Establish an efficient supplier audit program: A supplier audit program is one of the single best strategies for deterring economic adulteration. To use Ronald Reagan’s frequently quoted statement—“trust, but verify.” Companies should always try to work with legitimate suppliers, and verify that these trustworthy suppliers are meeting the required specifications. Top companies spend the time up-front qualifying each supplier through in-depth interviews and assessments. Some companies have redefined the supplier qualification process to include behavioral assessments similar to criminal investigations, detailed verification of recordkeeping and comprehensive site audits.
In addition, they invest in supplier development programs that strengthen relationships and educate suppliers, resulting in higher compliance to standards. Suppliers that are treated as true partners will regularly collaborate with their upstream and downstream partners when challenges arise.
Employ current intelligence networks: Leading companies continually monitor issues that suppliers may be facing. A good way to do this is to get input from “boots on the ground” employees, ingredient brokers and customer complaint trend analysis. Existing employees within a country can offer valuable insights, while reaching out to brokers that deal with day-to-day issues can provide an informal way to gather timely local information. Finally, monitoring customer complaints can identify issues early and allow for a timely reaction.
Increase traceability within the supply chain: Because the amount of risk in the supply chain decreases as transparency increases, it is important to instill mechanisms that allow full supply chain visibility—down to the individual farmer, where possible. Packaging and product identification, such as serialization, RFID tags or other inside-the-product markers can facilitate traceability throughout the supply chain, both upstream and downstream.
Recognizing that the costs of these technologies may be prohibitive, at minimum, companies can develop a “line of sight,” where the buyer has an obligation to understand the supply chain path and the various touch points along the path back to origination. As more companies become sensitive to using the spot market or brokers due to less transparency in the supply chain, they can simply reduce the number of steps and increase transparency with verification and validation at each step.
Minimizing risks to consumers, the industry and the global marketplace requires “all hands on deck.” As the food, beverage and consumer product industry continues to demonstrate its commitment to protecting consumers and product brands, now is the time to harness the tools outlined in this study to reduce consumer product fraud through effective deterrence and detection programs.
James Morehouse is a senior partner with A.T. Kearney in the firm’s Operations and Consumer and Retail practices based in Chicago. He can be reached at firstname.lastname@example.org. Freienstein is a principal with A.T. Kearney based in Chicago. She can be reached at Constanze.email@example.com. Cardoso is a manager with A.T. Kearney based in Washington. She can be reached at firstname.lastname@example.org.