Reputation and Traceabilty of the Food Supply Chain

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Part of a webinar sponsored by Food Manufacturing magazine in September 2013. Event called: Food Safety & Traceability: Supply Chain Visibility from Farm to Fork

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Reputation and Traceabilty of the Food Supply Chain

  1. 1. Linda Locke Principal Traceability: The Key to Food Manufacturing Reputation 18 Sept 2013
  2. 2. Our ultimate business goal is to be trusted Risk is predictable, if…. •  You know your stakeholders •  You understand what drives their perceptions •  You are aware of their values •  You listen to them Act With integrity
  3. 3. A strong reputation can enable a company to succeed v Provided by Trust Across America Based on: Financial stability Accounting conservatism Corporate integrity Transparency Sustainability
  4. 4. Reputation advantage Reputare Consulting LLC Chart: Yahoo! Finance Apple Stock Price vs. DJIA: 2007-2012
  5. 5. Reputation penalty BP Stock Price vs. DJIA: 2007-2012 Chart: Yahoo! Finance
  6. 6. Reputation •  Customers •  Suppliers •  Investors •  Advocacy groups •  Regulators •  Policymakers •  General public Reputation = judgments and perceptions of stakeholders
  7. 7. Why reputation matters •  The intangibles can comprise more than 60% of a company’s value •  Public perception impacts profitability, book value, sales •  Strong reputation can result in strong stock price growth •  Investors use reputation in purchase decisions •  Companies with a strong reputation can: •  Charge premium prices •  Hire the best candidates •  Attract the best business partners •  A strong reputation can be a competitive differentiator
  8. 8. For the food industry: operations = reputation •  Industry focuses on both quantity and quality –  Consumers want food that is safe, fresh, nutritious •  Supply chain integrity is not just about operations, but about reputation –  Consumers reject products seen as harming the environment, workers, and communities •  Companies that experience supply chain disruptions saw shareholder value drop; recovery can be lengthy •  Traceability is key; Consumers want to know the origin of food products, including location and life history •  Rapid response in a crisis is essential to protect reputation
  9. 9. The dimensions of reputation How do you make me feel? Adapted from Reputation Institute
  10. 10. Supply chain integrity delivers reputation risk resiliency •  Two sides of risk resiliency: ­  Preventing conditions of risk ­  Managing consequences of events Source – Carnegie Mellon Software Engineering Institute
  11. 11. Risk = Hazard + Outrage
  12. 12. The causes of outrage Do I put up with this? Awareness Choice Detectability Pressure Groups Nature Scientific View DreadMedia Equity Have I noticed pressure groups focusing on it? Was there a problem? Did you let me know about it? Did I choose to take the risk or was it imposed on me? Is the risk natural or man-made? Do I fear this risk? Can I touch/see it? Is it quantifiable/ Containable? What does the risk do for me? Is anyone bearing the risk who doesn t benefit from it? Do experts understand it? Do they agree/disagree about it? Have I read about it/ seen it in the news?
  13. 13. Three phases of outrage Sloth Greed Pride Wrath Envy Sloth Lust Young Elderly Human error Media-attractive Abuse of Power Lack of Responsiveness Impoverished
  14. 14. Many organizations are not prepared to manage reputation risk Reputation literacy not on risk agenda Risk literacy not on reputation agenda
  15. 15. Reputation competency requires the right tools and perspective Data-driven insight 24 x 7 monitoring Outside-in perspective Willingness to engage, act Enterprise-wide understanding Protecting revenue and reputation
  16. 16. Monitor how you are seen Source: evolve24
  17. 17. Consider the role of emotion in stakeholder reaction Source: evolve24
  18. 18. Know how you compare to your competitors Source: evolve24
  19. 19. Traceability and transparency can help sustain the business •  Traceability enables recalls to be targeted to the origin instead of the entire industry… –  Think spinach, peanuts and pistachios •  Full backward and forward traceability provides authenticity to claims of: –  sustainability, –  halal, kosher, allergens –  safety –  organic origin –  Fair Trade
  20. 20. Supply chain integrity requires traceability •  Consumers expect manufacturers to be knowledgeable and forthcoming about the origin of food products, including location and life history •  In a crisis many stakeholders will hold the manufacturer, distributor, and grocer responsible for the entire supply chain •  A robust traceability program can enable rapid identification and containment of the issue –  Protects the industry –  Calms fears of consumers –  Mitigates amplification by the media
  21. 21. Linda Locke Principal Linda.Locke@ReputareConsulting.com Twitter: Reputationista 314-435-3428 Thank you. Corporate reputation consulting Reputation Strategy Reputation Risk Identification Measurement Internal Alignment External Engagement Crisis Management and Communications Strategic, Executive Communications 


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