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What’s in your Supply Chain?

Meat in Question Mark

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.

About the author
James Marland
Vice President of Network Strategy - Ariba (Twitter: @JamesMarland)

James is responsible for defining and rolling out strategies for the Network with particular focus on Europe. He joined Ariba at the launch of the Ariba Network in 1998 after previously being a Solution Consultant at SAP America. In addition he ha... Read More >>>

3 Comments

Steve Baskerville

2013-02-19 12:08:29 Reply

It is a positive thing for the retailers to recognise the risk and use the 5 elements that James highlights. But are we missing the fundamentals of what consumers want on a day to day basis.

Business Networks are recognition of the complexity of today’s international trade.
We now seem to have a two stream food supply system.
The first and simplest is a low food miles supply chain where to local butcher sources meat from local farms and abattoirs and proudly displays the source in the shop window. This is a premium product with a corresponding price.
The second is the big brand supermarket with its value meals and price match deals. The reality is that most of us can only afford the prices offered by these companies on a regular basis.

As consumers we are not interested in the multinational web of suppliers, traders, manufactures and final brands. What we are interested in is what the supermarkets or brands are doing to supply products that are “fit for human” consumption and contain what it says on the packaging.

For the actual product (in this case beef) the physical supply chain is linear. The animal start on a farm and the final product arrives on the customer plate. This may go through multiple steps to get to the plate but it a physical movement of product. The ownership may be a completely different, but we don’t eat the paper/finance trail we eat the product.

The consumer needs confidence in the product on the plate not the financial and tax benefits trail.

Recommendations to the retailers:-
Audit your whole supply chain
Test the product – this way criminal intent would be circumvented
Be open and transparent with final consumer

Tim Minahan

2013-02-20 11:38:39 Reply

James

Supply chain transparency and responsibility are being thrust onto center stage. New regs from states, US State Department, and the UK are demanding that corporations take accountability not just for socially responsible practices across their sub-tier supply chain. This issue has been a frequent topic of discussion here on The Networked Economy:

http://thenetworkedeconomy.com/slavery-the-biggest-supply-chain-risk-you-never-knew-existed/

And will continue to be a hot topic here and for businesses in the future.

Tim

Peter Richards

2014-03-19 06:22:26 Reply

My company’s supply chain is aligned with best in class processes and technologies helping us to reduce substantial supply chain cost savings and increase efficiency and productivity. Companies like Global4PL, who are leaders in supply chain management, help us in achieving optimized supply chain delivery models which allows us to deliver our goods to our customers on time, every-time.

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