The UK Horse Meat Scandal of 2012 - Assignment Example

The UK horse meat scandal at 2012 (supply chain risk/CSR) Name Course code Instructor Date Table of Contents Table of Contents 2 1.0 Introduction 3 2.0 Problem background: Case of the horsemeat scandal in UK 3 3.0 Theoretical background on possible causes 4 4.0 Causes of the horsemeat scandal 5 4.1 Sudden change in supply regulations 6 4.2 Complexity of supply chain 7 5.0 Recommendations 9 6.0 Conclusion 10 7.0 References 11 1.0 Introduction Current supply chain management (SCM) literature provides a range of definition of supply chain. A prevailing definition, according to Cutting-Decelle et al. (2007, p73), is that supply chain is a system that consists of several stakeholders, such as “suppliers, manufacturers, retailers, and customers,” who facilitate the flow of materials and information of interest downstream from the suppliers and ultimately to the customers. In supply chain, information flows in both directions. The rationale for supply chain management is to distribute the right products in their right quality and quantity at the right time and at a favourable cost (Storey et al. 2006). However, a failure to manage the relationship between the stakeholders may lead to a failure to distribute the right products in their right quality and quantity at the right time and at a favourable cost, as evident in the case of the horsemeat scandal. This report provides an analysis of the 2012-2013 horsemeat scandal in UK to determine the causes of the supply chain problems that occurred and suggestions on how the problems may be resolved. 2.0 Problem background: Case of the horsemeat scandal in UK The interest in food safety picked after food supply chains from across the globe reportedly experienced different forms of food scare (Yamoah & Yawson 2014). In the UK, for instance, when a report by the Food Standard Agency (FSA) showed some 19.2 percent decline in food borne illnesses in the period 2000-2006, close to 53,000 laboratory-declared cases of food borne pathogens were reported in 2005 alone (Yamoah & Yawson 2014). The meat scandal of 2013, for instance, started immediately after the Food Safety Authority of Ireland stated publicly that the foods, advertised as containing beef, had undeclared horsemeat. A report developed by the Food Safety Authority indicated that the horse DNA was traceable in the frozen beef burgers sold in some UK supermarkets, such as Tesco, Lidl, and Iceland (Yamoah & Yawson 2014). Although this was treated as an indirect issue of food safety, the scandal brought to light the significant extent of breakdown regarding the quality of the food supply chain, in addition to certain risks of inclusion of harmful ingredients. It is argued that a weak relationship between the suppliers may have caused the supply chain failures. 3.0 Theoretical background on possible causes According to Gopalakrishnan (2014), supply chains are categorised into two types of operations: upstream and downstream operations. Otchere et al. (2013) also mentions that in upstream supply chain, materials flow into the organisation. In such a situation, tracking the meat packages from point of origin in Romania to the UK manufacturers was a problem. Indeed, investigations into the UK horsemeat scandal uncovered traces of horsemeat supplied upstream from Romania. Otchere et al. (2013) further define the upstream stage of the supply chain process as involving extracting raw materials. In the case of the horsemeat scandal, the horsemeat was raw material for making burgers. The Romanian suppliers provided raw materials to UK manufacturers and restaurants that in turn processed the materials. Supply chains entail establishing relationships among several businesses (Cutting-Decelle et al. 2007). The relationships, which are strong, allow businesses to react effectively to shifts in the market, including changes concerning what is valued by the customers. Weak relationships may be disastrous to the upstream businesses because of concerns of quality or possibilities of a failure to trace the products to their original suppliers (Storey et al. 2006). Pohja (2004) also contends that supply chains may be viewed as consisting interdependent system of businesses that contribute to the development of highly collaborative relationships. According to the interdependency theory, such relationships lead to satisfaction, investments in addition to quality of relational options. On the other hand, the dialectical theory views interpersonal relationships that demand constant adjustments in the supply chain, as network forces that may conflict or interconnect. The case of the horsemeat scandal shows a need to address the conflicts that businesses may face in their partnership frameworks. Indeed, within the context of supply chain management, the social network theory seeks to explain that businesses that engage in business-to-business markets are entrenched in complex network of relationships with other businesses, who are the suppliers (Pohja 2004). They are also engaged in a network of relationship with customers, as well as other stakeholders like the government and local authorities. Pohja (2004) argues that these networks are based on information sharing, trust and arrangements to solve problems jointly. Weak relationships, therefore, may lead to problems in information sharing, trust and arrangements to solve problems jointly. This may explain the underlying causes of the horsemeat scandal. As will be discussed later, the UK firms, like Tesco had weak ties with their network of suppliers in Netherlands and Romania, leading to poor information sharing, trust and ability for joint problem-solving. Put differently, strong relationships reduce transaction uncertainty. 4.0 Causes of the horsemeat scandal A range of possible causes of the horsemeat scandal has been identified surrounding the supply chain and the desire to obtain cheap meat ingredient. 4.1 Sudden change in supply regulations Sudden change in supply regulations weakened the relationship among suppliers, reduced the profit potential for suppliers, and in turn prompted some scandalous suppliers to substitute beef with horsemeat. According to Yamoah and Yawson (2014), the horsemeat scandal was largely caused by change from the foreign meat suppliers in UK, particularly because of the sudden shift in European regulations in 2012 on food exportation. The changes had several implications, including the idea that "desinewed meat" (DSM), which refers to a fine mince made from carcasses, would not be classified as meat after packaging. During the time, DSM generated in the United Kingdom served as the core ingredient in sausages, kebabs, burgers, and pies. In particular, the change implied that meat had to be supplied from other countries to fill up the demand. At any rate, the food industry was given a few days of notice of the change in regulations. This was, as Carrington (2013) explains, difficult for the suppliers to comply with the changes. In his view, failure to comply with the changes prompted the consequent contamination of meat products in order to fill up for the high demand. The UK problem was also linked to the horsemeat scandal in Romania. In 2011, the European Union had banned exportation of live horses from Romania in a bid to check against the spread of equine infectious anaemia (Vark et al. 2013). The ban, according to Vark et al. (2013), may have prompted the farmers in Romania to initiate the exportation of slaughtered horsemeat to other European countries, including the UK, to maximise their profits. The issue of cost cutting by unscrupulous suppliers, was also highlighted by the National Audit Office (2014), who observed that the increased costs of production methods for beef products prompted the producers to start looking for cheaper alternatives. However, as can be concluded at this stage, this was entirely unethical and showed high disregard for corporate social responsibility (CSR), which stresses the need for businesses to adopt some form of generous activities for the entire stakeholders, such as the customers and the entire community (Sternberg 2000). According to Maimunah (2009), CSR implies voluntarily adopting duties that go beyond just a company’s legal and economic responsibilities Arguments in favour of CSR have generally emphasised idea that a business should have the long-term responsibility of being ethically and socially responsible, other than seeking to achieve profits (Sternberg 2000; Kerns 2003; Ferrell & Ferrell 2012). However, the inclusion of horsemeat in minced meat showed that the suppliers were only interested in making profits, other than the society’s interests. 4.2 Complexity of supply chain Complexity of the UK food supply chain was another significant contributor to the scandal, as it implied a weak relationship among the supply chain stakeholders. According to Hemus (2014), in 2012 when the scandal happened, some 490,308 registered food businesses existed in England alone. Nearly 72% of the food businesses included restaurants while 23% consisted of retailers. The rest of the 5% consisted of exporters and importers, manufacturers, producers, packers, and distributors (National Audit Office 2014). Walker et al. (2013) observes that food supply chains in such a situation may be highly complex, specifically when it concerns products that are highly processed like burgers, and sausages. One reason of this is since meat has to go through a range of stages before it eventually reaches the retailers as a processed product. Such a complexity increases in situations where raw materials are sourced from the overseas markets. During the recent years, meat has continued to be increasingly viewed as commodity that is tradable internationally. In 2010, for instance, the UK emerged as a leading net importer of meat in Europe. Incidentally, the meat imports from the European Union were estimated at £3 billion while from other regions £640 million (National Audit Office 2014). Still, an important point in this regards is that when the food supply chain is complex, it becomes increasingly difficult to protect consumers from the associated risks like food safety. A case in point is the horsemeat scandal. For instance, a supply chain in the UK that supplied retailers and supermarkets in the UK with meat products had engaged a food processor in France, as well as its subsidiaries in Luxembourg, which was a subcontractor in Cyprus, who further contracted a meat trader in the Netherlands that operated a slaughterhouse in Romania (National Audit Office 2014). Figure 1: Complexity of the supply chain illustrated (National Audit Office 2014) 5.0 Recommendations The retailers in UK should strengthen their relationship with their suppliers, as this would strengthen sharing intelligence on the inherent risks to food authenticity and in turn develop a set of standards that can be used to test their activities (Hemus, J 2014). The companies in the UK should engage persistently audit their suppliers to determine their authenticity, and the ethical nature of their methods of production. This would improve their intelligence gathering and insight into the opportunities and incentives for food fraud. They also stand to properly understand the features of supply chains and the factors that may drive risks of food fraud. Deviant suppliers should be eliminated in the supply chain (Vaughn 2014). The suppliers and food retailers in UK should be encouraged to take up CSR, as this would shift their focus from merely making profits to ensuring social good. Alternatively, the food retailers, including Tesco, should make it condition for their suppliers from EU to initiate CSR programmes. This would ensure that even as the suppliers make amendments to cut the cost of production because of the increased production method for meat products, they do not consider compromising the quality of their meat raw materials (Pollitt 2014). There is also a need to use technologies like bar coding and radio frequency identification (RFID) in the food supply chain. Indeed, the complexities and challenges of tracing complex meat and meat products from Romania through the network of suppliers was a major problem. For instance, one package of meat could be linked to numerous suppliers. However, if the suppliers and retailers were provided with the capacity to track the meat products back to their points of origin, it would mitigate the health risk to consumers. 6.0 Conclusion The 2012 incident of horsemeat scandal, where horsemeat was found to have been substituted with beef products showed the extent to which a failure to manage the relationship between the supply chain stakeholders may lead to a failure to distribute the right products in their right quality and quantity at the right time and at a favourable cost. This conclusion is based on the interdependency theory, which stresses the need to improve quality of relationship among supply chain stakeholders to ensure satisfaction to the customers downstream. As found, sudden change in supply regulations weakened the relationship among suppliers, reduced the profit potential for suppliers, and in turn prompted some scandalous suppliers to substitute beef with horsemeat. The complexity of the UK food supply chain was another significant contributor to the scandal, as it implied a weak relationship among the supply chain stakeholders. It is recommended that retailers in UK should strengthen their relationship with their suppliers. Auditing of suppliers should also be encouraged. The suppliers and food retailers in UK should also be encouraged to take up CSR, as this would shift their focus from merely making profits to ensuring social good. There is also a need to use technologies like bar coding and radio frequency identification (RFID) in the food supply chain. 7.0 References Carrington, D 2013, "Horsemeat scandal blamed on European meat regulation changes," The Guardian, viewed 21 April 2016, Cutting-Decelle, A, Young, B, Das, B, Case, K & Shahim, R 2007, "A Review of Approaches to Supply Chain Communications: From Manufacturing To Construction," ITcon, vol. 12, pp.73-102 Ferrell, O & Ferrell, J 2012, Business Ethics: Ethical Decision Making & Cases, Cengage Learning, New York Gopalakrishnan, G 2014, "How to apply academic supply chain management: the case of an international university," Management, vol 20, pp.207-221 Hemus, J 2014, "The European Horsemeat Scandal: Insights and Analysis," Journal of Risk and Crisis Communication, viewed 21 April 2016, Kerns, C 2003, Creating and Sustaining an Ethical Workplace Culture," Graziadio Business Review, vol. 6 iss. 3, viewed 22 April 2016, Maimunah, S, 2009, “Corporate Social Responsibility and Its Role In Community Development: An International Perspective,” The Journal of International Social Research, Vol. 2 pp. 199-209. National Audit Office 2014, Food safety and authenticity in the processed meat supply chain, Reviewed 21 April 2016, Otchere, A, Annan, J & Quansah, E 2013, "Assessing the Challenges and Implementation of Supply Chain Integration in the Cocoa Industry: a factor of Cocoa Farmers in Ashanti Region of Ghana," International Journal of Business and Social Science, vol 4 no 5, pp112-123 Pohja, T 2004, Some theoretical foundations of Supply Chain Management and Supply Networks: the role of social networks in selecting partners, viewed 22 April 2016, Pollitt, M 2014, "UK stalls on supply chain slavery," Ethical Corporation, viewed 22 April 2016, Sternberg, E 2000, Insider Trading, Just Business: Business Ethics in Action, Oxford University Press, Oxford. Storey, J, Emberson, C, Godsell, J & Harrison, A 2006, "Supply chain management: theory, practice and future challenges," International Journal of Operations & Production Management, vol 26 no 7, pp.754-774 Vark, C, Humphrey, J, Sampathkumar, R, Nicolaides, L, Robinson, P, Ducharme, H & Longfield, J 2013,"What do food traceability crises in the North mean for people working in food chains in the global South," Food Chain, vol. 3 no. 1, pp1-16 Vaughn, G 2014, "Complex supply chains put businesses at risk," Global Risk Insights, viewed 21 April 2016, Walker, M, Burns, M & Burns, T 2013, "Horse Meat in Beef Products Species Substitution 2013," Journal of the Association of Public Analysts, vol 41, pp67-106 Read More