14Analysis


www.supplychainstandard.com


It’s the supply chain that guarantees the brand…


Finding horsemeat in beef products is leading to a significant shift in attitudes towards the supply chain, saysMalory Davies.


UK over the discovery of horsemeat in burgers. After all, horsemeat is


I


perfectly nutritious – and is commonly eaten elsewhere in Europe. According to the UN Food and Agriculture Organisation, several hundred thousand tonnes of horsemeat are imported to the European Union, primarily from Canada, Mexico, Brazil, Argentina and Uruguay. This is in addition to the tens of thousands of horses that are slaughtered for human consumption within the EU itself. So it would be easy to dismiss


this simply as British squeamishness. But putting that aside, the real issue here is that


suspect that there are plenty of people around theworld who are astonished at the furore that has arisen in the


a burger that is sold as beef should contain beef and nothing but beef. And the fact that other animal


products are turning up is a supply chain issue. Tesco, the most high profile retailer affected,moved quickly to sack that supplier, and reassure customers that it is putting in place a systemof DNA testing to ensure it doesn’t happen again. “We are looking in great


detail at every aspect of how products are sold in Tesco and at how our relationships with our suppliers becomemore transparent and collaborative,” said CEO Philip Clarke. Tesco is not the only retailer to


be focusing hard on its supply chain. Speaking to BBC News, PeterMarks, chief executive of the Co-operative Group, said: “We want to say a big apology.


It’s good to share…


O


ne of themore controversial areas of supply chainis data sharing –who to sharewith, and howmuch data is it appropriate to share. But if anyone is in any doubt about the value of


sharing data, SirDavidNicholson, chief executive of theUK’sNationalHealth Service has just produced some interesting figures. In London, theNHS has saved £460min six years – £80mlast year alone – froma procurement initiative, the London Procurement Partnership,which has at its core the sharing of data.The partnership expects to return £300million to itsmembers over the next three years. “Leaderswho think they don't need to collaborate


to procure need to think again; a failure to share procurement data and collaborate could leave suppliers free to take advantage of theNHS, and the consequent variation in prices paid byNHS organisations is unacceptable,” SirDavid told the manager at the partnership’s conference. “TheNHS is facing an unprecedented challenge to


meet rising demands for healthcare, driven by an ageing population against a backdrop of tight budgetary control. All the evidence shows that collaborative procurement across the systemgets better services and equipment for patients, quicker.” Clearly, an organisation of the scale of theNHS has


scope to produce some spectacular savings, but the lessons are equally applicable across awide range of organisations.


Food retailers can’t duck this. We can’t blame the government, we can’t blame the regulator – the FSA – we can’t blame our suppliers.When we sell products in our shops it’s our responsibility.” The Co-operative plans to


improve the rigour of its testing and take a closer look at its supply chain. Waitrose has not found horse


in any of its products but it found pork in one beef product which was not produced by Dovecote Park, its dedicated supplier. As a result, it is to build its own capability to produce a range of frozenmeat products. Thesemoves represent a


significant shift in attitudes towards the supply chain and what information customers should be given. That has to be a positivemove and one that


will have significant benefits in the long run. The question that has not


been answered is why the supplier did this.What kind of pressures were themanagement under? And what kind of checks were there to ensure the integrity of the product? Crime writer Dorothy L Sayers


knew a thing or two about brands, having started her career in advertising. So when she said “the quality guarantees the brand…[we] do not consider the brand to be the guarantee of quality” it was more than just a whimsical bit of word play. If Sayers were writing about


this situation today, I wonder if she might be tempted to revise her aphorism: “It’s the supply chain that guarantees the brand…”


Banks are also facing supply chain risks


some, continuing) losses, then there was payment protectionmis-selling and the Libor scandal, plus the ongoing rumblings about the culture ofmassive bonuses. Now, they are being taken to task


B


over their supply chains in a new report from the Information Services Group entitled “The ‘Uh Oh’moment: financial services enterprises focus on governance, transparency and supply chain risk”. It argues thatmany financial


services organisations are ill-equipped tomanage risk in their supply chains and poorly prepared to face increased scrutiny from regulatory bodies. “Financial services institutions face


significant supply chain risks due to their reliance on elaborate networks of first, second and third tier suppliers to manage critical processes and operations,” according to Peter Lauer, partner at US-based Information


anks have taken quite a bashing over the past few years. First there were the heavy (and for


Services Group. And he goes on to argue that banks


and insurers often don’t know what they don’t know about their supply chain risks. “While they may have processes and reporting requirements defined, significant gaps exist between what’s documented and what’s actually used to make decisions and manage suppliers and service delivery.” There is a familiar sound to this –


managing complex networks, dealing with unknown unknowns, and so on. And even the solutions proposed by ISG have a familiar ring – greater collaboration with supply chain partners and building a holistic service delivery. We tend to associate supply chain


risk withmanufacturers and retailers, but this reportmakes it clear that no organisation is immune. And it highlights the fact that the requirement for strategic thinking on the supply chain goes both wider and deeper than many people realise.


April 2013 Supply Chain Standard


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