When you go to the supermarket, there are food products from all over the world. Whether you realise it or not, the supply chain that ends up in your shopping trolley is a global exercise. Food is being produced, packaged, shipped and purchased in every direction.
Food supply chains are not a streamlined procedure. They are increasingly complex and under pressure to perform. When a food product passes through multiple countries on its way to your shopping trolley, it’s hard to conceptualise what’s actually happening to your food. The news is filled with stories of food poisoning, contamination and fraud in the food industry. These stories and experiences have kick-started a change. Customer expectations are changing and people want transparency about their food’s supply chain. They want confidence that their food is safe and the quality is sound.
Inventory Control in a Big Supply Chain
The business of food production is a multi-billion dollar industry. When there is money to be made of this scale, it can often lead to corruption and fraud. For example, in the honey industry, there has been quality assurance tests created to identify “fake” honey and used as industry-wide inventory control mechanism. This fraudulent honey has been adulterated and is no longer pure. Generally, the “fake” honey will be mixed with other syrups, as a bulking agent. Therefore, it is no longer 100% honey. These assurance tests try to monitor the selling of “fake” honey and take a strong hold on the product’s inventory control.
However, motivated honey producers try to find their way around these tests. Instead, honey producers have found ways around the previously detectable syrups. They have changed it to syrup that could not be identified with the available technology. This drove lots of honey suppliers from overseas to use rice syrup that could not be identified with the quality tests. So, even with regulations, companies were finding their way around it.
Transparency and Honesty
The honey supply chain is monitored not only for bulking agents, but because it is prone to having antibiotics in it that are illegal for consumption in some countries. It is common for countries to try to sneak it into others countries where this antibiotic is banned anyway.
Additionally, the transport segment of the supply chain has also been corrupted in the global selling of honey. For example, China was the largest honey supplier to the United States. The United States consumes more than 190 million kilograms of honey each year. A few years ago they were depending on China for nearly half of that supply. However, Chinese prices were undercutting the US honey producers market by so much that they couldn’t stay afloat. The US placed a significant tariff on Chinese imported honey.
However, China just started to ship their honey to other countries first, like Malaysia or Thailand. The honey would then be rebranded and sold on to the U.S. as “Malaysian” honey, which would effectively evade the high tariff. Other countries such as Germany and Russia have been found smuggling Chinese honey into the US market too.
This behaviour taints the trust consumers have with the honey industry. Even when companies are playing by the rules, it becomes harder for them to distinguish themselves and reassure consumers that their honey is pure. In a perfect world of textbook inventory control, every barrel would tested for quality. However, that is not realistic or feasible at this stage.
The honey supply chain is one of many in the food industry that has suffered from global problems and therefore lacks transparency in many facets. The global food business is complex and regulators are working diligently to bring more control to the products we eat every day.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.