Horsemeat Contamination in the Supply Chain

Things must be serious for the UK government to call an emergency meeting with food retailers, suppliers and the Food Standards Agency to discuss the contamination of horsemeat in beef product supply chain. Initial indications are that supply chains could be contaminated more widely than previously thought with the underlying cause being attempts to reduce costs.  Retailers and product manufacturers are now trying to trace the horsemeat to the source, i.e. lower tier suppliers such as abattoirs. Food retailers are already reporting a fall in revenues as a result of panic amongst the consumer which, in turn, will lead to an almost immediate loss of market share.  The additional cost of working is showing itself through additional testing such as DNA testing and traceability audits.

Finger pointing has already started, with accusations made against food inspection agencies for the reduction in the number of meat inspectors as well as a recent reduction in pay and pensions.  I think it is fair to say that reputations have already been damaged, but it will be some time before we can truly understand the size of the damage and assess whether it is long-term or not.

The insurance industry needs to take note of this type of event.  Whilst I welcome the innovation being shown by underwriters on new supply chain interruption insurance products, a number of these products exclude quality issues.  Insurers need to understand the various underlying causes that make up these scenarios as well as the resulting overall impact; they must therefore ensure that their supply chain product addresses the real needs of the client which can vary across a number of different sectors.  The ability to identify products that would add real protection for such an event, will help increase awareness and ultimately help to raise standards across the supply chain as well as provide adequate protection for quality issues.

About Tom Teixeira

Tom is the London-based Practice Leader, Integrated Risk Management, where he focuses on aerospace, oil and gas, mi…
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One Response to Horsemeat Contamination in the Supply Chain

  1. It will be interesting to see if they ever decide where the one problem point was this whole debacle. Did one person or one process screw up or was it a few mistakes across the board that culminated in one really big disaster?

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