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  • 5.5.3-LOGISTICS AND INSURANCE-THE RISK TRAIL TO FOB: WAREHOUSING AND PROCESSING

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  • The risk trail to FOB: Warehousing and processing

     
     

    Warehousing: The better organized this function is, the easier it is to obtain cover and negotiate the best terms and conditions. Like banks, insurance companies wish to know and understand how a business operates. Ensure coffee is stored in an easily identifiable manner, using a numbered bay system in the warehouse with the bay numbers and boundaries painted on the floor. Coffee must always be stored on dry, clean wooden baulks or pallets, off the floor, away from walls.

    Keep back-up warehouse records in a secure and separate location. Otherwise the loss of both stocks and records can become very convenient for some while creating a nightmare for the owner. Make weekly stock checks, preferably using people who do not know what is expected and therefore can only report what they find. All stacks should bear a clearly visible stack card, showing the detail and history of the coffee stored. There should never be unidentified coffee in any warehouse. Unidentified can become unknown and may progress to non-existent - mystery disappearance or 'going over the wall'.

    Make regular random weight checks to verify that bags are of the correct weight and that scales have not been tampered with. Occasionally tear down a stack, again at random, to verify there is no hole or empty drum in the middle.

    Other obvious general risk factors include flooding, fire, lightning, explosion, aeroplane crash, theft, burglary and embezzlement. Others are deterioration due to excessive moisture content, prolonged storage or infestation (but not all these latter types of risk are insurable).

    The buildings themselves can pose risk if roofs are not tight, drainage pipes are blocked, ventilation is inadequate or the walls and floor are of poor quality. The area in which the warehouse is located may pose risks if neighbouring buildings are used to store or produce hazardous or smelly goods.

    Processing: Usually the risk of faulty or improper processing cannot be insured. Processors must depend on the qualifications of their staff and good quality control at the purchasing end to achieve the expected results. Nevertheless, accurate storage and processing records with daily out-turn reports will go a long way to alerting one to any unexpected and unwelcome variations.

    Processing is always a weak point in that out-turns cannot be forecast exactly. Ensure scales are correctly set, bags are weighed to the proper weight and, above all, do not allow any unmarked coffee to lie around. Unmarked bags or bags without tags could be the first stage of an unscheduled voyage out of the warehouse.