Supply Chain Risk Management: Understanding the Value of Traceability in the Supply Chain
Supply chain management and risk control is a process that combines elements of prevention, mitigation and recovery. Different models have been developed to achieve and deliver this process. However, they are all based on the three basic principles/steps of risk management:
- Identify sources of risk
- Assess potential consequences of those risks
- Determine appropriate actions to mitigate them
The approach taken to complete each of these steps may vary depending on the requirements, available resources and complexity of the supply chain involved.
Independent of the approach to be followed, gathering, processing, handling and communicating the right information is a prerequisite to effective supply risk management and control. A supply chain risk management solution should therefore consist of two highly interconnected elements:
1. Ability to gather and process relevant information with the aim to:
- Identify supply chain risks, threats and vulnerabilities
- Develop a mitigation plan and manage necessary changes for effective implementation
- Trigger communication and active engagement amongst stakeholders across the supply chain towards a common goal; the provision of traceable and transparent information that would promote food safety
2. Use of an enabler in the form of an information technology control and management tool that is:
- Able to store, monitor, manage and report/communicate information
- Secure to use and can guarantee full traceability
- User friendly and reliable
- Constantly monitored and maintained to ensure continuous functionality
- Regularly updated/configured to ensure it meets changing needs
The ability to track a product from farm to fork is a complicated process, especially given the number of processing cycles a product might go through, as well as the potential complexity of the product recipe itself. The latter is often a combination of a number of different ingredients sourced around the world and mixed together at different stages of the supply chain. The requirement for almost instant access to such information means that manual traceability systems become less and less acceptable. Manual systems are considered to be much more susceptible to error, and fraud.
There are a number of reasons why companies would adopt a traceability system, either internally or across the wider food chain. Literature suggests that industry has ten main drivers for the implementation of food traceability: legislation, production optimisation, chain communication, competitive advantage, certification, quality, food safety, sustainability, welfare and bioterrorist threats.
Companies may voluntarily adopt a traceability system for different reasons. For example, to enable them to identify alternative sources of raw ingredients, or to comply with international trading regulations. Adoption of a traceability system as a direct means to improve food safety can be less clear. Unlike other food safety systems, for example HACCP or a number of pathogen reduction approaches, such as pasteurisation and preservation, traceability does not directly improve the effectiveness of a production process. Instead, it is a data bank that can promote active engagement and facilitate contractual agreements amongst stakeholders to promote food safety across the food chain.
Cases of fraudulent intentional contamination, as well as unintentional food contamination and food counterfeiting are amongst the key driving forces for the adoption of effective traceability. These are systems that trace food and the ingredients used in products, through the different stages of production, processing and distribution. Such systems are able to combat fraudulent practices and control adulteration. These can be very important issues for economic, cultural and also religious reasons. An additional benefit of effective food traceability systems involves the improvement in food crisis management through access to integrated data covering:
- The origin of food/feed and ingredients
- Processing at all stages in the supply chain
- Resources used such as transport equipment, people and machinery
Amongst others solutions, the availability of a fit-for-purpose traceability system can facilitate the targeted withdrawal and/or recall of contaminated products. This can significantly reduce the economic impact of a blanket product withdrawal/recall and therefore minimise the subsequent damage to operators, an entire food sector and consumer confidence.
Food Supply Chain Management Survey Underway
Current supply chain management industry practices, gaps and needs, have been the focus of an industry-wide survey conducted by SGS. The results will be presented at an SGS-sponsored special session, “How vulnerable is your supply chain?” at the 2015 GFSI conference (Thursday March 5, 2015 at 8:15am). In this session, participants will hear perspectives and practices, from key professionals, on assessing the risks and vulnerabilities of supply chains. An evaluation of the tools and methods available to manage traceability and transparency in the supply chain will also be presented, with a focus on how they can support the prevention, mitigation and management of risk.
Dr Evangelia Komitopoulou, Global Technical Manager for Food, SGS United Kingdom, is an expert food microbiologist. With a career that spans food technical consultancy, trouble-shooting and contract applied research and development, Evangelia is also the author and editor of many technical reports and articles.
SGS is the world’s leading inspection, verification, testing and certification company. SGS is recognized as the global benchmark for quality and integrity. With more than 80,000 employees, SGS operates a network of over 1,650 offices and laboratories around the world.