Supply Chain Risk Management Blog

Risk Management Perspectives Part 1: are we learning from recent Supply Chain experiences?

Catherine Geyman, of Intersys Risk, was asked by a prominent Risk Management publication to give her opinion on a number of topical issues. The publication summarised and, for clarity, her full answers are shown below.

q: Have lessons been learned from the issues emanating from the Thai floods and the horsemeat scandal?

a: “Certainly the horsemeat scandal has put a greater emphasis on understanding the true source of a material. A common problem across both the Food and Life Science industries is in pinpointing where a material is actually made when so many are sourced through agents and distributors. A similar provenance problem was experienced by the pharma industry in 2008 when the heparin scandal broke and it became obvious that a number of significant western manufacturers had no idea of the origin of the starting material – pigs intestines harvested in tiny, unregulated workshops across China. That particular issue put pressure on western regulators to increase their presence overseas and since then the US Food & Drug Administration has opened more centres in overseas locations which in turn have resulted in a greater number of inspections of foreign facilities and an increase in regulatory actions preventing non complying drugs and foodstuffs from entering the US.

From an internal controls point of view, the pressure to extend auditing activities further back up the supply chain has increased and the auditor’s skill set has been redesigned in an attempt to better detect fraudulent supply chain activities. There has also been a push in the food sector to simplify the most complex supply chains and to exploit more opportunity to source locally. The Food industry is not alone in reassessing its ability to reverse some of the outsourcing activities of the last decades, the pharma industry too is also seeking more manufacturing opportunities at home, with projects such as REMEDIES co-funded by the UK government and industry partners to redesign the UK pharma supply chain.”

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