Keep calm during the storm

26 June 2013
Since the horse meat scandal broke, it seems that companies have been falling over themselves to go ‘back to British’, promising 100 per cent UK sourcing, vertically integrated supply chains and replacing their car parks with farms. Admittedly, one of these is an exaggeration, but the principle remains that some companies seem to feel that the only way to respond to supply chain incidents is a knee-jerk change in sourcing policy. Companies need to understand that often the cause of these incidents is not where they source from, but how they source. Birds Eye recently announced that it is committing to sourcing 100 per cent of beef for burgers and ready meals from the UK and Ireland by the end of the year. Burger King and others have already announced similar policies, with, so far, only Findus remaining silent on the issue. The initial reaction to these announcements from many consumers and media organisations has been neutral, bordering on approval. What is interesting is that the rationale behind these changes, namely the horse meat scandal, never seems to be questioned. Furthermore, the causal link between out-of-country sourcing and increased supply chain risk is also not explored in any detail. It is possible that these particular companies have undertaken a detailed and comprehensive supply chain risk review across all affected ingredients from multiple product lines and road tested a series of robust plans in the months since the horse meat scandal. Organisations generally, however, appear to be assuming that geographic proximity to a supplier automatically equates to lower risk. In fact, the opposite can be true, with Weetabix and Hovis both having to halt production or change UK sourcing policies following a poor wheat harvest. While having a supplier nearby can be very useful, this is no substitute for having a clear understanding of what the risks to a business’ supply chain are, how these risks can impact it and having a proven and tested response to these growing risks. To change a sourcing policy that has been in place for many years because one risk has crystallised seems like a panicked response. Instead, perhaps organisations should keep calm, properly assess their supply chain risks and only then make the decision on where the best place to source from is. ☛ Justin Hughes is a supply chain expert at PA Consulting Group. Twitter @PA_Consulting
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