Quality lines

Will Green is news editor of Supply Management
13 October 2014

The long-awaited review into the horse meat scandal recommends eight pillars of good practice. Will Green asks how this affects buyers.

Professor Chris Elliott, director of the Institute for Global Food Safety at Queen’s University Belfast finally revealed his review into the horse meat scandal last month.

Built on “eight pillars of food integrity”, Elliott intends his report to be the basis of a “national food crime prevention framework with clear roles and responsibilities for government and industry”.

The eight pillars are: consumers first; zero tolerance; intelligence gathering; laboratory services; audit; government support; leadership; and crisis management. It is the areas of zero tolerance, intelligence gathering and audit that will have the greatest impact on buyers in the food sector.

In terms of zero tolerance, Elliott describes “deals too good to be true” and Andy Milner, procurement and supply chain director at caterer WSH, agrees. “Clearly there is a relationship between price and risk of adulteration and it is every business’s responsibility to ensure there are no compromises on supplier due diligence,” he says. “It is the firm’s responsibility that, if knowingly buying lower than market rates, extra care is taken when assessing a supplier’s capability.”

Mike Attwood, purchasing director at the European Independent Purchasing Company, which supplies Subway franchisees, says supermarket price wars add extra pressure. “If a retailer wants a lasagne or processed meat product for what is going to cost less than the meat going into it, then that’s going to encourage disreputable manufacturers to do disreputable things, or they might be tempted by a parcel of meat that is too cheap and not ask any questions, and that’s a race to the bottom in terms of quality,” he says.

In his report, Elliott “cautions against procurement of goods for less than the recognised reasonable price, based on market knowledge”, but for David Read, chief executive at Prestige Purchasing, it’s not so clear-cut.

“In theory this of course sounds sensible, but in practice it can be hard to deliver,” he says. “It’s debatable for example what a ‘market rate’ for any product is in the first place. That said, there is little doubt that in some sectors of the market commercial pressures make turning a blind eye somewhat tempting.”

Elliott suggests the Groceries Code Adjudicator could be given a remit to oversee “pressure on companies to supply goods at below market price”, but Read is unconvinced: “The problem needs to be dealt with, but introducing more red tape feels like a cheap and probably ineffective solution,” he says. “I really don’t feel that more regulation of the buyer is the right answer.”

But Milner is more receptive to the idea. “An independent adjudicator would be seen as a welcome introduction for suppliers who feel that they are being treated unfairly or under undue pressure,” he says.

Arguably, the central point to come out of Elliott’s investigations is that the industry was the victim of a concerted criminal effort, and when Attwood explains the potential returns for crooks you can see why.

“The problem with horse meat was that it was a fraud, which is quite difficult to protect against, particularly if you’re buying manufactured products,” says Attwood. “When you understand from a truckload of manufacturing meat, if you substitute a relatively small percentage with horse meat, you could make £20,000, you can understand why certain people found that quite an attractive proposition.”

A lack of convictions following the scandal also raised eyebrows. When this was put to the Food Standards Agency a spokesman would only say: “The City of London Police is still conducting an investigation.”

Read points to cost-cutting in the public sector and says it must be up to the industry to police itself. “The big lesson for me was quite how self-reliant the industry needs to be, as the public infrastructure is so shamefully lean,” he says. “With local authority enforcement and the public laboratory service subject to deep cuts and the police not seeing food crime as a priority, food safety from a crime perspective is pretty much entirely in the hands of the primary supply chain.”

The government timed its announcement of a Food Crime Unit with the publication of Elliott’s report, but scepticism remains in some quarters. Milan Panchmatia, director at 4C Associates, says: “Everybody recognises the fact they want a safe supply chain with high integrity that protects businesses and customers. The food crime unit is probably going to push that agenda forward, but to what degree I don’t know.”

But Warren Anderson, vice president of supply chain at McDonald’s, is more positive. “The creation of this unit is to protect the food industry, providing consumers with more confidence in the products which are available in the UK. This can only be a good thing,” he says.

So what can buyers do to cut the risk of being hit by another horse meat scandal? “Deal with people you trust,” says Attwood. “You deal with people over a long period of time so you build a good relationship. You build a dependency on each other so you can’t afford to have a problem because it can destroy your brand.”

Anderson says simplicity is the key: “If you have a supply chain that is short and transparent, tracing the source of your food is quick and easy – this level of transparency is what the consumer demands if quality is ever called into question. What we saw with the horse meat scandal was that those companies who couldn’t answer questions about their sourcing, or provide their customers with transparency about their products, were penalised by the customer.”

Audits and unannounced visits are also critical, according to Read. “Profile your suppliers on the basis of both risk and impact. Visit high risk/impact suppliers the most regularly.

Conduct regular checks on your supplier’s buying standards and policies. Agree before you start trading with a supplier that it’s OK for you to arrive unannounced, and then do so.”

Panchmatia recommends including warranties, service levels and KPIs in contracts to ensure “what you’re buying is what you’re buying and there is legal recourse against a vendor if it is not doing that”. But he warns this may lead to higher prices.

“There is a further level to this, whether that’s testing or inspection that needs to be built into the cost of the product, which ultimately the retailer and the consumer pays,” he says.

“There is a cost within the contract as well. If people are made to do additional things over and above what they have done in the past, it may well have a negative impact on the price you are paying.”

The scandal has shaken up the landscape. “It has demonstrated fraud can cross businesses, borders and sectors and simple checks are not enough to provide supply chain assurances,” says Milner. “Buyers are not only accountable for the price paid for a product, but it’s quality and provenance.”

LATEST
JOBS
Swindon, Wiltshire
upto £40K base (+ Paid overtime and corporate benefits)
Honda Manufacturing Ltd
Kew gardens, Richmond upon Thames, London (Greater)
£37,000 - £42,500 per annum pro rata, depending on skills and experience
Kew Royal Botanic Gardens
SEARCH JOBS
CIPS Knowledge
Find out more with CIPS Knowledge:
  • best practice insights
  • guidance
  • tools and templates
GO TO CIPS KNOWLEDGE