Setting the Agenda for Research into Food Supply Chains
Dr. Samir S. Dani | September 10,2013 11:08 am IST
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pdfThe recent horsemeat contamination scandal in Europe has sparked off a wide debate with regard to the food we eat. This case brought forth two important challenges of the food industry: the complexity of their supply chain and the issues with labeling.
Our busy lifestyles have created an ever-increasing demand for processed ready-to-eat food products. As global supply chains strive to deliver these products to the supermarket shelves, organizations start losing control over them. This is not the first big case that has occurred within the last few years. The milk contamination scandal in China (2008) and the peanut butter-salmonella cover-up in the USA (2009) depicted not only the speed at which the contamination spread globally, but also the responsibility and accountability for limiting the contamination. Unsafe food can lead to fatality, as seen in both these cases.
As food companies scramble for space and volumes in supermarket chains, availability of raw material for food manufacturing gets even more complex with the world facing increasingly uncertain weather conditions, which have an effect on agriculture production. Ironically, as food companies are increasing the production of processed food, a large part of the world is facing challenges in food security. Increasing population, uncertain weather conditions, food losses (both post-harvest and final consumption) are some of the factors that are challenging the advances in agriculture production and food processing. Availability of sufficient food, water and energy are important issues to consider for the future of mankind.
The School of Business and Economics has on-going research projects in the area of supply chains, with primarily a focus on the food sector. The projects deal with a number of topics that are important for the food industry.
FOOD SECURITY AND FOOD SUSTAINABILITY
There is no doubt that two of the biggest challenges facing the world today are food security and food sustainability. According to the UN Population Division, the world population is estimated to reach 9 billion by 2050, which will require a 70 per cent increase in food production to meet global needs.
According to the United Nations’ Food and Agriculture Organization, the pace of population growth, climate change, income distribution imbalances and change of consumption patterns are moving faster than technological advancements. The FAO states that preserving the inputs in the food supply chain, i.e., raw materials and using them as efficiently as possible, can increase food security for now and for the future. Yet the Government Office for Science (UK) estimates that 25 to 50 per cent of food is wasted along the supply chain and does not reach consumers.
Food losses and waste in developing low-income countries are related to the upstream supply chain – farm to processor – whereas the losses in the affluent world are related to the downstream supply chain – retailer to final consumer (Parfitt, J., Bartherl, M. & Macnaughton, S. (2010). Interventions to reduce post-harvest food losses are seen as essential by organizations such as the World Bank, to minimize food insecurity and for the agriculture sector to meet global food demands.
RISKS IN THE FOOD SUPPLY CHAIN
The food supply chain has been increasingly in the spotlight for safety scares, recalls and disruptions. Food supply chains of today are particularly fragile due to the geographic, economic and regulatory spread of participating entities and the manifestation of risk as it flows very quickly across international boundaries. The impact of risk materialization can be catastrophic both to the customer as well as the organization. Risks in the food supply chain are not only due to food contamination and recall, but also can often involve disruption due to natural hazards, terrorism, protests, political upheavals and labor issues. In recent years, floods, pandemics, extreme weather patterns and recession have all strongly affected food supply chains – perhaps most notably affected have been the world’s wheat supplies.
Risk management takes two forms: proactive and reactive. Proactive risk management needs planning and foresight. Whereas reactive risk management needs speed of response. In cases of food contamination, speed of response is required to work with the chain and the Food Standards Agency to limit the contamination. However, this is not always possible, and only some organizations have processes set up to deal with this rapidly.
In 2005, WalMart reacted to the disruption caused by Hurricane Katrina effectively and rapidly in comparison to any other organization – even to the US Government. Tesco and other major food retailers in the UK immediately recalled the contaminated food items in the wake of the recent horsemeat scandal, rapidly implemented DNA testing of their meat products and, more interestingly, pledged to source locally for their meat products.
The UK imports a large percentage of its food requirement from global sources, and hence, the UK food supply chain is exposed to natural hazards around the globe. It is therefore very important for food companies to be able to source their produce from suppliers that are resilient to these catastrophes.
SUSTAINABLE SUPPLY CHAINS
Sustainability challenges within the food supply chain are governed by the ‘triple bottom line effect’ as coined by John Elkington, which considers not just a financial profit-and-loss account of the company, but also the ‘people’ account (socially responsible) and the ‘planet’ account (environmentally responsible).
The pursuit of sustainable goals is largely governed through the fulfillment of legislative requirements. Some of the benefits of being sustainable are now being recognized by companies, and the motivation to follow sustainable policies is now based on clear economic and social benefits that are accrued by companies. Hence, the steps taken by Tesco, for example, to have energy-efficient buildings, reduce energy in its operations and support sustainable fishing; by WalMart to reduce packaging; or by Coca Cola to conserve water – all have clear economic and social benefits with wide-ranging environmental benefits.
As environmental, ethical and safety legislations get tougher across international boundaries, configuring supply chains in compliance with these standards will be essential. Most standards follow a compliance route to look after the interests of living beings (consumers, workers and the community) and the environment (waste minimization, pollution, effluent treatment, etc.).
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