturer; then finished product shipped to a distributor or direct to consumers. A commonly used phrase to describe this chain is “from farm to fork.”

Supply chain transparency is embedded in supply chain management that dates to the early 1900s, according to the supply chain management site SupplyChainOpz. As this network of business evolved, so did the need for dependence on each segment or entity to provide truthful and credible information in order to traverse the continuous flow of exchange of materials and goods through both foreign borders and domestic marketplaces.

The need for supply chain transparency is a demand being placed by consumers who want to know exactly what’s in their supplements, their sources or countries of origin, and how all the associated components were handled and distributed.

Over the last decade, increased attention from regulatory and compliance agencies resulted from a spate of food-safety issues and heightened threat of bioterrorism, as evidenced by the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (Bioterrorism Act), signed into law by President George W. Bush on June 12, 2002.

As a result, conducting an internet search for information on supply chain transparency today, will result in an overwhelming plethora of information, enough to keep one occupied at length. Whether this represents an emerging trend or a growing corporate awareness of consumer desires might be less debated given the climate of business-related human rights concerns also associated with supply-chain activities (e.g., child labor, forced labor, slavery and human trafficking). Consumers are not the only ones concerned about transparency.

Congress is just as concerned about supply chain transparency, traceability and disclosure requirements demonstrated in the Business Supply Chain Transparency on Trafficking and Slavery Act of 2014 (H.R.4842) introduced by New York State Rep. Carolyn Maloney (D-12). Further, FDA’s enforcement measures have caused the industry to pay more attention to supply chain management and transparency.

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Ensuring supply chain integrity before beginning supplement operations

Ensuring supply chain integrity before beginning supplement operations

In this remarkable age of international supply chains, instant transmissions of electronic information and voice communications, and the varied impositions of tariffs by different governments, the need for supply “country of origin” transparency has never been greater.

Recent statements from FDA Commissioner Scott Gottlieb, M.D., showed the agency believes it needs to step up its enforcement of the abuses of the dietary supplement industry that have been exposed in recent years. Concerns associated with imported goods remain, including the undisclosed presence of active pharmaceutical ingredients or their analogs, which have been identified by agency laboratories. The agency realizes to safeguard the consumers, it needs to step up enforcement of quality checks for imported materials.

One mechanism of this guardianship is the policing of new dietary ingredient (NDI) submissions by issuing timely acknowledgements of notification acceptance and better managing import alerts to customs and border officials to prevent adulteration, misbranding and potential harm to the consumer. This mandates transparency in the supply chain and honesty in disclosure documents.

Supply chain integrity rests squarely with the finished brand, which is tasked with the selection, handling, testing and processing of ingredients and components, as well as the composition, dose and shelf life of the finished product, whether it be a powder, liquid, tablet or capsule or in confectionery form. This elevation of responsibility was defined in statute with the passage of the Dietary Supplement Health and Education Act of 1994 (DSHEA) and the subsequent imposition of the cGMP (current good manufacturing practice) requirements.

What remains a mystery is why almost half of the cGMP inspections conducted annually by FDA still result in either official or voluntary actions being taken by the firms inspected to correct deficiencies in some of the most basic components of a cGMP system, according to information obtained in a Freedom of Information Act (FOIA) request.

Supply chain transparency, or lack thereof, can contribute to significant problems with the agency and the products intended for commerce. Either producers of products in our industry are naïve, or they are willfully ignorant of their responsibilities. In certain circumstances, importers are willfully ignorant of what is in their products. Those that engage in such deception should be met with the full force of federal law, and the offending products should be subject to immediate seizure, no matter where or how the products are being sold in the United States.

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Don’t take it personally—Regulations are the same for everyone

Dont take it personallyRegulations are the same for everyone

“Personalizing” intake is among the most exciting and logical approaches to nutrition. Nothing is more personal than something a person puts inside their body, such as a food or dietary supplement. The challenge for food and supplement brands is to make them even more personal.

The industry is approaching personalization with vigor, but regulatory pitfalls face these enterprising brands. Personalization was not anticipated by those who made the regulations, but manufacturing and labeling must follow the same laws as the old, once-daily multivitamins.

Combinations of different supplements have been put together in packs for decades. These presentations take individual product formulas and combine them in packaging for specific needs. The evolution of this would be to tailor a series of supplements for the individual and package them specifically for that person. This goal is difficult to achieve logistically and is near impossible to do from the standpoint of the regulations.

Individual batch records are required for every lot of finished product. Each “personalized pack” requires its own individual batch record, along with the other regulatory documentation and testing. Individual containers of product must be released, since these constitute a single “batch.”

To make things even more complicated, brands could custom blend individual nutrition packets for consumers. Each of these individual blends requires a master manufacturing record (MMR) along with additional production documentation. The testing requirements would be increased significantly because the results of one customer’s product are not applicable to the next. The additional burden imposed on companies wishing to venture into this must be considered during the development of the business. Compliant mechanisms can mitigate these challenges, but many of these solutions undercut the purpose of personalization.

Multiple products providing different ingredients require “ad hoc” labels for each production, but all labels must still meet regulations. That’s fine when there are rolls and rolls of labels, but not so easy when they are printed on demand.

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Packaging takeaways

Packaging takeaways

Consumers demand almost as much from the packages that hold their foods and supplements as they do from the products themselves. Packages must clearly communicate product attributes, must not harm the environment and must stand out among the sea of competitors on store shelves or in online searches.

Sustainable packaging can sway a consumer toward a product, or put them off, which has encouraged brands to use innovative packaging that uses less material and/or uses material that can be recycled or is made from recycled components. One such innovation in this area is packaging that can be composted in backyard gardens. However, “clean packaging” doesn’t have a universal definition, so brands must listen to their consumers and respond to their demands.

Brands must use these sustainable packages, but not at the expense of the safety or the quality of the products. Air-tight and micro-perforated packaging can separate contaminants from products, and thus maintain contaminate-free and unoxidized products. Packages should also be free of chemicals that could leak into the foods, causing spoiling or unpleasant olfactory effects. Product transport also needs to be considered as many shipping routes require goods to be stored in heat or cold for several weeks.

A sustainable, safe package won’t do consumers good if they aren’t attracted to the messages or design, so marketers must also use this real estate to best position their products. Along with product attributes, brand story and legal requirements, brands can highlight the packaging components to help build trust and transparency with customers. Millennials especially want a social media-ready aesthetic, so beauty and an “unboxing” appeal will bring more consumer interest.

Product claims cannot expand beyond the bounds of what is legal. Supplement and food packages cannot make disease claims, and health claims require FDA approval. Structure/function claims don’t require government pre-approval, but brands must notify FDA 30 days after marketing the dietary supplement with the claim.

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Supply Chains & The Trust Transparency Paradigm

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Transparency has become a reality, not an aspiration, in today’s marketplace. Understandably, customers and consumers in the dietary supplement industry have learned to expect more from companies, and are becoming progressively more demanding.

Ingredient manufacturers are becoming the cultural pivot point for change, and supply chains have been the focus of improvement. Expectations about transparency are eclipsing the rate of change though, as demand for more information increases. While companies seek openness from their supply chain, what they ultimately want is the trust of their consumers. To that end, we present here the paradigm of trust transparency—the intersection point of trust and transparency—which is a proactive and top-of-mind strategic approach to creating a process and value system that aligns organizations and their internal and external partners to develop tangible, quantifiable ROI.

There are many obstacles to overcoming perceived deficiencies in supply chain transparency including:

  • Inertia & Status Quo
  • Culture
  • Competitive Environment
  • Technology/Geography

Inertia & Status Quo
Today’s supply chain is still opaque, but slowly moving toward more transparency and clarity. It’s easy to maintain information privately that hasn’t traditionally been shared. Historically, we’ve been taught that we don’t get in trouble for what we don’t say. Today though, what is not said can be as damaging as what is. Consumers and society are shifting attitudes to require a responsible dialogue of truthful representation at an increasing level of accuracy. It is essential to recognize the shift in expectation and understand the need for both good and bad information to be shared.

Culture
Our supply chains traverse a variety of cultures that offer varying levels of transparency. To excuse misinformation or incomplete information as a product of culture, or translation of words or ideas, is not acceptable in today’s market. It’s our responsibility to educate about the importance of transparency and not enable, excuse, or accommodate a culture that is not open to disclosure. Rather, we should make it a point to reward transparency initiatives.

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CBD: A legal and regulatory update

CBD A legal and regulatory update

Over the past few years, cannabidiol (CBD) has become a household term. Moms, dads, brothers, sisters and even grandparents know what CBD is. At the least, they have probably heard of it. Cannabis sativa L. is a plant that includes both marijuana and hemp. CBD is a naturally occurring cannabinoid found in the cannabis plant. Hemp has a much lower concentration of delta-9 tetrahydrocannabinol (THC), the psychoactive chemical found in high amounts in marijuana.

On Dec. 20, 2018, President Donald Trump signed the Agriculture Improvement Act of 2018 (2018 Farm Bill), changing the landscape for companies involved in the hemp industry. Prior to the 2018 Farm Bill, the 2014 Farm Bill governed the growing and cultivation of hemp in the United States. The 2014 Farm Bill allowed for the growing and cultivation of “industrial hemp,” which was defined as “the plant Cannabis sativa L. and any part of such plant, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” The 2018 Farm Bill significantly broadens the definition of “hemp” to mean “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol concentration of not more than 0.3 percent on a dry weight basis.” Notably, the 2018 Farm Bill simply states “hemp” in its definition, rather than “industrial hemp,” and it includes the specific parts of the plant and its chemical constituents.

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State of the Nutraceuticals Industry for 2019

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In October 2018, Nutraceuticals World conducted a survey of readers to gain insight into their perceptions and attitudes toward the state of the industry. We received responses from 142 qualified industry members working at companies that manufacture, market, or distribute finished nutraceutical products—such as dietary supplements, functional foods, or nutritional beverages—or raw nutritional ingredients for inclusion in finished consumer products. The charts and graphics that follow illustrate results.

Highlights
Overall, confidence in the future of the nutraceuticals market was high; 85% of respondents said they are “very” confident in the future, and another 14% said they are “somewhat” confident. Compared to last year, 60% of respondents are more confident this year and only 12% are less confident.

Among the biggest concerns were regulations (65%), negative or misleading news about the industry (55%), and quality issues (43%). Also of note, 69% of respondents indicated their company is interested in implementing or planning to incorporate clinical research into their business plans. Another 52% cited “increased transparency,” and 51% said delivery/dosage technologies.

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Farm bill is now law, will ‘unleash the full potential of hemp’

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Ask around, and there’s a palpable buzz in the air.

Passage of the 2018 Farm Bill was a rare bipartisan affair—last week it passed the U.S. Senate, 87-13, and it passed the U.S. House, 369-47. President Trump signed the bill into law Thursday, Dec. 20.

Already, there’s an estimated 750 brands in the hemp-derived CBD business, according to a market assessment by Colorado-based brand Functional Remedies.

Is there room for 750 more?

In 2016, there was 9,000 acres of industrial hemp grown in the U.S., according to Vote Hemp. In 2017, it nearly tripled, to 25,000 acres. In 2018, it tripled again, to 77,000 acres. How many triples can U.S. hemp farmers hit?

The Farm Bill, which removes hemp from the Controlled Substances Act and thus takes the DEA out of the picture, is a bellwether event—akin to dropping the rope on the Oklahoma border in 1889 for all those sooners to grab their share of free land.

Even without the Farm Bill, CBD in 2018 grew by more than 80 percent, reaching an estimated $590 million, according to the Brightfield Group.

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Experts debate pros, cons of mandatory product registry for dietary supplements

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A veteran lawyer in Washington supports a requirement that companies register their dietary supplement product labels. The general idea—incorporated in legislation introduced in previous years on Capitol Hill—could lead to reform of the Dietary Supplement Health and Education Act of 1994 (DSHEA).

“I really believe that this movement has picked up speed this year,” said Scott Bass, an attorney who heads the Global Sciences team at Sidley Austin LLP.

Based on his discussions with myriad groups, the lawyer revealed, the idea’s “time has come.” He said it was possible to see “activity on this front as early as the fourth quarter” of 2018.

“And I don’t mean activity in the sense of the law passed,” Bass acknowledged, “but I mean serious legislative attention.”

In an interview during an annual symposium in California for the dietary supplement industry hosted in October by the Council for Responsible Nutrition(CRN), Bass laid out his support for a mandatory product registry.

“Unless we have a system where FDA can say, ‘We know what’s on the market in the list’ [of registered products] and then can easily find out what is not on that list and can easily enforce, we’re not going to be able to stem the rising tide of illegal products,” he asserted. “There really is no choice because FDA can never enforce against outliers unless they know what’s on the market legitimately.”

Added Bass: “Second, how can a company offer a product to consumers that is supposedly a health product and then say, ‘But I don’t want the government to know about it.’ It just makes no sense.”

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IP trends in sports nutrition

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Patent filings directed to sports nutrition continue to generally grow year over year. The trend is particularly pronounced on a global scale.

The increase in patent filings (through 2016) of sports nutrition products has been occurring outside the United States, with a large portion of filings in China. Brazil and Russia, which are not usually on the top filer lists, have weighed in with a significant amount of patent filings specifically associated with sports nutrition.

Sports nutrition ingredients may be formulated into food products, such as modified foods or complete food formulations. Alternatively, specialized ingredients may be incorporated into single or multi-ingredient nutritional supplements. To be patentable, these types of formulations must include a unique non-naturally occurring single ingredient or a previously unknown combination of ingredients, among other innovative features.

Trademarks for sports performance products include some expected terms like “sport,” “perform,” “strong” and “fast.” Since these terms are common, they cannot be registered in trademarks on their own. Common terms and variations thereof must be coupled with more distinctive terms to obtain trademark registration.

Careful consideration is required to determine if a particular combination is available. Trademark availability searches from trademark counsel can help find a potential trademark that does not encroach upon the rights of a third party’s trademark.

Finally, a steady increase in the term “performance” may indicate the sports nutrition performance field is still growing. Opportunities still exist for innovative products and brands to carve out their exclusive rights in an exciting area of nutritional products.

This is an excerpt from the article, “Intellectual property trends in sports nutrition.” To read the complete article, download the Sports nutrition: Performance digital magazine.

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