Chain of Thought

New meaning for “Pulling Trigger” in Supply Chains

Horse meat is trending on Twitter. Ever since news broke about equine DNA showing up in packaged foods supplied by Nestle, Walmart, Burger King, Tesco and even Ikea, the topic of supply chain visibility has received more…visibility. Now horse meat isn’t known to be dangerous, and it’s probably even better for you than the meat it replaced on those suppliers’ shelves—but if it wasn’t listed on the outside of the package, it shouldn’t be on the inside.

Once the dust settles in the ol’ corral, all industries stand to learn some good supply chain lessons from this. The companies directly involved have already made some changes in the way they do business. For example, the CEO of Tesco, the British multinational grocery chain, has decided to bring meat production “closer to home” and source more from British farmers.  

And Familjen Dafgård, Sweden’s largest food producer and the supplier of those now famous horsey meatballs that showed up in Ikea stores, made this announcement on its website:

 “Our focus right now is on further testing to identify the source of the meat and to see where the commodity chain has been broken.”

Horsemeat is a pretty cheap commodity, as commodities go, and one that isn’t on many menus in the U.S.—at least not knowingly. So I doubt there have been many reasons to trace horsemeat back through the food chain. Now there is. This gets me thinking, what if horsemeat gets more popular after all this and food producers start putting horse faces on the outside of their packaging? What other variety of cheaper animal flesh might infiltrate that packaging and cause the next high-profile recall? I won’t surmise, in case you’re reading this while eating.

The point is, supply chain visibility is getting more important as companies go global and start doing business with suppliers who are foreign in more ways than one.  Logistics specialists in the high-tech supply chain have gone though their own learning curve where traceability is concerned. I talked to Jim Gerard about supply chain visibility in the high-tech field while researching an article for MH&L’s March issue. He’s the high-tech segment marketing manager for UPS. He noted three trends in this space that are making supply chain visibility more important now than ever:

∙ Extended lead times for high-tech products;

∙ Shift of global demand patterns toward emerging markets, which is lengthening the supply chain and influencing sourcing, distribution and reverse logistics strategies; and

∙ Increasing customer demands driving need for greater responsiveness.

That’s not to say that high-tech has mastered visibility. Gerard said that many high-tech companies are still struggling with visibility across their supply chains. His company worked with IDC Manufacturing Insights to survey high-tech industry supply chain decision makers and found that "end-to-end visibility" is among the top three pain points in high-tech companies' import/export processes, as cited by 38 percent of respondents. That’s why the reverse supply chain is getting more attention.

He cited a 2012 Greve Davis white paper, “Recovering Lost Profits While Improving Reverse Logistics,” which was commissioned by UPS. It reported that as a whole, the electronics industry spends over $14 billion on returns every year.

“High-tech manufacturers without a well-managed reverse logistics process could be losing over 50% of the returned inventory value since the majority of returned products can be sold in secondary channels,” Gerard said.

Not sure if there’s much of a secondary market for returned horsemeat. I hope not, anyway.

 

 

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