The majority of large food manufacturers lack visibility into their supply chains, putting them at risk for violating regulations and damaging their reputations, according to a recent survey commissioned by Achilles.
The results found 19% of large food manufacturers around the globe could not determine the name or address of all their suppliers in the supply chain, and 53% said they had no plan in place to find this information in the future.
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The survey is part of a broader study of 450 procurement professionals from a variety of industries. Among food manufacturing companies, 10% of procurement professionals said their companies did not have corporate standards for their suppliers to adhere to on issues like ethics, health and safety, the survey showed. This is despite the fact many of these food companies (40%) believe they will be exposed to mounting legislation, and nearly a third expect to be exposed to reputational damage from a lack of visibility of their supply chain.
James Palmer, director of strategy and commercial development for Achilles, said he isn’t surprised by the survey results. Actually, he is surprised at the number of food manufacturers that said they could completely map their suppliers around the globe. The food supply chain is highly complex and multitiered, involving thousands of suppliers at times, some of which are located in remote locations around the world. Not having visibility over suppliers is a major problem for the food industry and poses major risks, Palmer said.
For example, a company’s reputation could take a huge hit if it is discovered a supplier is engaging in unethical working practices. A number of companies have faced scrutiny recently for this exact reason. Nestle is one food company that discovered forced labor in its supply chains in Thailand. Another report from the International Trade Union Confederation also identified “hidden workers” in the supply chains of 50 major corporations, including McDonald’s and Coca-Cola.
If it is found a company has a supplier in its supply chain that is involved with these sorts of practices, the company will be called out publicly, Palmer said, and its reputation can suffer.
“You always think it’s not going to happen to you, and then it comes along and the consequences are enormous,” Palmer said.
While companies cannot completely protect themselves from unethical supplier practices, the point is to make a reasonable effort and try to determine what is happening in your supply chain, according to Palmer.
It’s not necessarily easy to see into tier 2, tier 3 or further into the supply chain, but resources are available to navigate that process. Palmer said Achilles’ supply chain mapping technology helps companies determine who all their suppliers are, what products or parts they are supplying and where they are located.
SOURCE: Spend Matters
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