Horse problems in a supply chain

Roger OakdenGlobal LogisticsLeave a Comment

Complexity causes another headache.

Supermarket chains and brand companies in 16 Europe are responding to a supply chain problem. Frozen meat products have been found to contain more than 60 per cent horse meat and that certainly does not agree with the statements concerning ‘pure beef’ on the packaging!

Removing product from shelves and contracting with replacement suppliers is a direct loss, about one third of the total recall cost; but reputation loss is more difficult to quantify. When consumers trust in a brand or retail chain is damaged, it costs lots of money and effort to rebuild.

Consumers may imagine that a large supermarket chain selling ‘own label’ products and brand companies marketing products which carry their brand have some control over the supply chains of the items. But this case once again illustrates how this perception is wrong.

The current picture (which may change) shows a meat supply chain of considerable complexity. Working back along the chain, the supplier to brand companies and supermarket chains in Europe is an assembler of frozen meat based products based in France. They buy their ‘beef’ (labelled 100% French beef) from a meat wholesaler also based in France. The wholesaler purchases the meat from a consolidator based in Cyprus (although the meat is unlikely to be delivered from that country). The consolidator has purchased some of the suspect meat from a trader based in Holland, who in turn, purchased the meat from an abattoir in Romania. Where the cattle and horses come from has still to be ascertained!

What can you do?

As a buyer of the finished products, you may ask the supplier where the meat comes from. On being told ‘from a wholesaler based in France’, you may wish to confirm the supply situation with that wholesaler, but will you inquire further of the supply chain? Unlikely. You will expect in-full and on-time delivery against orders, but testing of the product for adherence to specifications will only occur on a random basis, given the thousands of orders arriving at your distribution centres each week.

The complexity of just one supply chain shown in this case illustrates that even large businesses cannot ‘manage’ their supply chains; they have relationships with their tier-one suppliers, but not be aware of the complete supply chains for each item purchased. That is until a recall takes place. Then, supply chain excellence is measured by how quickly shelves can be cleared, replaced with other products and consumers re-assured about the actions taken; all of which requires a special set of skills and a traceability regime that works. Above all, you need to assess and mitigate risk in your supply chains.

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About the Author

Roger Oakden

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With my background as a practitioner, consultant and educator, I am uniquely qualified to provide practical learning in supply chains and logistics. I have co-authored a book on these subjects, published by McGraw-Hill. As the program Manager at RMIT University in Melbourne, Australia, I developed and presented the largest supply chain post-graduate program in the Asia Pacific region, with centres in Melbourne, Singapore and Hong Kong. Read More...

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