The CEOs of GMA and FMI, together representing the food supply chain from manufacturer to retailer, told Committee members they are confident in the industry’s readiness on Y2K. Both organizations recently surveyed their members to gauge preparedness for the Year 2000, and have concluded Y2K will not cause any severe interruptions in the food supply.
"Bottom line, the preliminary results show the majority of food manufacturing companies have completed the correction of potential Y2K problems in their critical systems," said GMA President and CEO C. Manly Molpus. "Our industry has been quietly tackling this issue for some time, and feels well prepared to deliver food to consumers when the new millennium arrives."
"The supermarket industry, more than any other, is well accustomed to operating in the most trying of circumstances, including earthquakes, floods and ice storms," said FMI President and CEO Timothy Hammonds. "Like every business, our computers go down from time to time, yet supermarkets continue to stay open, with a full inventory of products, using contingency plans that have withstood the test of time."
On the manufacturing side, respondents to GMA’s survey say they have addressed the correction of potential Y2K problems in their critical systems, and 95 percent say they are confident or very confident their company will achieve its internal Year 2000 goals. On the retailing side, the vast majority of supermarkets expect to be Y2K compliant on front-end systems, such as scanners (96 percent) and scales (91 percent) by the year-end, and more than 75 percent have already completed or are already engaged in some stage of Y2K testing.
Total spending by food manufacturers to fix Y2K problems is anticipated to reach $1.8 billion, according to the survey, with the average company spending in excess of $27 million to achieve Y2K readiness. Most respondents indicated their company would be completely Y2K compliant by May 1999, and more than 70 percent have already reviewed the Y2K readiness of their suppliers, customers and utility providers. FMI’s survey found that 89 percent of its members have been working successfully with suppliers on identifying and resolving Year 2000 issues.
The GMA and FMI survey results reinforce the positive findings from newly released reports from the U.S. Department of Agriculture and the President’s Council of Year 2000 Conversion – all four reports conclude the U.S. food industry is well prepared for Y2K. GMA and FMI today also called for the government to help ensure public utilities and other basic infrastructures are Y2K ready, and take a leadership role in providing information to the public against needless food stockpiling.
Joint efforts to address Y2K problems continue. GMA and FMI are developing a joint position paper on contingency planning to provide a framework for resolving disputes that may arise among trading partners, as well as a series of regional educational forums in 1999 on Y2K issues impacting the food supply chain.
Joining Molpus and Hammonds in testifying today were representatives from food manufacturers Kraft Foods, Inc. and Nestle USA, as well as representatives from food distributors SUPERVALU, INC. and The Kroger Co.
GMA is the world’s largest association of food, beverage and consumer product companies. With U.S. sales of more than $450 billion, GMA members employ more than 2.5 million workers in all 50 states. The organization applies legal, scientific and political expertise from its member companies to vital food, nutrition and public policy issues affecting the industry. Led by a board of 44 Chief Executive Officers, GMA speaks for food and consumer product manufacturers at the state, federal and international levels on legislative and regulatory issues. The association also leads efforts to increase productivity, efficiency and growth in the food, beverage and consumer products industry.
The Food Marketing Institute (FMI) is a nonprofit association conducting programs in research, education, industry relations and public affairs on behalf of its 1,500 members, including their subsidiaries - food retailers and wholesalers and their customers in the United States and around the world. FMI's domestic member companies operate approximately 21,000 retail food stores with a combined annual sales volume of $220 billion - more than half of all grocery store sales in the United States. FMI's retail membership is composed of large multi-store chains, small regional firms and independent supermarkets. Its international membership includes 200 members from 60 countries.