A lack of proper compliance standards and systems is always a problem for any business. That’s no great secret. Non-compliant players in a supply chain can cause lowered quality in products, confusion and/or mistrust from the consumer base, delays in inventory deliveries, and more.
While all of these are important and major issues that can – and do – negatively affect business results, none of them elicit the same level of concern and need for immediate action that another three-word issue can: food safety concerns.
This article warns about the business and health dangers than can arise from poor supply chain compliance standards.
The Most Serious Risk
Supply chain compliance issues affect every type and size of business. Revenue losses are serious, and loss of consumer confidence is even worse – revenue losses are only the beginning in that case. When the lack of compliance leads to food safety concerns, the losses can even include a loss of life.
Thankfully, these food safety issues don’t always go that far, but the possibility is still there. Regardless, revenue losses are bound to be a certainty in these situations, as has been seen in more than a few instances with major global food chains in recent years.
The most recent cases involve the largest burger, chicken, and pizza chains in the world, proving that even the largest of corporations are vulnerable to problems with a lack of compliance. One of the companies has seen a decline of massive proportions after a supplier in China (based in the US, to be fair) was caught last summer selling outdated beef and chicken.
Chinese sales weren’t the only – or the largest – casualty. In Japan, where food safety concerns are a major priority, the company’s sales declined roughly 40% year over year in January, leading to their first operating loss in 14 years.
Fixing the Right Problem
You can’t clear a yard of weeds by pulling them up as you see them. A weed-free yard requires an overall strategy for eliminating current and preventing new weeds. The same is true in supply chain problems. Eliminating a supplier for issues doesn’t fix the root of the problem. The company with the China-based supplier found this out the hard way.
They replaced that supplier with a new supplier in another country, only to find different food safety issues popping up from subsequent supply shipments. Yet completely separate issues in another country, where delivery issues proved a costly remedy, affected another of their food offerings.
Supply Chain Compliance is the Right Solution
All of these various issues could have been mitigated with a single, bigger-picture solution. Rather than playing whack-a-mole and trying to deal with supply chain issues reactively, they should have addressed things at a more basic level by revamping their compliance system.
Nothing can catch every issue in supply, unless someone figures out a way to solve the problem of human nature, but the most effective and cost-effective solution available is a compliance and auditing system that is mobile, standardised from end to end, and easily learned and implemented.