Supplier risk management

The rising cost of food production, coupled with fierce competition in the retail sector, has driven food companies to aggressively seek cost savings and increase the complexity of their food supply chains.

This is the backstory to the 2015 scandal in China where decades-old frozen poultry and meat were smuggled and sold to restaurants, retailers and supermarkets in Chinese provinces and major cities [1]. Scandals like this are not uncommon as extended supply chains bring about new and expanded risks, such as reduced traceability and fraud.

Companies who have complete oversight over all stages of the supply chain, as well as risk management procedures tailored for multiple geographies, can build compelling competitive advantages.

In an industry where customer trust and confidence is paramount, a food safety scare can escalate into a high profile scandal threatening a food company’s reputation and viability. Successful food companies must demonstrate transparency and reliability by understanding their customers’ and regulators requirements as well as effectively manage their supply chain risks.

As supply chains in the food industry become more complex and international, can you, as a consumer, trust the labels on food products beyond a doubt? As a food business, is your supplier risk framework robust enough to avoid pitfalls and surprises?

[1] CNN, China's latest stomach-churning food scandal: Frozen meat from the 1970s, June 2015.

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Julia Leong

Partner, Southeast Asia Food Trust Leader, PwC Singapore

Tel: +65 9756 2123

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