Credit istock.com Vicky Gosselin
A combination of widespread incidence of food fraud and significant supply chain disruption signals a rising level of brand and product risk for global beverage manufacturers, according to a new report by supply chain assurance specialists, Lloyd’s Register (LR).
In a survey of 100 senior executives across the beverage sector, an astonishing 97% reported that they have been affected by food fraud in the past 12 months, while 80% agree that food fraud is a growing concern for their business. The impact of Covid-19 on supply chain performance has also been felt, with 92% of beverage manufacturers reporting ‘significant’ supplier issues in the last 12 months.
Detailed in the LR report – Confidence and Supply Chain Risk in the Beverage Sector – these factors are undermining confidence in supply chains. Just one in five (22%) of those asked said they were ‘very confident’ that suppliers are meeting food safety standards, while 70% of respondents confirmed that they have been forced to change at least one of their suppliers in the past 12 months.
Despite the risk to brands and potential serious consequences for people’s health, only 37% of those surveyed regard managing fraud as a ‘very high priority’, with a significant minority (one in five) in the alcohol sector rating it as an ‘average priority’ or lower.
Food safety also needs to be given a higher priority when vetting suppliers, according to the findings, with just 32% of respondents confirming that suppliers are checked against a recognised Global Food Safety Initiative (GFSI) benchmark standard. Almost one in five (19%) admitted that either no food safety checks are made as part of sourcing decisions, or that meeting regulatory requirements is considered sufficient.
Kimberly Carey Coffin, global technical director at Lloyd’s Register, said: “The disruption caused by the pandemic has served to highlight deep-rooted issues in beverage supply chains, which this survey now brings to the surface. With food fraud occurring almost universally across the sector and supply chain performance under pressure, it is hard to believe that the two aren’t linked.
“The stakes are high with companies’ brand reputations at risk and while it is recognised that food fraud is not an easy fix due to the nature of where and how fraud risk arises is highly dynamic, doing nothing is not an option.
“A systematic assessment of the vulnerabilities across supply chains is essential to understand where weaknesses lie, but there is clearly a long way to go, given that industry standards are currently being overlooked when vetting suppliers. The simple step of adopting GFSI benchmarking is a solid first step towards much needed peace of mind in times of growing uncertainty and risk.”
The LR survey also revealed that only half of respondents review supplier performance at least annually, with 40% reviewing performance every one to two years. A further 10% confirmed their reviews take place every two years or more. Additionally, when an issue does arise, only circa one third (32%) have ever looked to address the issues through collaboration with suppliers.
Kimberly added: “Our survey uncovers some surprising trends in the frequency of supply chain audits, but the key point to understand is that when it comes to managing risk, not all suppliers are equal and one size does not fit all. Being able to flex how performance is managed across suppliers with different risk profiles can ensure a more appropriate mix of proactive and reactive measures to build confidence levels.”
For more information, and to download the full report, please visit https://www.lr.org/en-gb/resources/food-fraud-beverage-sector/report/.