Over the past few years, due to high cost pressures to meet their ambitious margin goals, we have seen companies’ supply chains becoming stretched across the globe with dispersed production facilities, and increased outsourcing of many business functions. A recent SCM World study titled Every Day Low Price, Every Day High Risk – Protecting The Integrity of Food and Drug Supply Chains showed that more than 4 out of 10 respondents now purchase more than 50% of their materials/products from international suppliers.
This globalization has made supply chains more complex and challenging, and failures have gained unwanted publicity:
- Europe was shaken by the horse meat scandal
- Several headline-making scandals in China have dramatically undermined public confidence, from food contaminated by dangerous chemicals, to nutritionally substandard food, to relatively innocuous fake food.
These incidents had a drastic impact on the brand reputation of the companies involved. Similar issues, like counterfeiting and introduction of poor quality raw materials in the supply chain, don’t only worry the food industry, but many others as well, and thus more and more local supply chain-related regulations are put in place to counter that – affecting not only manufacturers, but partially also wholesalers, distributors and retail. To just list a few examples:
- Eliminating counterfeit and fake products in the pharmaceutical industry
- Crop protection and pesticide regulation
- EU rules that aim to track every cigarette in the tobacco industry
- The Explosives for Civil Use Task Force for the identification and traceability of explosives across the supply chain.
Beyond simply fulfilling legal requirements, companies are looking for better ways to minimize and wherever possible mitigate the risk involved in these situations. The ultimate goal is to prevent them, or at least manage the damage control to both customers and brand image. There is a strong and obvious need for software to support companies in these efforts. A comprehensive supply chain integrity offering that is tightly integrated with the relevant business backend systems, and is also able to take business partners’ data into account, can be a huge relief in that respect:
- Product genealogy helps determining all affected lots in case of quality issues of batch-managed products.
- Tracking of deliveries and shipments along the complete supply chain can localize the problem goods at, for example a hub, where they might be re-packed.
- Product serialization and tracking through downstream distribution enables pin-pointed recalls.
- The management and documentation through the help of efficient quality issue handling rounds off a complete track & trace process.
To learn more about SAP’s offering for supply chain integrity, click here.
You can also join us at the upcoming supply chain integrity Web cast on July 16th. Click here to register.