Supply Chain Scandals – Lessons Learnt
Filed under: Supply Chain
The discovery of horse-meat in processed beef in March drew the spotlight onto the food industry’s supply chain as a number of supermarkets across the UK were forced to recall their products. Mid-January saw Irish food inspectors announce that they had found horse-meat in frozen beefburgers made by firms in the UK and the Irish republic. A number of UK supermarket chains including Tesco and Aldi were then selling the horsemeat as beef. As a result, a growing number of companies across Europe have recalled beef products after tests found that they contained horse DNA.
The scandal not only shocked consumers, but also brought to light issues surrounding the difficulty of monitoring increasingly complex supply chains. Whilst the security and reliability of the modern supply chain is increasingly under scrutiny, it is important to draw lessons from the supply chain scandals that have been dominating the news of late.
Lesson one: Know exactly what is flowing through your value stream
There is only one way to avoid the fallout from your supplier’s choices and that is to be certain of what they are doing in the first place. Many experts argue that one of the most effective guards, against unwanted discoveries, is transparency. Within the horse-meat scandal, numerous stores and food processors were unaware of what they were selling to their customers and are now suffering the repercussions. Retailers need to ensure they have contact with each level of their supply base, well beyond their direct suppliers. The further down the chain, the greater the risk of problems, therefore the ultimate goal is transparency at every link in the supply chain. If you are pre-emptively increasing upstream visibility in order to gain knowledge on what you are delivering your customers, you can eliminate unwanted surprises.
Lesson two: Your suppliers are a part of your brand
Your suppliers are a part of your brand and reflect on you accordingly. Their mistakes are perceived as yours, if your supplier provides a product labelled as something it is not, you will lose credibility and trust. When customers purchase your product, they trust it is what you have claimed it to be. Few companies are able to pour resources into an image recovery if horse-meat is found in the product. If you can show consumers that your ethics run throughout your supply chain, you will inspire a great deal of confidence.
Lesson three: Suppliers and buyers need to work more closely together
The horse-meat scandal brought forth a significant question, what is happening between the retailers and the suppliers? It is a great example of the need for both to work more closely together in what they are doing. It is important to consider, if you know whom you are working with and if you trust them. If not, there is greater potential for difficulties. Closer working with suppliers in seeking mutual benefits through substantively improved levels of trust and sharing, leads to closer bonds, product innovation, investment opportunities and improved risk management.
There are many arguments as to the reason behind the horse-meat supply chain scandal, from the growing complexity of supply chains, to brands driving down prices on meat as consumers cut back on spending. Regardless of the reasons, it is important to take lessons from issues such as these to ensure they do not happen within your supply chain.
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