Horse meat challenges supply chains structures.
The point to emphasis about the recent scandal in Europe is not that products contain horse meat – many people eat it. It is that consumers were not told on the packaging; the product descriptions were therefore misleading and that is an offence.
The scandal has begun to elicit comments from leading retailers. Most appear to be defensive, but the comment from the CEO of major retailer Tesco about actions he is taking is illuminating.
The Tesco statement reads “It’s clear that the longer a supply chain and the more borders it crosses, the less traceable our food is and the more the chain is open to negligence at best, fraud and criminal activity at worst… We now need the supermarkets to stop scouring the world for the cheapest products they can find…I have asked my team to review our approach to the supply chain, to ensure we have visibility and transparency and to come back with a plan to build a world class traceability and DNA testing system… We pledge that over the weeks and months ahead, we will open up our supply chain and give you more information than any retailer has before…”
This is a powerful statement that puts traceability through supply chains ahead of cheapest product as a buying criteria. It recognises that extended supply chains cannot be ‘managed’, even by powerful buyers. It places supply chains and logistics as core elements of the business.
Because of its size in the British market and presence internationally, the actions taken by Tesco will require a competitive response from other retailers. The only acceptable response (to escape media attention) will be to take the same action. What will be the result?
Traceability and lot control will become the new imperative. This will require investment in systems, processes and training throughout the supply chains – not a five minute job! The recognition that long supply chains can be dangerous will encourage Tesco and other retailers to once again ‘buy local’; this will require a change in emphasis of contracts, to encourage development and growth of new businesses.
But what of international suppliers that have been satisfactory providing items? To remain as suppliers, they will have to invest in traceability and lot control and given the extent of outsourcing, they will have to impose strict conditions to their (often) small suppliers – and they may not have sufficient investment funds!
Indeed, horse meat might well be the catalyst for change to your supply chains.