1 March 2019
Ask a member of the public what the UK’s national dish is and expect there to be a pause for thought. Whilst fish and chips, shepherd’s pie and the classic Sunday roast are all valid answers, the effects of globalisation mean our menu (like that of most developed countries) is almost boundless. For centuries we’ve been able to source food products from around the globe. In fact, the humble potato, a key ingredient to each of these dishes, originally came from South America!
If you ask a restaurant manager where all his ingredients originate from, you may receive a much longer pause. As food supply lines have built up iteratively, with many stages, it is hard to trace, but there are several reasons why discovering more about the supply chain is worth the effort.
Reducing the impact of Brexit
It is not yet clear what will happen come 29 March, but should there be a no deal Brexit, UK farmers are warning of food shortages. I suspect we should instead use the phrase ‘ingredient shortages’ as, in my opinion, we won’t be short of food, but there may be temporary supply issues for certain ingredients. Understanding where your ingredients originate may enable you to either stockpile key items or alter your menu. In fact, the ICAEW has a five step guide on ‘supply chain mapping’ which is a useful point of reference.
Modern Slavery
In March 2015, the Modern Slavery Act became law. This was partly introducing new powers to prevent existing slavery and trafficking and partly consolidation of existing law. One feature, the Transparency in Supply Chain Provisions, requires that businesses with annual turnover in excess of £36m annually publish details about the steps they’ve taken to ensure slavery is not taking place in their supply chain, or state that they have not taken any steps. Few are expected to choose the latter option.
Whilst only large companies are currently in scope and detailed requirements are not stated (so that a flexible and proportionate approach can be taken), this Act should not be ignored; it is the first step in assigning some supply chain responsibility to high street businesses. With complex supply lines being the norm, it may only be a matter of time before a human rights scandal forces the government to enhance this Act.
Food value and quality
Understanding where your immediate suppliers ultimately source produce from can improve your margins as well as your food quality. Poor weather, large fluctuation in exchange rates, increases in fuel/transport costs and potential EU tariffs will all impact both the quality and price of food. These issues are magnified when you cannot see them coming and haven’t prepared. Engaging with suppliers should enable you to negotiate on a sustainable pricing structure for the medium term and also help identify any going concern issues your supplier may face that would affect your supply.
The 2013 horsemeat scandal made supply chains front-page news, but they seem to have now slipped our minds. Have sufficient improvements been made? Research from Achilles (produced in conjunction with IFF), suggests they have not. The findings show that 53 per cent of buyers in the Fast Moving Consumer Goods sector do not have any way of finding out who exactly their suppliers are. Clearly, there is still work to be done.
If you have any queries or would like to discuss this issue further, please contact your local UHY adviser. Alternatively, fill out our contact form here.
References:
No-deal Brexit would be catastrophic for food supply, say UK farmers, The Guardian
Supply chains and Brexit: getting the best out of preparing for the worst, ICAEW
5 reasons organisations need to map their supply chains, Achilles
A Guide to the Modern Slavery Act for Your Business, ContractStore
