UK Supply Chain Report: “Few Lessons Learned” From Horsemeat Scandal

15 Jan 2014 --- One year on from the horsemeat scandal, more than 80 per cent of large UK food manufacturers say the incident made no difference to how they manage information about their suppliers. The horsemeat incident caused reputational and financial damage across the food industry and highlighted the difficulty of managing risk across an increasingly global and complex supply chain, with multiple tiers of suppliers.

However, new research shows many food manufacturers still do not know exactly who is in their supply chains. Businesses have less confidence in suppliers lower down the supply chain – and the lowest confidence of all in suppliers based overseas, in emerging markets.

The survey, commissioned by Achilles – a global supply chain risk management company, – and carried out by independent consultancy IFF, showed:

• 82% of food and drinks manufacturers said the horse meat scandal did not affect the way they manage information about their suppliers

• Just over half of all food and drinks manufacturers have less information about their second level suppliers than first level suppliers

• 40% of food and drinks manufacturers have never ‘mapped out’ their entire supply chain to find out exactly who all their suppliers are

• Just over half of food manufacturers still rely on paper records to manage information about suppliers across the world

• ‘Emerging markets’ - Only 24% of food manufacturers said they were ‘very confident’ suppliers in emerging markets would continue to adhere to health and safety responsibilities. 30% said they were ‘very confident’ suppliers in emerging markets would continue to deliver required quality

• Despite this, 60% of food manufacturers said they were ‘very confident’ that the way they manage their supply chain allows them to manage risk effectively

Adrian Chamberlain, Chief Executive of Achilles, said: “It is a cause for concern that most large food manufacturers are still struggling to improve information about their suppliers after the horse meat scandal.

“A key aspect of the incident was that it took several weeks for food companies to map out the supply chain and establish which businesses had received counterfeit meat.

“One year on, and we believe food manufacturers may still be open to experiencing similar issues, because only a minority have overcome the complex task of mapping out their supply chains to establish exactly who supplies who.

“The food industry is reliant on an increasingly complex and globalised supply chain, as shown by the horse meat scandal – where counterfeit meat originated in Romania. However, this research shows food manufacturers have far less confidence in suppliers from the second tier and below, with even less confidence in the credentials of suppliers in emerging markets.

“Despite this, the vast majority of food and drinks manufacturers said they were ‘very confident’ in their ability to manage supply chain risks.  

“With a responsibility to workers producing ingredients, families consuming products and even shareholders, we were surprised to see many food manufacturers are still using paper records to manage information about their suppliers.

“We believe food and drinks manufacturers should act proactively and implement a single, coordinated system to manage information about all suppliers across the world and map their supply chains – before another horse meat scandal.”

Achilles commissioned independent research consultancy IFF to survey supply chain professionals from businesses with 250+ employees across a wide range of industries, including food manufacturing.

Examples of diminishing confidence through the tiers of a supply chain, and for overseas suppliers:

Confidence that suppliers will continue to deliver required service on time:

• 70% of food and drinks manufacturers said they were ‘very confident’ their first level suppliers would continue to deliver the required service on time
• 26% of food and drinks manufacturers said they were ‘very confident’ their second tier suppliers would continue to deliver the required service on time
• 16% of food and drinks manufacturers said they were ‘very confident’ their suppliers in emerging markets would continue to deliver the required service on time.

Confidence that suppliers will continue to deliver required health and safety standards

• 72% of food and drinks manufacturers ‘very confident’ Tier 1s would continue to adhere to H+S responsibilities
• 41% of food and drinks manufacturers ‘very confident’ Tier 2s would continue to adhere to H+S responsibilities
• 24% were ‘very confident’ suppliers in emerging markets would continue to adhere to health and safety responsibilities

Confidence that suppliers will continue to deliver required quality

• 70% of food and drinks manufacturers very confident suppliers at Tier 1would continue to deliver required quality
• 36% of food and drinks manufacturers very confident that Tier 2 suppliers would continue to deliver required quality
• 30% were confident suppliers in emerging markets would continue to deliver required quality.
Those who did improve the way they manage information about their suppliers made four key changes:

• Increase in supplier audit levels
• Ensuring supplier information is readily available and easily accessible
• Employing a tracking team to monitor suppliers
• Better verification of suppliers and the source of their raw materials; including DNA testing and specific information on the product