Entire cast in horsemeat scandal must recognise role

A tale of alleged fraud, denial, mistrust, rogue traders, falsified passports and illegal trafficking that has captivated the entire western world. The perfect setting for Ben Affleck’s next Hollywood thriller one would think? In a perfect world the answer would be ‘yes’, but in reality, Tinseltown’s talented young director is no match for the imaginations of capitalist ‘meat prospectors’.

In this world, the setting is the food supply chain and its stars are all the stakeholders (farmers, manufacturers, retailers, consumers etc.) that are involved in what is called the “farm to fork” process.

At its basic level the food supply chain is made up of multiple enterprises, multiple flows of items, information and finances and is a complex story to tell with many layers, plots and sub-plots to uncover and understand. Unfortunately, it is in its complexity that opportunities such as the recent horsemeat scandal have arisen.

Why has such a failure been allowed to happen?

Managing this complex network requires the strategic management of upstream (supplier) and downstream (customer) relationships in order to create enhanced value to the final consumer at less cost to the supply chain as a whole. Sustaining customer value and profits at increasingly lower costs has encouraged the drive for cost-cutting initiatives, including outsourcing and lean operations. When implemented properly, such initiatives can be very beneficial, but they have stretched supply chains to breaking point. This is when vulnerabilities in the food chain surface, increasing the probability of supply risks occurring. For example, risks associated with the lack of control you have over supplier sourcing for burger filling if you outsource that activity to meat traders.

Demand for cheaper prices at each transaction point in the food supply chain means corners will inevitably be cut, reducing the quality of processes while opening avenues of manipulation and illegal profit from a small number of so-called ‘rogue traders’ within the chain. This in turn has put huge strains on supply chain relationships and created organisational barriers that make the transfer of accurate, trusted information and traceability difficult.

Who is to blame?

At current counts, the horsemeat scandal has hit at least 23 countries and over 30 different companies, spanning meat processors in Co Monaghan to retail outlets in Hong Kong.

Each stakeholder is playing the blame-game, passing the buck onto the next link in the upstream chain. In truth, all stakeholders to a certain extent are to blame, but some disproportionately more than others.

Firstly, blame arises from the price war being fought within the food retail industry.

Yes, consumers are demanding cheaper products due to recession-hit disposable incomes, but the large retail chains simply try to meet this demand and maintain their margins by pushing the costs onto the wholesalers and brand manufacturers, who pass it on to the farmers. Until the costs are distributed evenly across the food supply chain in a fair way, there will always be those forced by necessity or greed to cut corners.

Secondly, and more disconcerting, the blame has to lie with the regulatory bodies. Bearing striking similarities to the poor financial regulatory control that caused the global economic crisis, with all its EU directives and standards, the most policed supply chain in the world has failed its citizens. What happened to hazard analysis and critical control points or EU Directive 2000/13/EC for labelling, presentation and advertising of foodstuffs? Did regulations collectively fail, or somehow not know the problem existed? It is a combination of both, and similar to the culture within the supply chain system itself, the failure lies in the lack of whole system integration and collaboration between each regulative body and government involved.

Has this happened before?

Yes, to a degree that it is unacceptable that it can still happen today. In Ireland and the UK alone, from the pork crisis in 2008 to the BSE crisis during the 1990s, there have been too many occasions where the call for restructuring of food safety regulations has not been properly fulfilled.

Calls for inquiries from the present Dáil agriculture committee mirror those made in 2008 after the pork crisis. We won’t learn from our mistakes until the organisational culture of food supply chain stakeholders changes by embracing the ideology of whole system collaboration where the whole is greater than the sum of the parts.

Recent events have seriously questioned the robustness of food supply chains. Minister for Agriculture Simon Coveney called for Brussels to have ‘an open and blunt’ conversation about the horsemeat scandal. Until these open, blunt discussions become embedded solutions into food supply chain regulations and culture, lessons will not be learned.

Now is the time to stop cutting scenes for cost reasons, the screenplay needs to be rewritten to ensure quality and customer value prevails. Who knows, there may still be a Hollywood blockbuster yet...

- John Crowe is a senior researcher in the 3S Group, College of Business at Dublin Institute of Technology. [e-mail].