Tutorial notes to cover SCM aspects on the Sustaining Organisational Performance module. The discussion case of the Horsemeat scandal

1. Week 4 Tutorial:
Supply Chain Management
Sustaining Organisational Performance

2. Session Outline
• Discuss in small groups the factors that a small
shopkeeper should consider when choosing a
supplier
• Discuss the complexity of the supply chain and
related issues in the 2013 horsemeat scandal
and reflect on lessons learnt (or not) for the
current car makers crisis cheating emissions
targets

3. Discussion 1: “Supplier selection for a
small shopkeeper”
In small groups discuss:
• What factors should a small shopkeeper consider
when choosing a supplier?
• You may also consider: How much supply (of single
or multiple items) should be dedicated to a single
supplier?

4. Discussion 1: “Supplier selection for a
small shopkeeper”
• Price
• Quality
• Delivery

5. Discussion 2a: Horsemeat Scandal
Watch: Horsemeat scandal: what are we eating?
https://youtu.be/C1yMZWeBXUg
Lawrence, Allen and Scruton suggest in The Guardian (Tuesday, 22nd
October 2013, Accessed 29/09/15) ‘the web of companies is so complex
that pinning down the point at which the crime of mislabelling took place
in the horsemeat scandal has proved elusive’.
1. Identify the key players involved in this scandal from “hoof to
plate” and consider how this process is regulated.
2. What are your thoughts on what went wrong based on your
understanding of global supply chains?

6. See: Lawrence, F., (15/02/2013), Horsemeat scandal: the essential guide, The
Guardian (Accessed: 29/09/12),
http://www.theguardian.com/uk/2013/feb/15/horsemeat-scandal-the-essential-guide
Complex?

7. Regulation in the meat industry
• Licensed slaughterhouses across Europe are required to have an official vet
in attendance when slaughtering takes place – in the UK most used to be
directly employed by the government but many are now supplied under
contract to the Food Standards Agency by the private company Eville &
Jones.
• Plants over a certain size are also required to have a meat hygiene inspector
• A trend to deregulate and leave industry to police itself, begun under the last
government
• Smaller cutting plants are no longer subject to daily inspection
• The Food Standards Agency has limited powers – it has depended on
industry alerting it to the results of tests voluntarily
• Enforcement largely falls to individual local authorities and their trading
standards officers, and their budgets have been slashed
Extracted from: Lawrence, F., (15/02/2013), Horsemeat scandal: the essential guide, The Guardian
(Accessed: 29/09/12), http://www.theguardian.com/uk/2013/feb/15/horsemeat-scandal-the-essential-
guide

8. Government control of food safety and
standards
• Food standards agency set up after the BSE crisis
• Need one agency that coordinated all regulation on food safety and quality
• The coalition government broke up much of the FSA in its bonfire of the
quangos, so that responsibility in the current scandal is split.
• The FSA is still in charge of food safety;
• The Department of Health is responsible for nutritional standards;
• The Department for Environment, Food and Rural Affairs covers labelling and
veterinary medicines.
Extracted from: Lawrence, F., (15/02/2013), Horsemeat scandal: the essential guide, The
Guardian (Accessed: 29/09/12), http://www.theguardian.com/uk/2013/feb/15/horsemeat-
scandal-the-essential-guide

9. Traceability in a meat supply chain
• Industry argues full traceability of its supply chain which it audits
frequently
• Most of the factories caught up in the scandal have accreditation with
mainstream auditing schemes such as that run by the British Retail
Consortium but it failed to spot the problem
Extracted from: Lawrence, F., (15/02/2013), Horsemeat scandal: the essential guide, The
Guardian (Accessed: 29/09/12), http://www.theguardian.com/uk/2013/feb/15/horsemeat-
scandal-the-essential-guide

10. Discussion 2b: Horsemeat scandal
Watch Prof. Mohan Sodhi response on the question posed: Are
overstretched supply chains to blame for the horsemeat scandal?
Watch: https://youtu.be/e5G3MzjEwXs
“We [with reference to Audi & Tesco] have no idea what we are selling
you” Professor Mohan Sodhi
Provide your own thoughts on the question above and reflect on
any potential lessons learnt at all for the current automotive crisis
(i.e. VW emissions testing scandal)?
What crisis might be next?

11. Comment & reflections – impact on global
supply chains
• A survey by the Chartered Institute of Purchasing and Supply (CIPS)
argued that supermarkets have “fallen woefully short” in the
management of their supply chains.
• Is it simply down to poor regulation of supply chains?
• Are supply chains as Professor Mohan Sodhi puts it ‘overstretched’?
• What we do know is that the scandal will and has to date had a
significant impact on global supply networks and how we perceive
industries such as the meat processing industry.

12. Comment & reflections – next crisis?
• It was reported in The Telegraph (Lawrence et al., 2013) that Tesco would
pledge to open up its supply chain after the horsemeat scandal, but do we
know any more?
• Has the Horsemeat scandal been forgotten?
• Did it change the way we think about food and what we consume?
• What about ensuring transparency and traceability in ‘free-from’ food products
or even ‘Halal’ processed foods?
• Can we actually be sure that Body Shop suppliers, including the ‘suppliers,
supplier’ has not at any stage of the process tested on animals?
• Are we 100% sure that fair trade coffee is exactly that – fair trade?
• We have learnt a great deal over the past few weeks regarding the crisis in
the car industry with Volkswagen cheating emissions performance targets
Many were surprised – what’s next?

13. Comment & reflections – building resilient
supply chains
• Christopher and Peck (2004) wrote an interesting seminal article on
‘Building the resilient supply chain’
• Raised the issue that supply chain vulnerability has became a
significant issue particularly as supply chains become more complex
as a result of global sourcing and the continued trend to ‘leaning-
down’. Christopher and Peck (2004) argue that this leads to an
increase in supply chain risks.
• They ask how organisations can mitigate these risks by creating more
resilient supply chains
Worth a read to broaden your horizons …

14. Assessment guidance
• 3000 (+/- 10%) word report contributing 50% to your final grade on the SOP
module
• Deadline: Friday 30th October (Week 8) by 1pm
Prior Reading
• You should read the case study entitled ‘Carmakers out of crisis?’
posted on Moodle
Task
• In small groups discuss the nature of the assignment brief and
offer advice to classmates on how to tackle the questions set

15. Context
Recent signals seem to show a dramatic improvement in car sales in the
UK as well as output. Manufacturing is beginning to boom once more in
the US and the UK is catching up. However, some major challenges still
remain as well with some manufacturers still facing particular difficulties
(e.g. Ford, Vauxhall, Volkswagen).
• You have been appointed as a Senior Consultant to a major UK/EU
car manufacturer of your choice to write a short business report
to the Board of Directors.
– Ensure you understand what is meant by a ‘report’
– Understanding the ‘intended reader(s)’ is critical in report writing
(i.e. the Board of Director’s of an automotive company)

16. Assessment brief
Note: weightings for comprehension & analysis
1. Critically assess the lessons that have been learnt and influence that the
Japanese car manufacturers have had on the organisational performance of
UK/EU automotive manufacturers
a) Lean thinking [30% total weighting]
b) Quality & environmental sustainability leadership [15% total weighting]
2. Investigate the challenges and pressures faced by UK/EU automotive
manufacturers to globally source supplies from low-cost countries (i.e. BRIC
countries) [15% total weighting]
3. Make recommendations on the performance objectives that should be
adopted to ensure that the chosen carmaker can remain competitive in the
face of competition of producers in low cost countries [15% total weighting]