Supply Chain Surprises

Do you know what surprises lurk in your supply chain?

Ok, so it’s not quite Halloween yet, but the recent announcement by the British Egg Industry Council that they’re drawing up a list of approved pesticides following the recent fipronil egg scandal serves up a timely reminder for procurement teams about the hidden scares that can lurk in supply chains.

To recap, the European Union (EU) barres the use of fipronil pesticides with animals intended for human consumption. However the alarming discovery in the summer that thousands of chickens in the Netherlands had been treated with the substance resulted in leading UK supermarkets recalling products that contained infected eggs in products such as salads, quiches and sandwiches.

The Food Standards Agency (FSA) regulations state retailers in the UK are permitted to sell raw eggs still in their shells, provided they are sourced in the UK. At first glance, this regulation appears beneficial to consumer and the wider UK economy as it ensures suppliers are sourced locally and from one of the most regulated food industries in the world. However, on examining the regulations further there is a potential loophole.

The loophole in question refers to the FSA permitting UK retailers to use eggs sourced overseas when they are a component in a pre-prepared food products. This ambiguity came home to roost (sorry, we couldn’t resist) when eggs designated as component ingredients in salads, quiches and sandwiches were sourced from Dutch poultry farms, resulting in the supermarket’s suppliers’ supplier harbouring the responsibility for the egg sourcing, and subsequent contamination.

Thankfully consumers escaped harm, but nonetheless the crisis illuminated the need for retailers to dig deeper when auditing their supply chain processes to ensure compliance, consumer safety and protect brand reputation. The egg saga has not caused the same impact for consumers and for UK grocers as the horsemeat crisis of 2013, but despite retailers acknowledging the difficulties in auditing a supply chain with multiple components, there must be lessons learned.

As expected, major grocers thoroughly audit their own top-tier suppliers, but how far down they are able to dig to maintain the required auditory depth? To avoid a repeat, it’s essential to operate with a deeper lens to gain the necessary visibility down the entire supply chain. Retailers will need to ensure their suppliers’ suppliers meet all regulatory requirements. This should be done as part of their initial supplier sourcing processes, and as part of an ongoing supplier information management programme where all necessary certifications and compliance documentation can be stored, with reminders for renewals set, and in their supplier relationship management programme, to ensure strict compliance requirements don’t slip over time.

Buying organisations need to make sure that suppliers must meet (and demonstrate compliance with) all the hard and fast regulatory conditions within their industry as a pre-requisite to working together. And whether that is with direct supply of goods, or where finished products involve many components sourced from a wider supply chain, the process needs to be equally meticulous and rigorous.