5 Steps to protect your food supply chain from fraud

The RASFF (Rapid Alert System for Food and Feed) seized two illegal shipments of horsemeat in Europe in the last week.  This comes as a stark warning to food producers and retailers that food fraud may well seek to target over-stretched and inadequate supply chains.  With food supply chains under incredible stress, there is enormous consumer demand on the one hand and key routes to market halted or severely disrupted on the other, the risk of food fraud food is more prevalent than ever.

This potential increase in food fraud could mean unsafe food, unfit for human consumption and/or food without proper traceability and safety checks, not of the nature, substance or quality demanded, either by the consumer or your contractual terms, entering into our food products with potentially criminal liability for directors who are unable to establish they took all due diligence and reasonable precautions to avoid committing offences under food legislation.

What can food businesses do to protect their food supply, consumers and brand reputation from fraud?

There are ongoing checks, audits and risk assessments that should be being undertaken generally in relation to food products, suppliers, supply chains and contractual obligations.

In addition to these, food producers should assess the risk to their supply chains specifically in light of pressures from coronavirus outbreak and associated restrictions.

  1. Follow the money

Identify where in the value chain of supply there is a temptation for fraudulent activity:

  • Where most value can be added?
  • Where is there most demand and/or scarcest supply?
  • Where is a cost that can be avoided?
  • What the benefits are?
  • The potential for detection?
  1. Where are you weakest?
  • Whereabouts along the supply chain is your product most vulnerable?
  • What does your company buy a lot of that could be subject to bulking or diluting to a degree that could not be immediately apparent?
  • What do you source that is particularly expensive , scarce or in high demand?
  • What do you source that is untested or via middle-men or outside UK/EU?
  1. What’s your risk profile?
  • Raw material quality, cost and availability
  • Adulterant material cost and availability
  • Profit associated with delivery of goods
  • Loss and consequence associated with a failure to deliver goods
  • Economic circumstance (market, corporate and individual)
  • Perception of associated risk and consequences
  • Likelihood of being caught
  • Consequences of being caught
  1. Reduction of that risk

Testing and auditing are the usual routes, where there needs to be a balance on the costs, reliability and standards. Whilst this remains the gold standard for intelligent targeted policing within the supply chain, in the current environment the additional facilities and logistics for this may be much more onerous. If there can be consideration given to a much more focussed approach to this in the main areas of vulnerability this is likely to provide both good protection and a deterrent to both criminals with fraudulent intent as well as more ‘accidental’ approach to delivering appropriate quality of goods.

The second tier of approach would be to ensure an ongoing collaboration and communication throughout the supply chain, the personal touch of ensuring suppliers are aware of the demands on your product and so are prepared for corresponding supply chain peaks and troughs. Sometimes, the stability of an order over a longer duration can help both parties.  Would a reduction in payment time assist the supplier in the short term to ensure maximum quality of supply? These are all considerations that could be discussed.

Also, although virtual audits can be open to the argument they are nothing more than a tick box exercise, they will still provide evidence of you/your company asking specific questions of your supplier and putting them on notice of points of quality and legality that are critical to your product. Whether or not you are then reasonable to rely on these statements will depend in part due to corresponding resources and expertise; however in the current environment they will provide a good support that your food business has sought to maintain all standards and quality.

  1. No such thing as a free lunch

The old adage that if something seems too good to be true, it usually is, will always apply in a time of crisis.  As an established food business, if a supply is provided below market value or if a product that was simply not able to be sourced and is somehow now in immediate supply, the onus will be on you to carry out additional checks to ensure it is legally compliant.

Other options would be to alter what is said about your own product – in the time of avian flu in February 2017 to avoid confusion, the industry decided to label free-range egg cartons with stickers stating the contents were ‘laid by hens temporarily housed in barns for their welfare’, although shoppers still paid a premium price on certain products.

Finally, the ethics of supply should not be forgotten in this time of pandemic. The Modern Slavery Act 2015 was put in place to ensure that companys who are sourcing supplies have their own responsibility to risk assess their supply chain for breaches of modern slavery. Working practices need to be fair, safe and responsible.

If there are any queries on supply chain and food fraud risks and steps that can be taken to mitigate the risk of this please contact Jessica Burt on jessica.burt@mills-reeve.com 

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