Horse Meat Global Supply Chain Management - Essay Example

 Executive summary Supply chain process in a company is essentially an external process. The present report will throw a light on the present scandal over horse meat in processed meat products. Horse meat was included in branded food products without informing the supermarkets, the processors and their customers. This led to a significant reputational and financial damage to the meat industry. The present report will give a detailed situational analysis of the meat adulteration scandal which took place in Europe and later migrated to other parts of the world. The report will throw a light on the origin of the horse meat scandal and its subsequent contamination to other countries. The shortcomings in the supply chain from the producers to the supermarkets have been discussed, which led to the spread of the adulterated meat scandal over horse meat in processed meat products. Possible steps have been discussed to control the breakdown in the supply chain and preparation for future risks. Contents Contents 3 Introduction 4 Discussion 4 Issues 4 Solution 6 Future Course of Action 9 Conclusion 10 References 12 Introduction The meat industry includes the slaughtering, packaging, processing of animals The Primary focus of the industry is meat production, but it also deals with a variety of side products such as hides, feathers, dried blood etc. Through rendering processes, meals such as protein meat and fat such as tallow are also produced. Europe is a major meat producer, and the EU accounts for more than 16% of meat produced globally. However, the sector has been suffering from the recent economic instability and increased number of frauds in meat processing and selling. The present report will give a detailed situational analysis of the meat adulteration scandal which took place in Europe and later migrated to other parts of the world. The report throws a light on the origin of the horse meat scandal and its subsequent contamination to other countries. The shortcomings in the supply chain from the producers to the supermarkets have been discussed, which led to the spread of the adulterated meat. In the next part possible steps to resolve the issues of supply chain has been discussed with references to supplier relationships, pernicious incentives and quality standards of the supplier products. In the next topic possible steps have been discussed to control the br3eakdown in the supply chain and preparation for future risks. Discussion Issues Food supply chain is a process operating in a dynamic, complex and critical environment where integrity of the product is vital (Bourlakis and Weightman, 2008). Quality of food is vital for the smooth flow of the supply chain. The evolution in technology and logistics has increased the productivity of the food supply chain to a great extent. As the food supply chain is becoming increasingly complex, it is becoming important to monitor and regulate the flow of supply chain across national and international borders (Power, 2005). Due to the rise in consumer concern regarding food safety, product traceability and labelling, various regulatory framework has been defined to control the supply chain process. A typical food chain includes food manufacturing, agriculture, wholesaling and retailing of food and drinks and the food catering sector (Eurostat, 2011). The food supply chain of Europe consists of many players. There are more than 3 million food producers. From the farmers or producers, the food products are suppliers to tier one and tier two suppliers. Sometimes, this chain is even longer with their three suppliers. From these suppliers and manufacturing companies, the processed food finally reached the supermarket and retail market chain, where they are sold to the customers. The European supply chain structure has been essentially labelled as funnel because a small number of players dominate in control and pricing. The European food market is however becoming saturated because of the low growth prospects (Agriculture and agri-food Canada, 2013). The primary producers and food manufactures are facing increased competition from imports and are forced to reduce their prices because of a highly concentrated retail sector. According to economic analysis, there is a huge pressure on the food supply chain because of the pricing structures and low elasticity of demand for a large number of food products. The horse meat scandal broke into Europe in the early months of 2013, but the adulteration was said to have started in early 2012. Ireland was the first European nation to identify this adulteration of horse meat into beef burgers. Ireland authorities found out that the adulterated horse meat came from Poland. After traces of horse meat were found in the supplier factories and two of the big food companies, investigation started with the help of Irish police. Soon, this meat scandal spread in other Britain, Italy, Spain and other parts of Europe. High amount of adulterated horse meat was found in beef from renowned food companies. These came from secondary, tertiary and other outside suppliers. The adulterated horse meat that was found in beef products originated in a Romanian based slaughterhouse. Though the meat coming out of the slaughterhouse was clearly labelled as horsemeat, it was relabelled as beef during the supply chain process. This indicated the lack of traceability of the meat during the supply chain process. The global food supply chain today has become so complex and sophisticated that it has become difficult to monitor and scrutinize the products and packaging process. The food industry is mainly concerned with profit and one time management. To facilitate the purchase of food ingredients for final processed food at the cheapest prices, the food industry has established very long supply chains. To provide flexibility, the processing activities are also outsources to small or medium sized operators. Integrity breakdown becomes higher with the increase in the size of food supply chain. The credibility of the labelled products is increasingly becoming a concern for the consumers as well as the regulatory officers. Rising food prices in the middle of the economic recession has put high amount of pressure on the suppliers to find cheaper sources and ingredients, which resulted in the food fraud. A majority of products in this scandal came from factories which products a huge amount of ready meals every year. This huge amount of anonymous frozen meat passes though an unorganized chain of traders, contactors and sub contactors, before reaching the main supermarket. Majority of supermarkets do not scrutinize the supply chain process and fail to monitor the origin and flow of these meat products putting a question on the quality of meat products. Another reason which is said to have contributed in the fraud is the recent lift of regulations from the meat industry. The recent self-regulatory push in the food industry has considerably altered the food safety operational structures. Budgets for state inspections have been decreased and workforce in this department went down in a huge number, decreasing the number of inspectors and other officials who were responsible for enforcing the regulations and law. This reduction in law and enforcement powers has been defended by claiming greater traceability and transparency, claims that are insufficient and contradicting in light of recent scandal. Solution In the past few decades, companies have realized that good supplier relationships can be beneficial for them in many respects. They provide flexibility in terms of better quality, better information, better material flow and delivery between suppliers and buyers. In order to achieve competitive corporate performance it is important to build a strong and efficient supplier relationship. The recent issues and scandals in meat industry have degraded the reputation and customer willingness to trust the beef industry in terms of reliable and quality meat products. To regain its reputation and lost image and build customer and supplier confidence, the sectors needs a strong and trustworthy partnership which can be developed through these strategies. Building Trust- Trust is crucial in any partnership or work. In a trusting relationship, conflicts and problems motivate the partners to look for deeper understanding of the issue and find a constructive solution, beneficial to all. Shared Vision and Objectives- It is very crucial that each player in the food supply chain shares the same vision and objective. These objectives should be clear and mutually agreeable. In this case, to regain lost customer confidence and sales, the focus should be on customer satisfaction being providing highest quality beef, with zero adulteration. Mutual Benefits and Needs- For a win–win situation in any business partnership, it is very essential that the companies have needs that are compatible. Mutual needs results in a collaborative environment and a room for more innovative solutions (Bogers, 2011). This also results in a more productive and long lasting partnership. In this case, mutual benefits can be formed in terms of pricing, by regulating the pricing structures and distributing the profits equally among all the suppliers in the supply chain process. Commitment and Top Management Support- The suppliers and manufactures should dedicate their time, best resources and people to make a successful partnership. Commitment should start from the top level management and should be supported by every level in the supply chain. In case of meat production and supply, the manufactures should be committed in providing highest quality meat and reliable and actual sources printed in their packaging. The suppliers in every level should ensure timely and proper delivery of the meat products without any alteration or change in the products. Information Sharing and Lines of Communication- To facilitate free flow of information in each level of supply chain process, there should be both formal and informal level of communication. There should be proper tracking of the logistics during the flow and the quality of the food products should be checked at each stage of the transportation. Performance and Incentives- Measures related to quality, delivery, cost and flexibility are the basic performance matrix should be used while evaluating the performance of the suppliers. This information given by suppliers is useful in improving the supply chain process. By evaluating the performance of suppliers, the companies can identify suppliers with exceptional performance, improve supplier performance and develop communication. The meat industry is very complex breaking into suppliers and sub suppliers and numerous other contractors. Thus it becomes very essential to evaluate the credibility and performance of the suppliers. This will ensure the company’s trust in the supplier and vice versa. Bribery and corruption is prevalent in the meat industry. During the packaging of the meat, the traders bribe the suppliers for mixing cheap ingredients in the meat production. Bribes are given for adulteration and improper packaging in terms of quality and weight of products too. For a smoother and more transparent flow of the meat supply chain, it is very essential that all kinds of pernicious incentives and bribes should be stopped. This can be done by appointing officers and inspectors who will be closely monitoring the flow of logistics and supply chain at each stage. Stringent rules and regulations must be laid down. The industry can also provide incentives to suppliers on the basis of their work and performance. This will lead in a healthy competition as well as increase in overall productivity of the supply chain. Quality Standards- Only the best suppliers should be targeted as partners (Lockamy and Smith, 2000). For maintaining quality standards in the supply chain process and the meat industry, supplier evaluation and certification is done. A certification is a set of guidelines which are laid down for control and coordination among companies operation in a similar business (Food Standards Agency, 2012). To find out the performance of the suppliers internal and external auditing can be done, The International Organization for Standardization (ISO) is authorized to publish various international standards for different organizations (The International Organization for Standardization, 2013). Future Course of Action Supply chain forms one of the crucial elements in any business (Stank et al, 2011). Even though supply chain is majorly an external process, it is one of the most important elements for the continuity of the business. The interconnection and complexity of the modern supply chain process makes it very vulnerable to disruption. The identification and proper management of external and internal risk through an integrated and coordinated approach among the members of the supply chain process, is very essential in reducing the vulnerability of the supply chain as a whole. Proper and necessary preparation of supply chain risk helps in avoiding loss of customer confidence and erosion of shareholder value. Risks can be broadly classified into five categories. Though there are few risks which cannot be avoided such as environmental risks, through proper strategies, business like supermarkets can avoid most of them. Demand risk occurs due to situations like volatility of demand, loss of major accounts of the company, shorter life cycles and innovative and challenging customers (Mo et al, 2012). Supply risks occur due to concentration in supplier market, disruption in the chain, quality and management issues due to outsourcing. Process risk is essentially risks relating to manufacturing and equipments (Rao and Goldsby, 2009). A retail chain or a supermarket can also suffer from network or control risk due to situations like asymmetric power relationships, poor pipeline management, lack of planning and forecasts etc. To create a resilient supply chain process, various strategic approaches can be adopted. Supply Chain (re)engineering- Supply chain engineering involves analyzing the present configuration of the supply chain, planning improvements in the supply chain configuration and then putting that improvised configuration into practice (Sweeney, 2000). It involves constant understanding and improvements in the supply chain. Supply Chain Collaboration efficient supply chain collaboration allows marketers and suppliers to exchange production forecasts, share production plans and commitments and helps suppliers in becoming more responsive to the demand requirements, irrespective of the place (Simatupang, and Sridharan, 2008). With a high level of communication and collaboration in the supply chain the companies can improve the delivery rates and customers satisfaction. Proper supply collaboration also helps the marketers to adapt to the rapid change in customer preferences without adding additional inventory costs. Supply collaboration helps in the alignment of the demand and supply across various tiers and levels in the supply chain process. Proper supply chain intelligence also increases the collaboration. Supply Chain Risk Management Culture- It is very essential to establish a proper an efficient risk management culture for the formation of the resilient supply chain process. This includes formation of supply chain continuity teams which will monitor the supply chain process on a regular basis and resolve any issue hindering in the smooth flow of the chain (Ghadge et al, 2012). A rich culture also includes commitment and trusted involvement from the board level members so that the managers and continuously motivated for improvement and innovative ideas for monitoring and regulation of the supply chain process. Agility- Agile supply chain processes are designed for quick response to any unpredictable change (Mistry, 2005). The basic features of an agile supply chain are close connection to the final market place, visibility of the real market demand, high level of upstream and downstream synchronization and continuous search for opportunities to compress the time limit. Conclusion From the above report it is clear that the meat industry is exposed to constant threat. Adulteration of the meat, pernicious incentives, bribery and corruption are few of the roadblocks to a smoother and transparent flow of the food supply chain. Due to the complexity and inter connection of the supply chain and the involvement of many contactors and traders in the middle of the process, it becomes very difficult to monitor the flow. Any kind of break in the supply chain can damage the entire flow and lead the supply chain process to a halt. To overcome these issues and prepare for any kind of breakdown in the supply chain, the manufactures as well as the supermarkets need to prepare strategies. These strategies should be agile, collaborative and well equipped with resources so that the companies are fully prepared to any kind of supply chain risks. References Agriculture and agri-food Canada, 2013. Global Trends Grocery Retailing Implications for Suppliers and Manufacturers. [pdf] Available at < http://www.gov.mb.ca/agriculture/statistics/food/global_trends_grocery_retail_en.pdf> [Accessed 4 April 2013]. Bogers, M., 2011. The open innovation paradox: knowledge sharing and protection in R&D collaborations. Emerald 14. 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