What’s in your Supply Chain?
The big story over here in the UK is the fact that horse DNA has been found in many “beef” products such as hamburger meat and ready-meals. For the equine-loving Brits this has come as a bit of a shock, and endless horse jokes and puns have been flying around twitter, and the House of Commons.
My favourite, “The Prime Minister is rightly shocked by the revelations that many food products contain 100% horse,” an opposition MP began. “Does he share my concern that, if tested, many of his answers may contain 100% bull?”
Joking aside, it has been a PR disaster for our largest retailers, such as Tesco whose tills currently take one in every eight pounds spent in British shops; and CPG companies such as Findus Foods whose family-friendly brand became toxic overnight.
How could Britain’s largest retailer not know what went into its burgers? The problem seems to have occurred somewhere and the third and fourth level of the supply chain: their supplier’s supplier’s supplier.
Somewhere in the murky world between Romanian horse dealers and offshore tax havens there is a lot of room for ambiguity.
The Supply “Chain” — which looks more like a tangled multinational web rather than a chain — seems to be the following. A Romanian company sold meat to a Dutch company (registered in Cyprus), run in Belgium (and owned by a BVI-based company) who delivered it to a French Company in Luxembourg who sold it to Findus where it was retailed by Tesco.
The problems stem from viewing the Supply Chain as a linear Value Chain, rather than the true Business Network that it really is.
A Chain implies a simple link between two trading partners that is clear and well-defined. However in the modern world of consolidators, freight forwarders, third-party logistics and joint ventures understanding all the players in your Network has never been more important. Each brings risk as well as value to your business, and understanding the risk at all points in the network becomes critical to profitability and maybe saving your brand from the next scandal.
Business Networks on the Internet can help you quantify this risk, for example:
- By monitoring twitter feeds, Facebook, blogs and other social media it is possible to take the consumer “temperature”, this is called Sentiment Analysis
- Easy access to credit scores from well-trusted brands such as Dunn & Bradstreet
- Information regarding how many other trading relationships a supplier may have with suppliers in the same industry or geography
- Supplier profiles which include ISO certificates, accreditations and other documentation
- Supplier’s suppliers information
The Networked Economy is much more than just transacting documents. By overturning the perceived linearity of a Supply Chain and giving a view of the full Business Network, companies can manage their risk, and avoid becoming the target of every politician with a half-decent joke.