By Todd Fitzgibbon
It’s the kind of news that anyone who enjoys a tasty burger or steak dinner dreads to hear: a massive recall of contaminated beef. In December, JBS Tolleson recalled more than 12 million pounds of beef due to a salmonella outbreak that sickened hundreds of people, according to the U.S. Centers for Disease Control and Prevention.
When millions of pounds of meat are recalled, it has a huge impact that reverberates across industries. Suppliers and retailers need to inform and educate consumers. Contaminated supplies need to be collected, pulled from shelves, and properly disposed of. Retailers with customer loyalty programs that track purchases likely have an added duty to inform buyers about the tainted products they may have purchased, which is their ethical duty, an industry best practice, and encouraged by organizations including the Consumer Product Safety Commission. And everyone involved has to do some public relations gymnastics to ensure their brand lives to sell meat another day.
However, it’s not only the meat industry and meat lovers who should be dreading this kind of news; anyone involved in supplier risk management should pay close attention to the painful lessons the meat industry learns each time this happens.
It should prompt you to think about, and answer, three very important questions about your own supply chain risk management practices, regardless of your industry.
1. How well do you understand your vendors’ processes?
We’ve examined why organizations struggle with vendor risk management before, and it’s clear that trying to manage the minutiae of another company’s operations and processes is a losing battle. However, that doesn’t mean you turn a blind eye to them completely. It’s important to understand—and document—their processes so you can gather a complete picture of how their problems could become your problems when they impact your supply chain. For the case in point, did grocers, restaurants and other retailers have a documented understanding of JBS Tolleson’s processes for ensuring the safety of their product, and was it documented?
2. What is your continuity plan if a vendor needs to be replaced?
Even if the third-party vendor has been a stellar performer for years with your business, it’s risky to become complacent. It’s important to have a business continuity plan in place that includes several—three or four—vetted vendors that you can swap in to your supply chain if your “A” vendor has an issue.
3. What are the regulatory implications?
Regulatory requirements touch many industries, and certainly affect the meat industry. You should have yours documented, as well as a plan for complying with them if you experience a disruption to your supply chain. There are also ethical issues above and beyond the strict letter of the compliance law that you’ll need to consider. Is there an extra step you need to take on behalf of your customer to ensure their safety and security? While these may not be legal requirements, they demonstrate your good will toward customers and are likely the right thing to do in order to protect your brand in a crisis.
Supply Chain Risk Management Strategy
Asking these questions seems relatively easy on the surface, but managing your supply chain risk in an ongoing way is particularly tough. The number of moving parts, interdependencies, and lack of transparency can be simply overwhelming. A first step to establishing any effective strategy will be to document those elements and ensure you understand their relationships, requirements, and how they influence your objectives. From there, you can begin to further leverage the benefits of technology to optimize and gain efficiencies with the processes that support your supply chain risk management practices.
At Rsam, we’re advocates for using a platform that supports your ability to centrally manage risk from identification through automated remediation, and all points in between. Learn more about Rsam’s Vendor Risk Management Solution.