A perfect storm of food supply chain risk is brewing, and many businesses could be putting themselves at risk. The tragic events in Ukraine are causing ripples that are travelling further than anyone could have foreseen – impacting supply chains globally.
The legacy effect of the pandemic and Great Resignation continues to create staffing issues and a significant drain of institutional knowledge. Mixed with the challenges of Brexit, unprecedented inflation, and weather shocks and we are entering an era of heightened food risk resonating throughout the supply chain as shortages become commonplace, and ingredient swaps are inevitable.
There are two kinds of ingredient swaps: intentional swaps or reformulation, and food fraud, where a supplier deliberately deceits. If we are to focus on deliberate ingredient swaps, this is a common occurrence in the food industry; as materials change in price or availability, food products are under regular reformulation.
When this happens, new suppliers will need to be vetted and onboarded to maintain quality and safety compliance. Formulation changes may require packaging, product claims and allergen warning adjustments.
Complexity concerns
If a change in ingredient is more complex than a like-for-like swap, then ensuring consistent performance through processing is also critical. Successful reformulation relies on companies maintaining their due diligence of the supply base, particularly when changes occur due to supply issues rather than planned product development projects.
Creating comprehensive raw material specifications assists procurement teams source from alternative suppliers and helps ensure that changes to materials are avoided, or differences are identified and accounted for.
The concern today is the pace of change and the heightened risk profile; suppliers are altering more quickly and with less rigour than before. The possibility of rushed decision-making regarding ingredients and products risks fraudulent, poor quality and even unsafe food making its way into the supply chain.
Businesses need increased supply chain transparency to shop around carefully and be vigilant about all their ingredients. Speeding up the reformulation process does not necessarily lead to issues, but missing steps or making assumptions on how changes can affect products could.
Suppliers
An essential consideration in complex supply chains is that it may not be a direct supplier making a change but one of their suppliers, so securing assurance from all suppliers in the chain about proposed ingredient changes and impacts is just as important if not more so.
We have already seen shortages in wheat, sunflower oil and honey as a direct result of the war in Ukraine. However, long term, we can expect secondary effects to impact the food chain later this year and into 2023.
With the prices of agriculture’s three key components, fertiliser, feed and fuel, currently rising much faster than farmers’ returns, many are reducing their yields affecting domestic meat production and agriculture. The dairy market is beginning to illustrate the effects as the UK teeters on the edge of a milk and cheese shortage.
Climate issues increasingly shock supply chains; the weak harvest in the US is compounding the already diminished global chickpea supply from Ukraine, and poor weather is hampering mustard yields in France and Canada.
Global imports
The UK already imports almost half of its food. As manufacturers and suppliers continue to face shortages of raw ingredients, we can expect businesses to turn more to imported goods to keep food on supermarket shelves. In the UK, we have high food and agriculture standards that must be
maintained; these standards are among the world’s highest and widest reaching. We must be careful to try to uphold these standards on any food imports to protect our great food reputation and our brands and maintain a level playing field for UK farmers and producers.
As businesses look to import crops and meat, these are likely to have provenance in countries that do not have the same standards. While these foods will not be dangerous, they will likely not be subject to the same rigorous checks. Those using imported goods will need to find new ways to help ensure quality and alignment of animal welfare and product claims such as non-GMO and organic. Now, businesses must put more rigour into their supply chains to protect themselves and the British public.
