Food Safety Magazine

CASE STUDY | February/March 2003

Costco Wholesale: Culturing Food Safety Success

By Julie Larson Bricher

Costco Wholesale: Culturing Food Safety Success

For Costco Wholesale, with nearly 400 warehouse stores serving more than 38 million members worldwide, dedication to food safety is in the very fabric of its corporate culture--and it shows in the company's distinctly structured, highly successful total food safety system.

"Food safety should be absolutely invisible to our members," says R. Craig Wilson, Assistant Vice President, Food Safety and Quality Assurance, with Costco Wholesale. "They should expect that. When you go shopping, you expect to buy food that is safe. Period."

Ensuring that this basic expectation is met every day for more than 38 million Costco members shopping in 411 membership warehouse stores located in 36 U.S. states, Puerto Rico, Canada, Mexico, the United Kingdom, Japan, South Korea, and Taiwan is the responsibility of Wilson and his U.S.-based staff of 16 food safety professionals. But the primary reason that Costco's food safety program is successful throughout such a large operation, says Wilson, can be succinctly stated: Food safety is part of the corporate culture because senior management is deeply committed to it.

"The essential reason that we've had such success with our program is that we've always had great support from the top down. In particular, Jim Sinegal, president and CEO, Dick Dicerchio, senior executive vice president, and Tim Rose, senior vice president of the fresh food groups give us tremendous support to make food safety part of the culture at Costco," Wilson explains. "On the operations side, Costco executive vice presidents Joe Portera, Craig Jelinek and Dennis Zook also are tremendous supporters.

"These are people who understand how important food safety is, and without that kind of top-down support in any company, programs like this aren't successful. It's really easy to talk about it, but it's a little more difficult to walk it."

To walk the walk of food safety at Costco, you've got to cover a lot of ground. The Issaquah, WA-based wholesale club operator is the largest such company in the U.S., with sales of $37.98 billion in 2002. Costco offers between 3,700 and 4,500 different brand name products to its members at any given time, with fresh food, groceries and related items comprising 50 percent of the company's business. The warehouse buildings average 135,000 square feet, with ample space dedicated to the company's in-store service deli, food court, and fresh food and grocery department operations. As part of its mission to provide club members with high quality products at substantially lower prices than traditional wholesale or retail outlets, Costco also makes available the Kirkland Signature private label product line, which includes food items such as coffee, juice and cookies. In addition, Costco Wholesale Industries, a division of the company, operates a food packaging manufacturing business in San Diego, CA and Monroe, NJ, and a meat processing facility in Tracy, CA.

"Because food safety is part of the culture here at Costco," says Wilson, "and thus, part of our everyday business, we've been able to develop a very successful, structured program that is unique in its simplicity given how big the total operation is and the fact that we employ 100,000 people."

Costco's food safety program is divided into four distinct areas: Food safety operations in the warehouse club buildings, which involves a unique use of sanitation standard operating procedures (SSOPs) and Hazard Analysis & Critical Control Points (HACCP) developed to work in a retail setting; knowledge-building food safety vendor audits; a company-wide food safety training program; and a proactive quality assurance function that focuses scientific and technical expertise on both the food safety and quality of foods manufactured, repackaged or supplied to the company. "This is the four-legged foundation that provides a very solid footing for all of our programs, which are implemented on a daily basis," notes Wilson. "The elegance of our total food safety program is its simplicity."

Uniting HACCP with Retail Operations
Costco began its retail SSOP/HACCP program approximately five years ago, "when people didn't use 'HACCP' and 'retail' in the same sentence," says Wilson. "Quite frankly, using HACCP in retail is a struggle, but we've been fortunate in that we've found a way to make it work, and work well for us."

Costco's retail SSOP/HACCP program was developed using the government guidelines originally created for food processing operations. But the company found that this was only a launching point and set to work on customizing SSOP and HACCP-type criteria for each kind of food-related area in its buildings. "Each building has fresh foods areas, dry foods areas, a service deli and a food court. We knew that different criteria would have to be applied to each one of these areas to have a successful program, so we had to look at this with a unique, fresh approach."

The company's goal included structuring its SSOP/HACCP program to exceed federal government guidelines, whenever possible, and to incorporate related food safety protocols from sources such as the U.S. Food and Drug Administration Food Code and local health inspection agency rules to appropriate departments in each building. The result is a set of specific HACCP plans for each of the food departments--and for each item, in some cases--all focusing on validated critical control points, with specific Food Code criteria included for the service delis and food courts, for example. "We think that it is important to exceed some baselines that have been identified by government as good for the nation. In many instances, Costco may want to exceed such a baseline and do a better job than is required. This goes back to our corporate culture."

An equally important aim was to design a program from the outset that could be easily understood by all Costco employees worldwide. This, says Wilson, is one of the distinguishing elements of Costco's SSOP/HACCP program. "One of the biggest challenges for any food scientist or engineer is to take a concept that's reasonably difficult and communicate it so that everybody understands. That's our focus: Make it simple so it's not a big deal. Our main goal was to come up with a simplified, understandable process designed for and accessible to that 18-year-old high school graduate who is actually doing the work in order to make the program efficacious."

With this in mind, Costco created clear-cut protocols and step-by-step procedures available in both a print manual and in a digitally enhanced format available at designated computer stations in all of its warehouse buildings and processing/packaging operations. The digital manual, available via Costco's internal food safety website, features concise textual instructions on every component of the SSOP and HACCP plans, illustrative visual images and standardized electronic recordkeeping and documentation forms easily accessed by employees. The electronic format not only allows any employee to quickly check specific protocols on a routine basis, but also provides a rapid, straightforward avenue to address immediate food safety questions or concerns that may arise on-site. The system encourages employees to proactively interact with corporate food safety management, which further supports the emphasis on prevention and control found in HACCP plans and in the fabric of Costco culture.

In order to implement a HACCP plan that works, notes Wilson, a company must have good SSOPs in place. The SSOPs provide a good example of the company's successful intranet site. "If you look at federal HACCP guidelines with regard to SSOPs for a meat, seafood or cereal facility, you'll find that they are very complicated and written in such a fashion that perhaps only a sanitarian can understand. However, the person in the facility who does the work may never see the SSOP. Because we're committed to making food safety procedures easy to understand for all employees, we've taken a completely different approach to developing the SSOP. We believe that a sanitation standard operating procedure should be focused on the people who are doing the work. This means give employees a tool that makes sense, a tool that validates their work and then is reviewed by management.

"As a result, these SSOPs have been developed digitally with very limited text because the people who are doing the work have got to be able to look at this and relate it to what they are doing. The employee can see exactly what is expected of him from a food safety standpoint-- how to set up and operate a slicer or grinder, how to wash and clean it, how to reduce cross-contamination of food contact surfaces or food-handling areas by using appropriate hand washing and personal hygiene techniques, how to monitor food product-specific temperature and holding times, and so on. He can also see what corrective actions must be taken and what documents or logs must be completed.

"Of course, there are SSOPs and HACCP criteria for each and every department, and every component of a HACCP plan that you would find in a big meat or seafood plant you will find in the manual here. The difference is that this is simple and easy to follow, and is available on a computer in each one of the buildings, so if there's a question about an SSOP, the employee can go right to their department computer, pull up the SSOP and take a look at it."

The intranet SSOP/HACCP manual is maintained and kept current by Costco's Food Safety Operations Group, which conducts annual reviews to update food safety protocols in conjunction with changing food regulations, adjustments to the Food Code, or the introduction of new equipment. One measure of the program's success is illustrated by the fact that many organizations want to emulate it. Costco shares program information with local health inspectors, food safety officials from the states of Washington, Oregon and Michigan, among others, who use the company's program as part of their training. "The satisfying part about having a program like this is when health inspectors come into our buildings at locations around the world, not just in the U.S., and tell us that they are extremely impressed. We're very open about sharing all of information we have with these organizations.

Vendor Audit Program Supports Win-Win Partnerships
Another element of Costco's food safety program that has been imitated by others is its extensive vendor audit program. Five years ago, the company took a look at the large number of vendors from which it purchases food products and considered strategies to better assess the safety and quality of products supplied. At the time, the Costco Quality Assurance Department conducted cursory checks of vendor products, Wilson notes, but the company decided to develop a more interactive vendor audit program. The result is that Costco's system is considered by many of its suppliers as one of the premier vendor operation auditing programs in this sector of the food industry.

Wilson believes that this nod from vendors is due, in part, to the fact that the audits make their own systems better. "Our audits are not punitive, they are focused on helping us better understand what that vendor does. Our vendors have embraced the auditing program with open arms, because it's making them better vendors and it's ensuring that our members are getting exactly what our buyers want them to get: high quality food items all the way through. We even negotiate the audit price for our vendors so that they don't have to pay a ton of money for the audits. It's a real hand-in-hand, win-win situation with our vendors."

Category-focused experts from the Costco buying staff perform the audits in a wide variety of food manufacturing operations. In general, the audit involves an 8 to 12 hour visit at the vendor's facility, where the auditor examines all of the documentation for that company's given industry, and then proceeds to the process lines to ensure that the manufacturing processes actually follow the documentation. Strict criteria is in place for basic food safety associated requirements that all vendors must meet in order to do business with Costco, such as the operation of metal detection equipment and the implementation of HACCP plans. At the conclusion of the audit, an exit review is conducted by the auditor with the vendor, and all vendors receive a copy of their audit within three days of the evaluation. Vendors must address any issues that arise from the audit, providing information to Costco on what corrective action they will take, within a specified time.

Wilson adds, "We spend a lot of time with our vendors, and if the audit shows that there are some unmet requirements, we'll help that vendor do whatever they need to do to meet the criteria. For example, we provide resource lists to vendors to assist them in finding industry consultants, trade association and academic experts, and service providers such as pest control and testing companies. We do this to assist vendors who want to begin to or continue to do business with us.

The buying staff, who are all food safety certified by Costco's Food Safety Training program, schedule food safety audits with all new vendors, says Wilson, but the auditing program has a loftier aim. "Our goal is to audit every one of our vendors every year. We haven't yet reached that goal because of the enormous number of vendors with whom we do business, but it is a goal that we continue to work toward achieving."

Knowledgeable Employees Key to Success
The third leg of Costco's Food Safety and Quality Assurance Program involves three levels of food safety education and training programs. The training programs were developed in-house and the certifications and examinations are administrated by Costco staff in each building to maintain Costco's cultural advantage, notes Wilson. Educating all employees, whether they work in food or non-food areas, about food safety is another way in which Costco keeps food safety invisible to its members.

All of the company's employees that work in food areas take Level 1 training, which requires all those working for the company to read a food safety handbook and view an interactive, multimedia presentation on CD-ROM. The CD-ROM provides an comprehensive, basic introduction that covers SSOPs for all areas, such as personal hygiene and food handling protocols, and advises employees on their roles and responsibilities in ensuring safe foods. Currently, Costco can offer the training to its employees in three languages--English, Spanish and French--and soon it will be available in Cantonese and Japanese. After viewing the CD, each employee is tested and awarded a completion certificate.

All Costco managers take Level 2 training, which is a 22-hour home study course followed by a four-hour in-house class session and a certified exam administered by management staff. "The requirement, in most cases," says Wilson, "is to have each of our managers in each building food safety certified. In most cases, that's eight to 10 and sometimes even 15 people in a building who have successfully completed a fully credited food safety certification program."

Level 3 training is a recertification course for the managers, which is taken by staff every three years as an update. This supports Costco's commitment to cross-training its employees. Says Wilson, "This is a dynamic company. We could have someone who's working in a non-food related area today, but tomorrow, he receives a promotion and is managing a foods area. Our food safety training and certification program enables employees to have the knowledge they need to successfully move into different departments during their career."

Top-Notch Technical
The Quality Assurance Department (QA) involves a strong technical group that offers food safety and quality assurance support to all of Costco's warehouse, manufacturing, packaging and private label operations. Directed by Christine Summers, who is credited by Wilson as an early proponent of instituting the company's food safety programs, and staffed with experienced food technologists and microbiologists, the Quality Assurance Department is the function that provides the science behind the system.

Food product samples taken from vendors and Kirkland Signature item producers from across the country are sent to the corporate headquarters laboratory in Washington State, where the QA scientific team checks the microbiological quality of hundreds of items items against the specifications that have been set by the buying staff. In addition, the department oversees the management of in-house microbiological laboratories located in its ground beef processing plant and repackaging facilities, works with third-party labs for chemistry and some microbiological testing services, and coordinates sampling and testing of products scheduled for export and items to be tested in other countries in which Costco operates.

"Having a strong technical arm gives us credibility in everything that we do," states Wilson. "Not only do we have the programs, but we have the capability to get and use the data to support the programs, which we feel is a very important element of our success on many fronts."

For example, he continues, "The pathogen testing that we perform at the Tracy, CA, meat plant, where we use polymerase chain reaction (PCR) technology all the way through, is fully supported up here by our QA department. Our ground beef operation produces about a half a million pounds of ground beef a day, both raw and cooked, and we can effectively collect and analyze data on the microbiological quality of every single grind."

It's the Culture
"We have more than 100,000 employees, and when you look at making a program like this work with so many people involved, it can sound daunting," adds Wilson. "But with our built-in culture that supports food safety coupled with the way that Costco is structured, we really have a food safety staff that consists of 100,000 employees, and so we're successful.

"I'm a firm believer that there's not one person in this country who wants to make somebody sick. It's a matter of how you teach people to give them a clear understanding of their role in keeping food safe and then giving them the right tools to do the right job."

While Costco's four-legged food safety program is a well-established success, the company isn't going to rest on its laurels. "We don't look at food safety as a competitive advantage," states Wilson. "If there is anything that we do that can be of benefit to the safety of the nation's food supply, we're more than willing to share that with the industry. Our food safety programs are under constant review, and we continue to focus on how we can improve them, simplify them for everybody across the board, and still expect excellent results."

And how does Wilson define excellent results? He smiles. "Not only should our food safety efforts be invisible to Costco members, they are invisible to our members. And that is the true measure of our success."

Julie Larson Bricher is editorial director of Food Safety Magazine. A degreed, professional journalist and editor for 16 years, Bricher has covered the food processing, foodservice, retail grocery and environmental industries for a variety of leading business-to-business, scientific and trade association publications. She also is an experienced industry conference session planner, most recently organizing Food Safety Magazine's sponsored sessions and speakers for The Food Safety Summit, presented by Eaton Hall Expositions, and cosponsored by the National Food Processors Association, the National Restaurant Association and the Food Marketing Institute.

Categories: Management: Best Practices, Training