Managing supplier risk effectively in the Food Manufacturing industry
March 27, 2016
The recent recall of Mars and Snickers bars in up to 55 countries is estimated to cost the U.S. confectionary giant ‘tens of millions’ of dollars. In addition to this, the PR costs and potential reputational damage, along with the effect it could have on investor relations could end up costing the organisation a lot more. For an industry still recovering from the effects of the horsemeat scandal, this is another wake-up call to the effects a product recall can have on brand and reputation.
It was highlighted this week that, despite recent scares, many food organisations are still exposed to supply chain related risks. Research published in Spend Matters has shown that many food organisations lack visibility of their supply chains. According to the research, 40% of food manufacturers believe it is ‘likely or very likely’ that they will be exposed to mounting legislation, and almost a third (29%) say it is ‘likely or very likely’ they could be exposed to reputational damage.
Food-related businesses are often complex, multisite and multitier organisations; due to the nature of their business, they are often faced with extra levels of compliance and health and safety legislation. Visibility and traceability of suppliers, including their level of compliance and their health and safety processes, is just as important as they themselves complying with these requirements. Obtaining complete information on suppliers and supply chains might seem to be a complex task, but not doing this properly or comprehensively presents huge risks.
Mike Edmunds, Managing Director at Trade Interchange, comments: “These figures illustrate that the food industry has a real need for comprehensive supplier information and insight into its suppliers and supply chains. We have seen a surge in food-related organisations approaching us to help them manage supplier risk. This is not surprising given the high levels of compliance they are required to adhere to, especially around the issues of safety, quality and traceability.”
Mike continues: “We have worked with 30% of companies featured in Restaurant magazine’s R200 list*, so we have genuine insight into the needs of the Foodservice and Hospitality industry. Effective management of supplier information and compliance, insight into supplier processes and visibility over supplier contracts including agreed SLAs are paramount to preventing or minimising supplier risk and exposure to reputational damage.”
< Our short video demonstrates how ARCUS® SIM can help manage supplier-related risks.
*According to Restaurant magazine’s R200 list 2012 featured in BigHospitality’s article here.
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