Products that convince
Transparency in raw material sourcing, good sales prospects and high quality standards - we manage many relevant sustainability aspects in the action field products. Our goal: Products that are successful in any respect.
The Uelzena Group sources more than a hundred thousand tons of agricultural raw materials from its suppliers every year. We process these materials into food and ingredients, mainly for orders from the industry and trade. As such, we are part of the food sector and its production chains - and consequently, we fulfill a task for society that is important in two aspects. We supply high quality and safe food products to consumers and we secure the livelihood of many agricultural producers because we are a reliable buyer of their raw materials. At the same time, the entire sector - from the farmer and the processor to the final consumer - is responsible for environmental protection, observance of human rights and animal welfare. The International Dairy Federation, which is the umbrella organization for the dairy industry, manifested the intention of meeting this responsibility in its Declaration of Rotterdam.
Our management approach: Products
Products are a topic that comprise a number of different sustainability aspects which are important for our Stakeholders, in particular for customers, members and suppliers. These include sustainable and reliable sourcing, customer health and safety, labeling of products and a strategic focus on growth markets.
In order to meet the justified expectations of our stakeholders, we have defined goals for ourselves. We intend to grow profitably, produce safe and high quality products and source raw materials in a sustainable manner. Tailor-made Measures will help us to reach these goals. These include our strategic sales planning, our quality management and procurement management that provide the basis for sustainable products. If it is deemed necessary, we adjust or supplement these measures; in 2016, for example, this was regarding sourcing and quality management.
Sustainable management of supply chains
In 2016, we started with the systematic development of sustainable procurement management for selected agricultural raw materials. We were able to expand on several existing approaches, which we had started in 2014 and 2015. Gradually, a management system will come into being that comprises several steps: prioritizing the most important raw materials and analyzing potential sustainability problems, engaging in dialogues with the suppliers, defining requirements as well as auditing and monitoring suppliers. With this management system, we will be able to collect the relevant sustainability information on our most important raw materials along the upstream supply chains. Based on this information, we will be able to answer our customers’ requests in the best way possible.
Progress with agricultural raw materials
We have made considerable progress with the raw material milk. In the second half of 2017, data collection at the farms will start for the sustainability module milk. In 2016, everything was prepared so that the answers could be evaluated. The evaluation of data will be completed by 2018. We will then get our first insight into how sustainable our contract suppliers and members are in milk production. However, the sustainability module is not a rating system with scores. It is a method of collecting data in an objective and anonymized way. It is only milk collection companies and dairies that are able to match the data to a certain agricultural enterprise.
"Our investments into the segregation of product streams have significantly improved hygiene in our Uelzen facility far beyond legal standards. This has been confirmed by customers in their audit reports."
Dr. Peter Fichtl, Managing Director Production and Technology, Uelzena
Changes in the field of non-dairy raw materials: Since 2016, suppliers have provided the required information and data via an online supplier portal. Furthermore, we have reached a milestone regarding the reviewing of suppliers. All of our direct suppliers with headquarters in Europe that deliver raw materials from critical countries of origin to us will now confirm to us via self-disclosure that human and worker’s rights will be observed in their companies according to the globally acknowledged guidelines of the Ethical Trading Initiative (ETI). The suppliers have committed themselves to agree on similar standards with their suppliers. Our next milestone: Expanding the transparency along the supply chain back to the origin in close cooperation with our key suppliers.
Improved hygiene management
Our quality and hygiene standards are very high. Nevertheless, we are constantly reviewing possibilities of achieving even higher safety standards, for example, by optimizing the flow of materials and products. As a result, we have completed a new automatic product transport bridge between the production area and the storage area at our Uelzen site. By repacking onto plastic pallets, we are further reducing the impact on the environment, the risk of foreign matters (such as wooden splinters) and the external contamination of the production areas. We have also expanded our concept of locks, which now allows us to better segregate the different product streams. This is important because dairy powder is an allergen and subject to labelling and must not be introduced into other products such as yeast for example.
Results 2016: Products
Did we achieve everything in 2016, which we set out to do internally in the field of action products? Yes, we achieved 93.6 percent - this is the result from the calculation of our achievement value. This value shows that we achieved most of our goals. Details on our performance for each sustainability aspect are reflected in the different indicators that we collect. See also Audit letter.
Total quantity of products provided/sales (sub-indicator of G4-9): Our total sales for our main product groups rose within the period from 2015 to 2016 by 5,163 tons (t) or 2.4 percent to a total of 221,258 t. Our sales in the product field milk fats and specialty products remain almost unchanged. Sales in cheese fell by 2 percent because we reduced the production quantities as a reaction to the poor market prices. For milk powder, we recorded a plus of 6 percent. In the field of sweetened condensed milk and delicatessen, we also achieved a combined plus of 6 percent.
We were able to increase sales in the strategic business field (Ingredients & Contract Manufacturing, Instant Beverages, Health) by more than 5 percent. These fields are under constant development and were on target except for Health products.
Despite higher sales, profitability in 2016 in total fell short of our targets. This was mainly due to the fact that the prices obtained were not sufficient to compensate for the cost of development.
Materials used (G4-EN1): The quantities of milk raw materials used including semi-finished goods rose slightly from 538,639 tons in 2015 to 544,889 tons in 2016. For non-dairy raw materials including semi-finished goods, we recorded a modest growth from 28,837 tons to 29,185 tons. In total, we used precisely 1.2 percent more materials in 2016 compared to the previous year. When relating this value to sales, it becomes evident that the increase in sales (2.4 percent) was more than proportionally higher than the increase in materials used.
Secondary raw materials used (G4-EN2): In 2016, we used more recycled packaging materials than in the previous year. However, it is only a comparably small increase of 11 tons to a total of 1,831 tons. At the same time, the percentage fell from 37.8 percent to 36.8 percent. This is due to the fact that the share of packaging materials without recycled content rose more than proportional when compared to materials with recycled content. Our purchasing department had no influence on this development. This is exclusively a matter of sales. Our customers bought fewer products in paper and cardboard packagings. At the same time the demand for film-wrapped products increased.
We reviewed 100 percent of our products for health and safety impacts (G4-PR1). For 100 percent of our products, we have the required information available and the products are labelled accordingly (G4-PR3). Moreover, all of our production sites operate according to certified quality standards (G4-FP5). This means that we have maintained the high quality standard in 2016 again and we were certified to 100 percent in external audits according to all important certifications such as IFS, BRC or ISO 9001.
Our sustainable product strategy – targets and measures
- Our aim is to achieve profitable growth in strategic business fields with a focus on products and areas such as instant beverages, health products, dairy ingredients and contract manufacturing. For our traditional dairy products such as cheese our aim is to maintain stable sales volumes.
- For our entire food production process – from raw material delivery to production - we ensure high safety levels and reliable quality.
- Our sourcing of raw materials and other materials will be more sustainable. This means: When purchasing materials, we do not just pay attention to safety and quality but also to ecological, social and ethical criteria.
- Our process-focused quality management system systematically accompanies all processes, checking for errors and making sure that product specifications are complied with.
- Uelzena has been certified according to the most important schemes: ISO 9001/2008, IFS Food (higher level), BRC (British Retail Consortium), Fair Trade, UTZ, Eco regulation, Kosher and Halal.
- Our laboratories operate at high-end chemical-physical standards which, for example include specific test methods on the structure of particles. Our laboratories are certified according to ISO 17025.
- Risk-based sampling procedures based on quality control plans are in place for all raw materials, intermediate and finished products. This process ensures that the defined microbiological, chemical-physical and sensory product properties as well as quality parameters are complied with.
- Our HACCP management comprises: Allergen management, computer-aided servicing and maintenance, Management, foreign body management, hygiene concepts (zones and regulations), pest prophylaxis.
- We control our suppliers: for example, by requesting information, on-site visits, supplier audits and supplier specifications. Moreover, Uelzena produces its milk-based ingredients and products exclusively from milk raw materials that stem from Germany or the European Union.
- Uelzena in general excludes risk technologies such as genetic engineering, nanotechnology or irradiation.
- Packaging materials as well as food contact materials and articles comply with German and European regulations. Furthermore, declarations of non-objection according to Regulations (EC) 1935/2004 and 10/2001 are available. Respective supplier confirmations and certificates are also available.
- In 2016, 92 percent of our milk raw materials (quantity share) came from regional producers. The agricultural companies producing the milk are located at a distance of less than 150 kilometers around the Uelzena sites.
- Starting in the second half of 2017, we will question our milk suppliers systematically on how sustainable their milk production is. This survey at farm level is based on the sustainability module milk. The catalogue was developed under the scientific leadership of the Thünen Institute. It contains more than 60 criteria referring to three sustainability aspects (ecology, economy, social) and animal welfare. Our goal: We would like to initiate further developments and be able to answer customer requests more precisely.
- We offer our customers the possibility of sourcing raw materials from sustainable cultivation according to internationally acknowledged sustainability standards such as Fairtrade, UTZ, Rain Forest Alliance, Organic.
- We request transparency from our suppliers when they sell us raw materials from sensitive countries of origin in Asia, Africa or South America. For example, we request producer’s self-disclosures from our direct suppliers in Europe - which are mostly brokers or processors - in which they confirm that their companies observe human and worker’s rights according to the guidelines of the Ethical Trading Initiative (ETI). Step by step, we will be requesting such confirmation from their pre-suppliers as well. Furthermore, in line with the further development of sustainable procurement management, we will possibly request more sustainability aspects from the suppliers.
- We control our suppliers on the basis of risks. If information is inconclusive or suspicious, we reserve the right to have our quality manager review this directly in the supplying companies.
- We focus strategically on market segments with increasing consumer and hence customer demand. This is why we frequently analyze consumption and demand trends and develop capabilities, expertise and technical options in order to serve such markets or customers.
- We also maintain products and competences in those markets where we have large market significance despite the fact that they have no growth potential or will not be developed for strategic reasons.