Big buyer purchasing practices are often cited as the cause of supplier non-compliance in outsourced supply chains in different sectors. Is that what went wrong at Tesco?
By Elaine Cohen
The Guardian reports that GBP300m was wiped off Tesco's market value in the days following the news last week that frozen beefburgers, advertised as 100 percent beef, contained 29 percent horse DNA. Some also contained pig DNA.
This meat-swap revelation has brought with it a heavy financial penalty and a reputational nightmare for Tesco and other supermarkets. The factory from which Tesco apparently unwittingly sourced the horseburgers has now been shut down and Tesco is left with unstocked freezers, an extremely embarrassing conversation in the Board room and a big dent in the company's value.
Tesco Apologizes With a Promise
Tesco, of course, apologized immediately after the news became a scandal, taking care to ensure that the world knows that not only Tesco but "our supplier" is also at fault. The full apology was published on Tesco's Facebook page and included a promise:
"We will find out exactly what happened and, when we do, we’ll come back and tell you. And we will work harder than ever with all our suppliers to make sure this never happens again."
That's hardly likely to pacify the British horse-lovers.
Horse-meat may be a staple diet for some but for the British, the very thought of eating the animals that make Royal Ascot the glorious institution that it has become is enough to mortify most. The very thought of Mr Ed ending up on British dinner plates is so abhorrent that it risks turning the U.K. off beefburgers for life. Additionally, it is illegal to serve horsemeat in the U.K.
While it is true that no one died and no one, apparently, has suffered from any horse-related disease as a result of consuming stallion cutlets, this incident rocks our faith in the retail food chain and its ability (or even intention) to ensure a fair deal for consumers, to guarantee quality and safety and to deliver what it promises.
Greed for Profit: Trusting our Retailers
Just a few months ago, Tesco (and Asda, the U.K. division of Walmart) came under fire for misleading consumers by selling filtered bottled tap water at a 2,500 percent markup. Positioned alongside branded bottled waters sourced from natural springs, Tesco's bottled water was not easily identifiable as simply filtered tap water. This indicates a greed for profit at the expense of environmental stewardship and a marketing approach that runs short on integrity.
Some might say that the appearance of horsemeat dressed up as beef is a genuine error and Tesco will learn its lesson and clean up its supply chain.
Undoubtedly, Tesco will now tighten up all processes governing meat sourcing, and create new working procedures which will prevent similar incidents. This begs the question, however, that if Tesco (and the other supermarkets implicated in the same issue) is able to develop procedures to ensure that beef is beef, then why was this not done to date? If there is a solution, why was it not implemented before today?
Debating Sustainability: Pressure on Suppliers
Here we come to the crux of the entire sustainability concept: the preventive, or precautionary, approach to accountability. The fact that Tesco did not feel the need to be accountable enough on this issue to ensure that adequate quality procedures were in place for burger sourcing speaks volumes. The problem only came to light after testing by the Food Safety Authority of Ireland and may have been going on for years.
We can only speculate at this stage about the reasons this occurred.
One possibility is that Tesco's supplier decided to cut costs in order to take a bigger profit, expecting no one would find out. Another possibility is that Tesco pressured suppliers to such an extent for low pricing on "Everyday Value Burgers," that suppliers responded by using lower-cost raw materials and circumventing known guidelines. Big buyer purchasing practices have often been cited as the cause of supplier non-compliance in outsourced supply chains in different sectors. The human rights campaigner NGO Labor Behind the Label, puts it this way:
"Companies need to change their ways of doing business if they are serious about improving conditions along their supply chains. Making demands on suppliers to pay living wages, reduce overtime, improve working conditions and support worker organizing whilst at the same time demanding lower prices, shorter lead times and refusing to commit to long term supplier relationships is just a different way of refusing to take responsibility."
What is not credible in this case is that no one knew in this beef supply chain as Tesco claims. Someone knew.
Twenty-nine percent of content is not a minor oversight. Someone, for sure, was complicit in this consumer deception. But even so, relying on someone knowing is not a proactive approach to accountability. Ensuring Quality Assurance procedures are in place is a practice so basic that it seems hardly worthy of mention. Yet, in the Tesco beefburger supply chain, the simple test to ensure that products meet specification was apparently not performed.
Finally, we have to ask, can we trust any Tesco-branded food products?
Among the more than 6,000 comments in response to Tesco's Facebook apology, one commenter makes reference to deception and fraud, another asks how many other products are not what they claim to be and several declare that they will stop buying at Tesco. Another says this is just another case of Tesco failing to "meat" their obligations.
But probably the hardest-hitting comment is by Gina Turner who wrote: "...Tesco have no respect for their customers. If they did, this would never have happened". Food for thought for the Tesco leadership? Perhaps they could discuss it over a nice horseburger barbecue.