Supply Chain Transparency – Is the Food & Drink industry doing enough?

Rick Sanderson FIFST

Managing Director, Gate to Plate Solutions

22nd May 2019

The need for Transparency

I have been more than a casual observer since ‘Horsegate’ in 2013, as the food industry has tussled with the moral, desirable, contractual and in some cases now legal requirement to deliver Transparent Supply Chains, and present Supply Chain Maps to demonstrate their endeavours.

This is clearly not an exact science. Many companies in the food and beverage industry I have worked with were starting from ground zero, and had never given this requirement a second thought. Others, as you would expect mainly those with some equity in the provenance of their goods, had taken some small steps towards this, but mainly those in retail and close to the agricultural chains as immediate suppliers. For the most part, this was a new challenge.

Since the issue of Version 7 the BRC have suggested best practice would be to produce evidence of Vulnerability Analysis (VACCP) or Threat Analysis (TACCP) for supply chains whereby raw materials may be deemed ‘at-risk’ of compromised integrity. They do not specifically require or specify ‘supply chain mapping’, and do not treat it as a non-conformance, however they do ask that:

·        â€˜5.4.1 The company shall have processes in place to access information on historical and developing threat to the supply chain which may present a risk of adulteration or substation of raw materials…’

·        â€˜5.4.2 A documented vulnerability assessment shall be carried out…. This shall take into account:… ease of access to raw materials through the supply chain…’

Following this lead, many of the multiple retailers have gold plated this requirement, with mapping becoming mandatory for high risk raw materials or countries of origin. Government departments have required mapping to demonstrate good practice when supplying schools and care homes etc, and the HMRC have required transparency for The Alcohol Wholesaler Registration Scheme (AWRS) in order to ensure they are collecting duties.  

As a buyer and supply chain manager I have always had an inquisitive eye on the full value chain, and had endeavoured to seek this information out when approaching a supplier or a category. This had never proven a futile exercise, and was always insightful for both myself as a buyer, and the suppliers involved. In most cases it led to value share programmes, longer contracts, more strategic relationships, and crucially more trust. In a couple of examples it also led to consumer level brand equity, with great stories of provenance on menus and labels.

So why would you not be transparent?

The food industry has not covered itself in glory in past years when it comes to respecting shared supply chain insight. Retailers have used this information, given in good faith by suppliers, to source more directly from the primary source, cutting out ‘waste’, but in turn burning bridges and breaking trust. This has left a legacy of cynicism and anxiety about sharing information about supply chain partners. I get it and have been there.

 Another reason would be, and let’s be honest here, is that we simply do not know the answers. How many food specifications today do not contain accurate information about raw materials, their credentials, and crucially the suppliers that provide them? Look at the mess we are in over allergens and the FIR requirements, with leading premium retailers likes of Pret only just moving to clear labelling.

In my experience, and its extensive, 50%+ of food companies I have assisted in mapping chains do not have a handle on their Tier 1 suppliers. Who are they, where are they, are they accredited, do they still supply us, what are they in scope to supply? I would too often spend 3-6 months trying to answer these questions, lifting and shifting dated Excel and Word documents, sifting through emails, and talking to equally puzzled suppliers before we could begin to explore beyond Tier 1.

It’s a mess of our own making.

The role of Technology

Along with a handful of technology disrupters we are offering the industry some assistance in this space, and the ability to map chains using a low/no-cost, cloud based platform, assisted by food people to push for engagement down the chain, and in many cases paid for and at the behest of their customers.

The real art form when it comes to mapping chains is to have reliable, verified data that remains live and interactive once mapped. Sounds simple, but is incredibly hard to achieve. I believe the only way this is possible is to find a common platform through which to share data, whereby actors in the supply chain can collaborate and be in control of what they share, and with whom.

We all hear lots of talk about Blockchain, and undoubtedly this will form part of our future roadmap for delivering the transparency we need, but from my experience the ability to deliver transparency is mainly about people, politics, and purpose, and the platform is just the enabler. Where there is a will there is a way, it’s about motivation and mindset.

Knowing vs. Showing

In many of the most successful mapping deployments I have worked on, the client is most at ease when we are working for them directly, without the request coming from a customer. This allows them to work to their own agenda, at their own pace; risk assessed, and safe in the knowledge that the sunroof isn’t open with the customer peering in.

When the client is happy and satisfied that the data is sound and reliable, they may choose to be pro-active and share this data with their customer or auditor, in order to demonstrate compliance and knowledge. Knowing then Showing.

The sad reality is this is very seldom the case. In most examples I can refer to, the work I have done has been used as an insurance policy, rather than a value proposition, and therefore lacked the ultimate value that being transparent can capture - the trust of the consumer. Believe it or not, QR codes were invented in 1994, yet how many goods do we buy that are sharing insight in this way, or that have proud stories about provenance, and in this age of digital shopping how many platforms are bringing to life the real origin of goods we buy?

The sands are shifting

The good news for consumers, and perhaps challenging news for industry, is that the sands are shifting, and that younger, more informed and information seeking consumers are demanding more. We can now message the CEO of a retailer on social media and demand instant recognition; we can start a movement from our bedrooms, or exact fundamental change in industry and consumer practice by crowd-sourcing concern and rapidly deploying information. Just look at the recent impact on the disposable plastics industry for testimony.

What are other industries doing?

I have recently taken some time to explore how other verticals have tackled this need for transparency in their own sectors. It’s been extremely eye opening, enlightening, and equally frustrating in same measures.

I have looked at the fashion and textiles industry, and how since the Rana Plaza collapse in 2013, resulting in over a thousand deaths, in many cases children, how that industry has responded. Retailers have taken a leading role in ensuring they are buying goods from identified and approved suppliers, safeguarding human rights, and crucially driving traceability all the way down the supply chain back to the cotton fields.

I have seen how the timber industry has a strict chain of custody program to ensure that only sustainable raw materials work their way into the UK supply chain, and that the environment, animals and people are not exploited along the way.

I have looked at how delivery companies such as UPS have used technology to be transparent about live dispatch detail, first using it for knowing, and then utilising it as a tool for showing to their customers, transforming the relationship with them in the process and building trust. We have now come to expect this level of insight, and the likes of Uber and co are following in through the same door.

So, back to the food industry, what are we doing? Is technology disrupting our industry in the same way?

Scandal vs. Tragedy

The evidence is sadly lacking. Granted we have breakout examples of how being transparent is helping brands gain value and shelf space, but it remains largely in the domain of premium goods and services. Should transparency have to attract a premium? Maybe it should. I guess the question I often get asked is ...“Transparency is all well and good, but who is going to pay for it?” It is largely not seen as a platform for growth or a premium, but as a cost that is not deemed urgent or essential enough to bear.

I have worked with all the major retailers and many of the foodservice companies over my career, and there is a common thread through all of it – the desire to offer value to customers manifesting in margin pressure on suppliers...but at what cost? Should Modern Slavery be the price we pay for cheaper food? Should processors be closing factories they cannot afford to operate due to cheap imports with opaque origins and standards? Should farmers be living below the breadline and have the highest suicide rate in society because of returns below cost of production?

Sadly it seems it is human nature to only institute real change, and convert compassion into cash when there has been a tragedy. Did football stadia require full seating before Hillsborough in 1989? Were councils around the country retro-fitting sprinklers before the Greenfell Tower collapse in 2017? Were the retailers so keen on full chain disclosure in textiles before Rana Plaza in 2013? Were we all changing our habits around plastic use until David Attenborough made us aware of the developing tragedy in our oceans last year?

So why hasn’t the food industry done more since Horsegate in 2013? I believe it’s because it was deemed a victimless crime. Who died? Where was the tragedy or lasting public outrage? Yes it was a scandal, and we have had several tremors on the adulteration scale since, such as infant formula in China, toxic oil in Spain, tainted Oregano in India...so where is the stampede from food companies to demand transparency in their chains? Reminder - We put this stuff into our bodies, and those of our children, every day.

Sadly the evidence seems we need a tragedy, and as a consequence an Economic or Legal imperative to motivate large scale change.

Modern Slavery and the Food Industry

I believe the next big scandal in waiting for the food industry is the cost to human life and exploitation in order that we can produce ‘value’ food & drink, and so does the government since the introduction of the Modern Slavery Act in 2015. Section 54 of the Act - Transparency in Supply Chains – is asking that food companies of scale (￡36m+ in turnover) endeavour to gain transparency in their supply chains, and work with their supply partners to close of any opportunity for human exploitation in their inward supply chains.

Following my own recent research, it saddens me to see that from a sample of the Top 200 food companies in the UK by turnover, 12% have not yet produced a statement, a further 10% are non-compliant, and few to any are making reference to Section 54 and truly placing transparency and social responsibility at the heart of what they do. This despite recent research from the Slavery Index that 66% of consumers would stop buying a product if it was associated with the slavery trade, and over 50% would pay a premium for goods that could be guaranteed free of slavery.

Maybe it’s time for a David Attenborough moment?

A brighter future

The good news is I do sense that the tide is turning, and that we have reached a point whereby transparency is becoming desirable, where such is the technical debt in the food industry that platforms such as ours are being seen as cost-effective and essential, and where the triple bottom line credentials of food and drink are an imperative. A good start point.

I studied business, and 2 of the most famous quotes in business came from Peter Ducker;

1.      If you can’t measure it, you can’t improve it

2.      Leadership is about doing things right, and doing the right thing

These have certainly stood the test of time, and couldn’t be more appropriate to the need for a more transparent and responsible supply chain for the food and drink industry.

At Gate to Plate Compliance we have crowd sourced the best in leading technology, subject matter expertise, data analysis, and leading edge solutions to offer a one-stop-shop for the food and drink industry.

Why not get in touch and take the first step? The best way to predict the future is to create it!

Rick Sanderson FIFST

Managing Director

Gate to Plate Compliance

0845 565 2096

07847 813759

rick@gatetoplate.org.uk

www.gatetoplate.org.uk