Sir: It is well documented that supply chains can be incredibly complex, resulting in an increased level of risk for organisations that don’t know or understand where their products come from (‘Horsemeat: Tesco pulls meatloaf after it tests positive for horse’, thegrocer.co.uk, 13 March).
Many chains now stretch to five tiers and by the time a product reaches its customer, it could have passed through multiple countries, been handled by a variety of subcontractors and exposed to numerous known and unknown risks.
The key point that many organisations fail to appreciate is that, as with any chain, supply chain disruption follows the principles of the bullwhip effect. A small ripple introduced at tier four or five can be magnified out of recognition by the time it reaches the end-customer.
Addressing these risks at source would have a cost both in time and money. However, the cost of identification and mitigation would easily be dwarfed by the direct and indirect cost of a major scandal.
Unless organisations start using a methodical, rigorous approach to detecting these ripples, there will be more incidents like this and the ‘we didn’t know’ defence will start to sound very thin.
Justin Hughes, supply chain expert at PA Consulting Group