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Supply chains and trust

10 October 2014

Today, I can order a product online and track its progress: From being boxed at the distribution centre and its delivery all the way to my front door. Why is it still so difficult to track which farm my steak, cheese or vegetables come from, or evaluate how fresh these are by seeing when they were delivered to the store?

Recent food scares such as the horse meat scandal in Europe and the contamination of Fonterra milk from New Zealand means consumer trust in supply chains is evaporating. Scandals have highlighted gaps in manufacturers’ tracking of ingredients and the inability of regulators to prevent food fraud or rapidly identify the source of contamination. Instead of trusting in brands and regulators, consumers want to evaluate the integrity of supply chains themselves.

The need for greater supply chain transparency is most acute in high risk categories such as meat and dairy, or products built on ethical production claims. Eventually, providing 100% product traceability will become the norm for many products: Consumers will be able to find out what farm the product came from; how it was transported and for how long; where it was processed; what other ingredients it has been mixed with; and when the product arrived in store. Few consumers will actually look to fully track all products, but the availability of this data will be necessary to regain trust.

The emergence of mobile and cloud computing allows for both more advanced product safety tracking systems and improved granularity of data. Mobile and cloud technology allows data to be uploaded and accessed from anywhere, be it the farm, the factory, the shop floor, or the consumer’s front room. While this may increase production costs initially, the introduction of greater supply chain transparency will ultimately pay for itself, by minimising product recalls and increasing sales from more trusting consumers.

Ultimately, greater public-facing transparency means products will be judged by public perceptions of processes, not just minimum regulatory standards. For example, recent lawsuits in the US regarding the use of the word “natural” on product labels show how some product claims can be confusing for consumers. Fully transparent traceability of ingredients means products wishing to make “natural” claims will need to convince consumers of the wholesomeness of every ingredient in a product; there will be no hiding room.

Consumers often blame retailers as much as brands for food safety issues, so it is incumbent on retailers and manufacturers to work effectively on this issue. In particular, retailers need to work with key categories such as meat, dairy, and ready meals that need to regain consumers’ trust. It is manufacturers of ethical or high quality products that stand to gain the most from highlighting ingredient sourcing and production methods.

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Ronan Stafford By Ronan Stafford

Ronan, senior analyst at Canadean, loves to find out what the big trends today actually mean for consumers' day to day habits - from aging populations to health consciousness to the online world.  Ronan has a background in UK local politics where he did, as he says "the same job I do now: finding the right message, with the biggest impact, and knowing how to communicate it to the intended audience."