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Our Insights 12 Nov 2014

On Our Radar: Food Safety Concerns in China Spotlight Need for Greater Traceability

By Rida Bilgrami

Flickr image by nachof

This piece was originally published in the autumn issue of Radar Magazine – Issue 05: Unusual Activists.

A series of scandals have shaken food companies sourcing and selling in China, bringing into the spotlight persistent safety concerns and forcing corporations to review traceability tools and consider working more closely with suppliers to address the problems.

In July 2014, a supplier to McDonald’s and KFC in China was exposed for supplying rotten meat and falsifying product expiration dates during an undercover investigation by a local TV channel. Earlier this year Walmart recalled meat products, in a similar incident to the UK horsemeat scandal, as packs contained species of animals not identified on their labels.

The recent scandal in China (combined with sluggish demand) has contributed to the worst same-store sales decline in over a decade for McDonald’s. The company has announced an overhaul of its food safety strategy in the country including boosting the number of unannounced audits of suppliers, creating anonymous hotlines for suppliers to report non-compliant practices and appointing a new national food safety chief. Walmart has announced plans to triple its spending on food safety and pledged to increase checks on vendors and conduct DNA testing of meat sourced in China.

As customer confidence dips, consumer-facing innovations that enable greater traceability are entering the marketplace such as a prototype of smart chopsticks that transmit data to a mobile application that can trace for contaminated oil in food. In response to recent food safety scares, BT and Traceall Global have announced a collaboration on a new supply chain solution for consumers—a secure, centrally-managed web-based system delivering a 360° end-to-end view of a company’s supply chain.

What to look for: Food safety issues will continue to be a lightning rod for companies with supply chains deeply embedded in China. As companies galvanise their efforts to increase oversight of their supply chains, they will need to look beyond audits to communicate their transparency efforts to stakeholders.

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