Given the impact of artificial intelligence on every industry, ongoing geopolitical turmoil and the worsening climate crisis, supply chains are entering a new era of risk management, writes Kimberly Coffin, global technical director at LRQA.
By now, we are used to checking the news and seeing stories that greatly impact the food supply chain. Since 2020, our industry has faced many new challenges that required sacrifice, strategy, and skill to overcome.
American author Kurt Vonnegut once wrote: “History is merely a list of surprises. It can only prepare us to be surprised yet again.”
While we may not be able to predict the details of what upheavals lie ahead of us, we can learn from the past and put plans in place for when the next surprise makes itself known.
The Next Steps Of Supply Chain Assurance
To better identify, manage and mitigate risk across supermarkets, food manufacturing and logistics companies, risk management factors can be placed into one of six pillars: climate, technology, responsible sourcing, supply chain, cyber threat, and brand reputation.
With the world changing and becoming more complex, assurance must also change with the times. As we enter the era of Assurance 4.0, it is vital we recognise a new development in supply chain assurance: interconnected risk.
In short, interconnected risk means that major changes in one area are likely to affect others. For example, unpredictable weather patterns impact availability leading to a rapid change in supply source and, with that, a need for extra or different controls, such as microbiological and/or chemical testing.
Similarly, the selection and implementation of new technologies such as automation, artificial intelligence (AI) and Internet of Things (IoT) devices presents an increased risk of a cyber-attack. Prioritising that interconnected risk is considered will help keep supply safe now and into the future.
What Can European Supermarkets Do Now?
Those involved in bringing food products to the consumer – from manufacture to retail – must ensure the product safety and integrity while upholding supply chain transparency. Analysing their own data more effectively can help achieve this.
In the era of Assurance 4.0, product safety stakeholders should also consider various risk factors affecting products made and transported by others as well as their own operations.
Using a wide range of data to understand risk impact, both from within and outside the company, is necessary for keeping up with rapid changes. Knowing where the most valuable data is and how to collect and analyse it is crucial for building a holistic risk profile.
So how can this understanding be achieved? By collecting meaningful data, companies can identify vulnerabilities and focus resources on areas of highest risk. Businesses can use data to transform risk management systems and gain greater confidence in their entire supply chain.
Prepare To Be Surprised
There has been much to learn since 2020. More recent events show that our industry cannot become complacent or rely on things returning to 'normal’.
Due to the ongoing conflict in the Red Sea, supply ships are avoiding the Suez Canal and sailing around the southern tip of South Africa instead. This necessary change adds at least a week to the time goods spend in transit, which can shorten their shelf life, while the added miles increase the carbon emissions associated with the final product.
Due to unpredictable changes becoming so commonplace and having such far-reaching impact on food supply chains, annual risk assessments are no longer enough.
With heightened Environmental, Social and Governance (ESG) expectations, fragmented global supply chains and cyber-attacks, a new, digitally enabled approach is needed to navigate global trends. The entire food industry should use Assurance 4.0 principles to make data-driven decisions and continuously monitor threats to protect their brands and consumers.
Working with a global assurance partner such as LRQA means that food manufacturers and retailers, along with their suppliers, will get expert advice on issues like responsible sourcing, product integrity, assets and management systems, cybersecurity, and managing the energy transition.
