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"Retailers must recognise that having clear sight of the currently unknown values and standards of distant suppliers can be more important than auditing the suppliers closer to home."


Steven barr, PA SUPPLY CHAIN expert

 


‘Textbook approach’ leaves many businesses vulnerable

Steven Barr 

Financial Times 

19 January 2013

 

Letter to the editor 


Sir, Lombard’s view that Tesco has responded in “textbook fashion” to the beef burger contamination crisis highlights the problem not the solution (“The wrong time for Tesco to have to manage a crisis”, January 17). The textbook approach – supplier audits and the occasional very public apology when they miss something important – leaves many businesses vulnerable to big losses. Audits, announced or unannounced, will always fail to spot what they do not know they should be looking for – in this case, contaminated meat. As supply chains lengthen to reach cheaper producers of raw materials, there are often many tiers between the retailer and the source of the scare and these tiers hide many “unknowns”.

The solution lies in taking a different approach. Retailers must recognise that having clear sight of the currently unknown values and standards of distant, lower-tier suppliers can be more important than auditing the suppliers closer to home. It took the Japanese tsunami and its effect on the supply of special paint to alert the manufacturing sector to just how vulnerable they can be to events and behaviours that were unthinkable. At least one UK carmaker is strengthening its already impressive approach to focus on unknowns in its global supply chain. Tesco and others should also rewrite their risk management textbook to avoid a bad taste in future.


Steven Barr is a supply chain expert at PA Consulting Group

 


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