Eggs Crisis Emphasises Supply Chain Risks – It’s No Yolk (sorry) …

My first purchasing role at Mars Confectionery centred on dairy products, but included a range of other materials, including orange juice (we weren’t big buyers so didn’t do any exciting commodity market stuff), colours and flavours (very interesting as we moved towards all natural) and eggs – well, spray-dried egg albumen powder to be precise, an important ingredient for several iconic Mars products.

The drying process makes the egg whites much more stable, hygienic and easier to transport or handle than raw eggs of course, but even then it was not unusual for such products to have microbial issues. The worst-case fear was salmonella; so Mars took lots of precautions in terms of testing the product and having very good information in terms of the “provenance” of the products we purchased.

But eggs are an inherently risky foodstuff, and last week we saw problems in the UK over hundreds of thousands of potentially contaminated eggs from the Netherlands. The BBC reported that:

“The Food Standards Agency (FSA) said it was very unlikely that there was a risk to public health. However, 11 products containing egg - including sandwiches and salads - have been withdrawn from supermarkets. Dutch police have now arrested two people suspected of using the insecticide fipronil. The FSA said the 700,000 figure represented 0.007% of eggs eaten in the UK each year”.

The eggs in question were laid at around 180 farms in the Netherlands that bought poultry from a supplier who allegedly used an illegal insecticide to treat red mite in chickens. Fipronil is not authorised for use as a pesticide around food producing animals as it can make its way into the eggs.

Fipronil is not supposed to be used anywhere near the human food chain, but the danger here seems limited given the level of dilution before any is actually consumed. As long as you don’t eat dozens of eggs a day we suspect you’re probably OK. And whole eggs sold in the UK are virtually all UK produced, but eggs from the Netherlands are used in manufacturing other products such as mayonnaise. The issue is also affecting other countries, such as Denmark and Germany.

It will be interesting to see if this has any effect on egg consumption in the UK – it shouldn’t, for the reasons outlined above, but we know that this sort of incident can cause general concern amongst consumers, even if it is illogical. And yet again, it shows the difficulty of managing complex food supply chains with 100% attention and success. Many issues, like this one, start right at the beginning of the chain and there may be several intermediaries between final consumer and initial producer.

So the more general issue for procurement is again around supply chain risk management best practice . That comes down the three key steps:

  1. Understand your critical supply chains, the various parties and tiers within them and the key risk issues, keeping up to date with events, changes and development
  2. Develop risk management plans, including mitigation approaches for key supply chains, suppliers, and products
  3. React quickly and take appropriate actions when a “risk event” occurs and triggers a response

You may also be interested in our series of supply chain risk briefings – short, sharp 2-pagers that cover key risk areas. They are available to download, free on registration (courtesy of risk management solution providers riskmethods), here.

Man-Made” Risk – Different Risks Require Thoughtful Strategies

Natural Disasters – How to Mitigate Unavoidable Risks

Corporate Image & Compliance at Risk: How to Mitigate the Hidden Risks Lurking in Your Supply Chain

The Most Effective Ways to Mitigate Supplier Financial Risk

I’m off now – scrambled eggs for lunch (seriously)!

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