English Pork – or is it? Traceability in the supply chain hits the news again

So on Tuesday we published a piece about the tragic shootings in the Washington Navy Yard, carried out by Aaron Alexis, a man with a history of violence and mental problems, who nevertheless had security clearance. We put this in the context of  the growth in third parties carrying out work that was previously done in-house - Alexis was working for a sub-contractor to a sub-contractor to the Navy.

Arguably therefore, a very particular and appalling example of supply chain risk. But nearer home, we have had more examples recently of risks that, whilst not having anything like those consequences, do make you wonder about firms' appetite for getting to grips with supply chain risk management.

Testing on Tesco "British" Pork found evidence that it was in fact Dutch origin – and animal welfare standards are lower there than in the UK. Now Tesco have said all the right things, but after all the horsemeat and related problems, you might think that this sort of issue would be less likely now.  (It’s also worth saying that the scientific tests that came to this conclusion do not appear to be 100% reliable, so this might still prove to be a flees alarm).

But in any case, it strikes me that buyers need to start taking a stronger line with suppliers. Perhaps Tesco should say that any incidents like this will lead to that supplier never working for them again - or perhaps a one-year "ban" for a first offence. That would focus the minds somewhat I suspect amongst suppliers.

But one of the issues is market concentration. Over the years, we know that most procurement organizations have pursued a strategy of supplier rationalization. Along with the tough economic conditions, this has led to many industries where there just aren't that many appropriate potential suppliers.

So whilst supplying the big supermarkets is not exactly a bundle of laughs, or a recipe for huge profit, the balance of power might not be as one-sided as we might at first suspect. Throwing out suppliers – for many buyers, not just the supermarkets – may not be as easy as it used to be, because many firms just don’t have alternative suppliers easily to hand.

As we said, the pork issue is not totally clear cut anyway.  But buyers have to get on top of these risk issues. And whilst I'm a big supporter of having constructive relationships with suppliers, there are times when shouting  "we're going to punish you if your firm screws up like this” at the Sales Director is a totally appropriate strategy!

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