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Management of the Food & Beverage Supply Chain: Cost or Opportunity?

​Food safety, quality and financial risks are the most vulnerable areas according to the world’s companies. Environmental impact awareness remains low.

​When it comes to the food & beverage supply chain, the benefits obtained from risk mitigation actions outweigh the costs. This is true for 1 in 2 respondents participating in a survey carried out by certification leader DNV Business Assurance and GFK Eurisko.The survey involved some 500 food & beverage professionals from companies in Europe, North America, South America and Asia.

Food safety (63%) and quality (54%) are the areas of supply chain management that companies consider particularly vulnerable.

Financial risks (38%) are deemed less threatening (at least, they have been so far), together with legal and regulatory compliance (35%), and environmental challenges (29%). Last on the list are community relations (10%) and ethics (8%).

The food & beverage supply chain is such a complex and diverse world that there is no such thing as a single solution to reduce risk – you have to undertake a range of actions. No single action is more often resorted to than the others. Companies will implement them all to a proportion of over 80%: from the exclusion of suppliers based in sensitive areas, to supplier diversification and development, as well as assessment (audits and evaluations), certification according to regulatory standards, crisis management plans and risk transfer.

Small companies are keener on supplier diversification and avoiding sourcing from risky areas. Large companies, on the other hand, are opting for supplier and risk assesment activities, comakership, certification and emergency preparedness.

Which actions are most effective according to companies?
Assessment activities are thought to be the most effective, in particular for managing issues associated with quality and food safety, as well as certifications and emergency preparedness. Last two are the preferred actions for mitigating potential environmental risks, as well.

There is no doubt as to the reasons that lead companies to adopt chain-wide risk prevention and management measures. It’s neither the legislation (36%), nor the influence of public opinion (39%), that exert the highest pressure. Over 50% of respondents declared that they were pushed to take action by the needs and demands of their customers. This proves particularly true of small enterprises, while approximately 60% of large companies feel that chain-wide risk management is an integral part of their corporate strategy, and a strong differentiating factor.

Companies that have adopted chain-wide risk mitigation actions state that they have materially benefited from them, both in terms of product quality enhancement (74%) and competitive advantage (51%) and in terms of brand reputation (42%), an aspect that is particularly relevant to final product owners.

Are there more benefits or disadvantages?
Apparently, costs (62%) seem to be a hurdle. The burden seems to be heavier in Asia and North America (71% in both cases). The financial burden is viewed as fairly equal when it comes to investing in food safety, quality, or the environment. Ethical costs are believed to be particularly high, say 84% of respondents.

In fact, the overall benefits are undoubtedly higher than the investments required. Only 9% of the respondents think that the costs borne outweigh the benefits.

What to expect in the future?
Priorities will not change (food safety, financial risks - up 12% - and quality); however, a deeper awareness of the need for a more sustainable approach in the future is hinted at by the growing perception of the risks associated with the possible impacts from community relations (+9%), the environment (+8%) and ethical aspects (11% vs. 8%). A growing role for laws and regulations is also expected, mostly in Asia and the American continent.

Luca Crisciotti, CEO of DNV Business Assurance, commented: “Mitigating risks is about being pro-active. Managing each step in the supply chain must be part of a long-term strategy that aims at creating value in every aspect and for all stakeholders: from the grower to the processing plant, all the way to the consumer. Customers will reinforce their pivotal role, because the product will increase its added value from the perspective of quality, safety and environmental, social and ethical requirements. The surging attention for these areas shows how companies are increasingly shifting towards an approach that integrates sustainability into corporate strategies.”

- The survey was conducted from January 29th to February 15th 2013, on a sample of about 500 professionals who work at prominent companies in the food & beverage business in Europe, the Americas and Asia
- The sample is qualitative and not statistically representative
- 75% of respondents come from manufacturing companies in the food & beverage business, 60% of which are directly involved in the processing of the final product
- For approx. 70% of survey respondents, their position is directly involved in quality and safety management, while approx. 10% are senior decision makers (CEO, COO, managing director, etc.)
- Most of the companies involved employ over 250 people and have an international scope of action
- The questionnaire was administered using the CAWI methodology

About DNV Business Assurance:
DNV Business Assurance is a world-leading certification body. We work with companies to assure the performance of their organisations, products, people and facilities through certification, verification, assessment and training. Our 1,800 employees worldwide help our customers build sustainable business performance and create stakeholder trust. As part of the DNV Group, an independent foundation established in 1864, we belong to a global network of more than 10,500 employees working from 300 offices in 100 countries. www.dnvba.com

Mercredi 17 Avril 2013

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