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ABSTRACT
In early 2015, SGS invited food industry experts to take part in a
survey Current Industry Practices in Supply Chain Management: How
Vulnerable is Your Supply Chain? This document looks at the subject,
its definition, practices and risk management. We also review the
SGS surveys key findings and aim to provide insight to the risks and
challenges facing the industrys supply chains, as well as examining
their causes and potential impacts.
CONTENTS
I. EXECUTIVE SUMMARY ...................................................................................................................3
II. SUPPLY CHAIN MANAGEMENT: KEY DEFINITIONS & COMPONENTS..............................3
III. SUPPLY CHAIN MANAGEMENT PRACTICES ..........................................................................4
IV. SGS SURVEY ....................................................................................................................................4
V. SUPPLY CHAIN RESILIENCE ..........................................................................................................5
VI. SUPPLY CHAIN RISK MANAGEMENT........................................................................................6
VII. SUPPLY CHAIN TRANSPARENCY..............................................................................................7
VIII. SUPPLY CHAIN COMMUNICATION & COLLABORATION...................................................8
IX. SUPPLIER SELECTION AND APPROVAL PROCESS................................................................9
X. CONCLUSIONS..................................................................................................................................9
XI. REFERENCES....................................................................................................................................10
I. EXECUTIVE SUMMARY
An industry-wide survey on current
supply chain management (SCM)
practices, conducted by SGS, confirms
that although organisations do have
systems and processes in place to
manage their supply chain network,
they are not always perceived to be very
effective.
Participants feel that those systems and
processes in place fail to address supply
chain risks or to ensure transparency
and visibility across the supply chain.
The latter were placed amongst the
top challenges to effective supply
chain management. Overcoming those
challenges requires the ability to:
COMPANIES CAN
NOT BE EXPECTED
TO PREDICT AND BE
READY TO DEAL WITH
EVERY POSSIBLE
RISK, HOWEVER THEY
ARE EXPECTED TO
BUILD SUPPLY CHAIN
RESILIENCE
1.
2.
ENSURING REGULATORY
COMPLIANCE IS
INDUSTRYS TOP
PRIORITY. REGULATORY
NON-COMPLIANCE IS
INDUSTRYS NUMBER
ONE SUPPLY CHAIN RISK
estimates that just 25% of their
companys end-to-end supply chain is
being assessed in any way for risk. In
93% of cases, risks assessments are
performed using in-house expertise
only, while in the remaining 7% of cases
risks are not considered at all (Dittmann,
2014).
Asked to define the main risks to their
54.20%
52%
49.30%
41.30%
Regulatory noncompliance
Supply interruption
Supplier quality
performance
Fraud
THE ABILITY
TO IMPLEMENT
TRANSPARENT
AND INTEGRATED
INFORMATION
TECHNOLOGY
SYSTEMS CAN AFFORD
ORGANISATIONS
A SIGNIFICANT
COMPETITIVE
ADVANTAGE.
The benefit of using sophisticated
IT systems to support SCM was
appreciated by 64.9% of participants
to the SGS survey, who indicated
their organisations see a benefit
to implementing a supply chain
management tool.
76.40%
74.70%
64%
58.20%
Analytical testing
results
Country of Origin
Packaging
specifications
Site certifications
Allergenic / freefrom-status
56.00%
Transportation
details
50.20%
48.90%
Recipe
specifications
Supplier selfassessment Qs
POOR COMMUNICATION
& COLLABORATION IS
THE TOP CHALLENGE
TO EFFECTIVE SUPPLY
CHAIN MANAGEMENT
Even though information sharing is
important, it is the quality of such
information that is critical in effective
SCM. Quality of information refers to
the accuracy, credibility, adequacy and
KEY OBSTACLES
79.40%
62.80%
62.30%
Poor
No knowledge of
No visibility,
communication &
current &
traceability and
collaboration
emerging risks
transparency
59.20%
56.50%
Underestimation
Poor risk
of risk impacts assessment skills
management practices.
Participants were asked to identify the
top five factors that affect their selection
of suppliers. Supplier commitment
to quality and safety was top in the
agenda (74.1%) when selecting and
approving suppliers followed by the sites
certification status (64.3%) and suppliers
own technical expertise (62.9%). Supplier
communication and response times
(54%) and suppliers own internal quality
systems (52.7%) were amongst the top
five factors affecting their selection and
approval process.
When asked to identify the top five
supplier conformance issues, participants
rated suppliers inadequate investigation
into the causes of non-conformances
X. CONCLUSIONS
Supply chain resilience is defined as
the ability of a global supply chain to
reorganise and achieve continuous
delivery of its core functions, despite
the impact of external and/or internal
pressures. Key to building resilient
supply chains is investment (effort and
financial based) as well as cooperation
across the supply chain network. A
number of factors can affect supply
chain resilience, though the results
of our survey indicated that product
tampering and fraud were the number
one threat to supply chain resilience.
Identifying risks and prioritising those
according to potential impact, is a key
approach towards improving supply chain
resilience. Our survey results indicated
that conducting risk audits of key
suppliers, as well as creating a supplier
risk register, are industrys top resilience
improvement practices. However,
participants low levels of confidence in
their organisations current supply chain
risk management practices were quite
alarming.
To achieve effective supply chain
management, organisations need to
take a holistic integrated approach to
managing their supply network. Such
Deloitte (2013)
Dittmann, J. P. (2014)
Dr Evangelia Komitopoulou
Global Technical Manager - Food, SGS
Dr Evangelia Komitopoulou is responsible
for providing technical support to the SGS
global network including the certification
and auditor teams. Evangelia is an expert
food microbiologist with specific areas
of experience in microbiological risk
assessment and specifications, food
processing and preservation. With a
career which includes over 14 years
spent in food technical consultancy,
trouble-shooting and contract applied
research and development, Evangelia
is also the author and editor of many
technical reports and articles.
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ABOUT SGS
SGS is the worlds leading inspection, verification, testing and certification company.
SGS is recognised as the global benchmark for quality and integrity. With more than
80,000 employees, SGS operates a network of over 1,650 offices and laboratories
around the world.
Enhancing processes, systems and skills is fundamental to your ongoing success
and sustained growth. We enable you to continuously improve, transforming your
services and value chain by increasing performance, managing risks, better meeting
stakeholder requirements, and managing sustainability.
With a global presence, we have a history of successfully executing large-scale,
complex international projects. Our people speak the language, understand the culture
of the local market and operate globally in a consistent, reliable and effective manner.
TO LEARN MORE ABOUT SGS SOLUTIONS FOR MANAGING SUPPLY CHAIN RESILIENCE
VISIT WWW.SGS.COM OR CONTACT SSC.MARKETING@SGS.COM
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RESILIENCE TOPICS, INCLUDING SECURITY AND BUSINESS CONTINUITY
MANAGEMENT, VISIT WWW.SGS.COM/WHITEPAPERS
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