It is hard to come across a global company today that isn't being advised to enhance supply chain visibility. Doing so can provide organizations with a wide range of benefits, including opportunities to streamline production and uncover cost-savings. But improving operational efficiency is not the only reason businesses are accelerating these efforts. They are also being pressured, by both the public and regulators, to demonstrate social and environmental responsibility and to prove that they are adhering to and in compliance with safety and other regulations.
And while this is true for businesses across all markets, the food industry is receiving a considerable amount of scrutiny. A handful of high-profile cases of food-borne illnesses being caused by major corporations, such as Chipotle, have further fueled the demand for more insight into the production and sourcing processes of products.
Achieving end-to-end supply chain visibility can be challenging for most organizations. But the larger the company is, the harder this task becomes. This is particularly problematic for major food manufacturers.
Food giant transparency stalled by distant suppliers
According to Nicholas Fereday, an analyst at Rabobank, over the past five years, 4.3 market share percentage points have been taken from 10 of the industry's leading brands, mostly by smaller competitors, The Wall Street Journal reported this week. This trend can be attributed to a growing interest among consumers in purchasing healthier and safer products, which the smaller and newer brands are able to offer them.
And even though the distant tiers of large food manufacturing supply chains are further complicating major companies' efforts to enhance transparency, this hasn't stopped them from trying.
McDonald's recently announced that, although it is unable to disclose full traceability, it is attempting to improve transparency levels and remove deforestation throughout its production line. In its commitment addendum, the fast food giant explains that it is going to increase visibility specifically on the origin of raw materials it sources. The corporation also added that it plans to "work with suppliers and expert advisors to determine the appropriate level of visibility and traceability needed for each product to ensure responsible production at origin."
This approach doesn't offer complete transparency. But it does demonstrate one of the ways in which major food brands that have complex supply chains are attempting to mitigate the growing risk of noncompliance.
Adding a personal touch to product labeling
The Wall Street Journal pointed out that a number of big-name companies, such as Campbell Soup Co., have started including specific labels on food products that disclose where ingredients where sourced from. However, other organizations are taking it a step further by letting consumers know not just where, but by who, an item was sourced.
For example, Fish + People Inc. has started posting to its website the pictures and personal details of the people responsible for catching the fish used in its seafood products, the source revealed. In addition, the food company prints codes on its packaging that consumers can use to access the same information about a specific ingredient. Some products even have the pictures of the boat captains directly on the packaging.
These lesser-known manufacturers have simpler supplier networks that make it easier for them to verify where each ingredient was sourced from and to communicate that information to their target audiences. And because the demand for ethical, humane and healthy production is so high among consumers, the organizations able to confirm this quality of standards have a marketing advantage.
Key focus areas for demonstrating a safe supply chain
Whether for a small firm or global enterprise, the expectations and demands from consumers and regulators will likely only continue to intensify. And, although end-to-end supply chain visibility may not be immediately attainable for all large food companies, it is important to realize that there are certain areas where the focus should be prioritized.
Retail Leader revealed that, according to a research conducted by The Center for Food Integrity, consumers hold the companies accountable for demonstrating transparency. They expect a business to adequately assess the safety and healthiness of its products, as well as the impact sourcing them had on the environment. But there are also a few specific measures that the source indicated should take precedence.
The first is to have a third-party conduct food safety audits and make the reviews and reports visible to customers. The second is to make sure the business clearly communicates its brand's story. It isn't enough to simply post the corporate policies. Consumers prefer hearing about the background and practices of an organization in a way that highlights what its values are.
Finally, improving the quality of supplier relationship management is imperative to preventing the occurrence of future compliance issues. Food companies must be able to guarantee that every partner involved in supply chain operations is adhering to contract agreements, regulation standards and consumer expectations.