Driving transparency throughout your food business

Food Dive identified ‘transparency’ as a major food trend to watch in 2018. In the age we live in where information is so easily accessed, and cynicism is rife, it is vital customers feel they can trust the quality and integrity of the food they are buying.

Food scandals and scares

Some of this desire for greater transparency has been fuelled by various well-documented food scandals. In January 2013, Europe was rocked by the horsemeat scandal in which food advertised as containing beef was found to contain horse meat – sometimes as much as 100 per cent was rogue meat. The furore revealed a major breakdown in the traceability of the food supply chain and the fact that it wasn’t clear exactly which authorities were responsible for monitoring food crime.

Only last month in Australia, sewing needles were found embedded in a number of punnets of strawberries and this triggered a country-wide investigation. Strawberry growers responded by saying they did not believe the problems were occurring at the grower end of the production chain as so many different labels and packing houses had been affected. The authorities and supermarkets were clearly keen to find the culprit and reassure consumers.

As a result of headline-grabbing incidents such as these, major supermarkets and food companies are now much more conscious of the need to map out and understand their supply chains, but it is a challenging area to stay on top of. Many supermarkets stock around 35,000 – 40,000 different food product lines and supply chains are complex, crossing the globe and involving dozens of different suppliers. While big supermarket chains may have the resources to prioritise food integrity, smaller food and retail businesses may not.

Mitigating risk

Good supply chain management can help manufacturers identify problems in the supply chain that they can then address before they get worse. For example, when Nestlé looked into some of its seafood suppliers in Thailand, it uncovered brutal and largely unregulated working conditions. The investigation also found that many other international food companies buying seafood from Thailand were exposed to the same risks of abuse in their supply chains, whether they knew it or not. While the revelations were shocking, Nestlé was then able to act and impose new requirements on all potential suppliers in the region. This was a good outcome for the supply chain even if it initially involved unsavoury discoveries.

Exposing payment practices

Transparency should also be applied to all financial dealings of a company and this will mean a willingness for payment practices to be scrutinised. This may be a painful process for big businesses but it is crucial if a culture of transparency is to be established. Consumers will react angrily if they discover claims of transparency only go skin-deep.

Going digital can really boost transparency. It completely eliminates paper from the process of paying suppliers and increases the efficiency and accuracy of accounts payable teams. Suppliers can check invoice status online through a portal and see in real-time what stage their invoice is at and whether there have been any problems. It gives them immediate visibility of when they are going to get paid, enabling them to monitor cash flow and manage their working capital requirements, minimising the need for chasing phone calls.

Digitisation can improve the entire dynamic between businesses and their suppliers as everything is shared and suppliers become more like partners. It is an easy way in which businesses can promote transparency and responsible payment practices towards their suppliers, who will often be smaller businesses, more prone to cash flow problems.  It strengthens supply chain relationships and supplier confidence in terms of payment timelines. The end goal is an efficient supply chain that is mutually beneficial to all and where businesses and suppliers are able to work together closely.

There is no point in businesses being transparent towards consumers but continuing to have an outdated payment culture that keeps suppliers in the dark. This contradiction will, in time, be exposed and businesses will be embarrassed if they are not treating suppliers in a fair and responsible way. Instead, now is the time to bring back office operations into the light and adopt digitisation and transparency from first to last. It will bring untold benefits to your supply chain and immediate efficiency savings.