Critically discuss what went wrong with the food supply chains to the supermarkets and manufacturers of processed beef products
In the year 2013, according to the reports of the Food Safety Authority of Ireland (FSAI), horse meat was found in products labelled as 100% beef sold in some UK and Irish supermarkets. Horse-meat was revealed in products which were labelled as 100% beef and sold in Europe, the United Kingdom and France. The existence of DNA of pigs in products was also discovered during the tests in preserving beef products. The products were associated to supplementary of the ABP Food Group, which is one of the leading beef producer with business activities in Poland, Ireland and the UK and the biggest exporter beef products in continental Europe.
Famous French supplier Comigel was also reported by the presence of horse meat in its products. As a result of this, product testing spread in the entire Europe and certain results explored high amount of horse meat in products packed as beef (Cullinane, 2013). Consequently, agricultural officials of the European Union also initiated to examine for phenylbutazone or Bute, an anti-inflammatory drug generally given to racehorses which can be cause cancer in human beings, consuming horse meat. Some officials also involved police to help in the proper investigation of the scandal, supposing involvement of any criminal activity in the entire supply process of meat.
Government officials ordered to carry internal evaluation of all beef products, and testing of large scale has taken place, both as a preventive measure and in return to positive evaluation of beef products having horse meat. It has been revealed that a number of famous and leading retailers such as Asda, Tesco, Burger King, Sodexo, Whitbread, Waitrose, Taco Bell and Ikea, were found selling horse meat in their beef products. All these retailers apologized to their customers by, for supplying them contaminated meat.
It was reported that the ABP Food Group has lost more than 55 million dollars in contracts just after a few weeks of the scandal, as leading retailers, companies like Tesco, Burger King immediately switched suppliers (The Telegraph, 2014). In April 2013, the positive results of tests for horse meat carried by Dutch officials were released by the UK Food Standards Agency has affected more than 130 retailers in the Netherlands and 350 others all over the Europe. Such types of scandals not only focus the concern over food protection, but also the absence of transparency in meat supply chains and the lack of ability of food retailing organizations to offer guarantees and safety of their product labels. According to experts, the horse-meat scandal has focused the complication of the food industry’s supply chain all over the Europe.
A number of people assume that financial expansion is the main motive for the scandal as horse-meat is cheaper in comparison of other meats in some countries. Some others believe that because maximum profit margins have been grasped by supermarkets so suppliers decided to take this action. According to the FSA, on the basis of evidences it has concluded that the horse meat scandal has happened either due to negligence or intentional contamination in the food chain.
On the basis of the views of Environment Secretary Owen Paterson, “contaminated lasagne from Findus and frozen beef burgers from Tesco were assumed to be associated to suppliers in France and Ireland respectively.” French authorities examined the scandal as a case of scam rather than food safety. In a discussion in parliament in the year 2011, Owen Paterson narrated that the “main source of these occurrences is still being investigated and the scandal is appeared to be one of deception and mislabelling.
A retired auditor of food safety standards has released the statement in Parliament that because of the negligence of retailers to monitor their suppliers and inspection of meat in regular intervals causes the occurrence of horse meat scandal. Another prominent meat supplier also confessed that they may have been horse meat in products supplied to hospitals, schools, armed forces and other hotels. A number of supermarkets had to remove processed beef from their racks after knowing it has horse in a scandal that has spread across all parts of the Europe. Retailers were found accusing and blaming their suppliers for supplying those contaminated beef with misleading labelling.
In a another discussion in Parliament, Mr Smith, a meat auditor of 40 years, places doubt on the strategies and schemes implemented by supermarkets (The Telegraph, 2014). Mr Smith, blamed supermarkets of having an incestuous and inapt connection with food suppliers, who are accountable for issuing a Global Standard for Food Safety to various meat suppliers. The entire retailer and supplier system is a shame and in requirement of total evaluation and control. The Government was under constant pressure to keep the horse meat scandal under control since it was first revealed in Europe in January.
How could the problems with the meat supply chain be repaired? Discuss with reference to supplier relationships, pernicious incentives and quality standards
The horsemeat scandal has revealed breakdowns in the industry to control and monitor food scam and non-compliance to food and health standards. It has focussed importance on the requirement for organisations to adopt necessary measures to better scan and track their materials with the aim to recuperate costumer trust. In the era of high competition and globalisation, such scandal increases reputational danger for companies and intensify the absence of costumer confidence, at the same time disturbing profits and revenues costs.
Moreover, organisations can suffer management risks if investigation outcomes or product re-evaluation lead to removal of their business operations and the application of severe rules and regulations causes higher observance costs. The meat supply chain requires achieving back consumer trust across the world. The most effective and efficient method to achievement, is to enhance and develop transparency at each and every step of the meat supply chain management, from feed production, through calorific to the slaughterhouse and on to the final consumers. With the latest meat scandals, supply chains are in constant pressure to make control policies more strong, improve traceability and accountability. Implementation of an effective and suitable, food quality management system is definitely now a main concern.
A successful and appropriate supply chain involves, Global G.A.P, Quality and safety, CERTUS and IKB. These systems need to be implemented in-house, verified and audited by a third party and successfully operates handling, processing, control, evaluation and monitoring processes and rules. Significantly, the need for third party audits and inspections should be exhibited to stakeholders, consumers and costumers in the form of business’s dedication to safety and quality.
Suppliers should adopt effective measures to choose the appropriate strategy and it will include the entire production process, from feed selection to labelling of end product. These days’ customers are highly concern about the treatment of animals so suppliers need to offer audit, inspection and certification services at each stage to retailers as well as customers.
Various leading retailers to address the drawbacks of their supply chain management has joined the Supplier Ethical Data exchange (Sedex), a non-profit organisation that helps suppliers to share accountable trading data with retailers and brands online. Such non-profit organisations assist retailers to conduct ethical and healthy and safety audits of their suppliers and then, along with this information, it focuses to manage risks throughout its supply chain, dealing with suppliers to maintain better transparency across its global supply network. This move will also help in gaining trust of customers in the greater food industry. Lack of accountability and lack of direct influence over suppliers results in lowering down the performance of supply chain management process (Earley, 2013).
Retailers to avoid issues and problems in meat supply chain should demand clarity of purpose and create a conduct of conduct with clear and realistic expectations. Implementation of a risk-based approach is also significant, discovering the high risk areas and dealing these first. Collecting strong data is an effective technique and retailers should take it further by understanding business challenges of suppliers, providing support and establishing long-term relationships.
Establishing clear standards, adopting a practical approach while evaluating supply chain issues, offering evidence-based training, listening to consumers and focuses the business benefits of sustainability assists in dealing with the issues with the meat supply chain. Implementing appropriate food safety systems and involving expertise for control and evaluation process, guarantees that the product reach the final consumers in perfect condition.
Suppliers should be motivated to narrate their processes and plans back to their consumers, explaining the progress they are doing on particular sustainability challenges. Retailers dealing with issues in meat supply should participate in working groups and joint measures such as the Ethical Trading Initiative. Handling such issues collectively can enhance the speed of change in a cost-effective way. Companies while hiring new suppliers should use realistic, industry-standard scorecards supported by necessary data-sharing on carbon, social and environmental performance (SGS, 2014).
The collaboration of organisations with local groups and NGOs can be effective in communicating more efficiently with suppliers. When retailers effectively communicate with their suppliers, the whole supply chain process, involving management of inventory and obtaining goods, will move smoother and be more effective. Retailers to eliminate issues in meat supply chain should invite suppliers to strategy meetings, let them tour to their workplaces, involve them in business discussions and events and share information about new products and personnel.
How should purchasers like the supermarkets prepare for breakdowns in their supply chains?
With the increase in the percentage of supermarket sales the investment focus has shifted from customer service and sales into processes such as supply chain and logistics. One of the important factors that impact customer shopping behaviour is delivery times. Supermarket chains that aspire to attain long-term benefits in the high competition in the development, should evaluate the supply chain management process to develop the focus on the role of distribution centre and to improve efficiency. Supermarkets chains should constantly adopt measures to offer high variety, low prices, reliable quality and timely delivery of products and systems of quality services to fulfil demands of consumers.
Nevertheless, not all uncertainties can be eliminated and thus supply chains demands specific strategies on the basis of their demand and supply features. In the era of globalisation, e-commerce will have a major impact on all significant areas of supply chain management in organisations from design, through purchasing to meet demand and service support. It has the ability to improve the quality of product design, minimise design time-scales and most importantly enhance the interaction between manufacturers, engineers, suppliers and designers (Ross, 2010). E-working is an aspect that will have a high impact on the supply chain management. Most organisations have already offered number of their employees’ access to intranets and the Internet.
The implementation of Just-in-time (JIT) approach in supply chain focuses at harmonising the material deliveries in the appropriate amount and quality in time of need in production. The aim of JIT is to decrease inventories of initial products. Another approach quick response assists in faster delivery between manufacturer and retailer or between producer and supplier. According to some authors quick response is developed version of Just-in-time approach and based on the achievement of short production and delivery periods by reduced inventory (Kraxenberger, 2007).
This approach is very famous in the consumer food and good industry. Breakdowns and risks is all around, and if nor appropriately discussed, can lead to a major threat to the sustainability and survival of the business. In fact many supply chain employees who determine the value of transparency may struggle to signify activities and create a transparency process.
Because of the global presence and the nature of the food industry, the transparency team identifies two sets of risks-one on the basis of product category and the other by entire risk within the supply chain organisation. The food industry is mainly associated with product category and cross-product category supply chain risks, in such cases the transparency team choose to trace the wider supply chain of organisation before moving into individual product category. After identifying major breakdowns and risks, the procurement team came out as a critical gatekeeper that could create additional visibility and remove risks within the organisation’s supply base (Sollish and Semanik, 2011).
Significantly, the procurement department became the important aspect to manage both product category risks and the supply chain risks. Implementation of the risk management tool and technique is also a crucial step and along with this the supply chain management team also required to perform high-quality code of conduct standards and maintained a performance improvement strategy to enhance alliance with greater-risk suppliers and to reduce risks.
Thus it can be said that the important first step is to identify which risk emphasising on. Supermarkets should create a list of supply chain risks which can help them in focusing on specific high-priority areas (Ross, 2010). The transparency mapping system includes identifying and accessing the suppliers and supermarkets for products, information gap and finding those who will assist in filling those information gaps. All supermarkets should implement an effective supply chain management system for producing and delivering the best quality and timely products and services to the customers for achieving customer satisfaction.
References
Cullinane,S.2013. What's behind the horsemeat contamination scandal? [Online] Available at: http://edition.cnn.com/2013/02/12/world/europe/horsemeat-contamination-qanda/ [Accessed on 2 December 2014].
Earley, K.2013. Supply chain transparency: forging better relationships with suppliers. [Online] Available at: http://www.theguardian.com/sustainable-business/supply-chain-transparency-relationships-suppliers [Accessed on 2 December 2014].
Kraxenberger,H.2007. Improving supply chain performance through an integrated planning concept. diplom.de.
Ross, D.F. 2010. Introduction to Supply Chain Management Technologies. USA: CRC Press.
SGS.2014. Improving the Meat Supply Chain, from Farm to Retailer. [Online] Available at: http://www.sgs.com/en/Our-Company/News-and-Media-Center/News-and-Press-Releases/2014/03/Improving-the-Meat-Supply-Chain-From-Farm-to-Retailer.aspx# [Accessed on 2 December 2014].
Sollish, F. and Semanik, J. 2011. Strategic Global Sourcing Best Practices. John Wiley & Sons.
The Telegraph. 2014. Horsemeat scandal: supermarkets have failed to check meat suppliers, MPs told. [Online] Available at: http://www.telegraph.co.uk/foodanddrink/foodanddrinknews/9891296/Horsemeat-scandal-supermarkets-have-failed-to-check-meat-suppliers-MPs-told.html. [Accessed on 2 December 2014].
