E&Y research reveals poor supply chain checks

LESS than half of companies in the UK carry out due diligence in their supply chain, a survey by accountants Ernst & Young has revealed.

The research carried out by the firm’s fraud investigation and dispute services team comes amid the growing food supply scandal, which on Thursday  saw the withdrawal from sale of some fresh meals by Asda – after horse meat was detected.
 
The research found that only 48% of UK firms carry out due diligence in their supply chain, with a further 30% never doing any checks.

The survey of procurement managers and directors also reveals only 6% have ever been made aware of unethical activity in their supply chain.
The research, which covers UK companies operating across a range of sectors and countries, also found that 14% did not know what third-party due diligence meant.

Victoria Spencer, head of Ernst & Young’s fraud investigation team in the North West, said: “The current issues around contamination of products have highlighted the importance of understanding and ensuring the integrity of the supply chain, which is a big part of the DNA of many businesses.

“Companies are, in most cases, responsible for the actions of third parties acting in their name; however our research reveals that firms, across a range of sectors, are not carrying out basic checks.

“In the case of packaging, when stating the provenance and integrity of products, companies must be able to stand by their claims, requiring transparent disclosure of the entire supply chain.

“Companies need to be able to defend such statements and to demonstrate traceability of the data and declarations upon which it relies and which form the basis of the trusted relationship it attempts to build with its customers.”

Food retailers are expected to reveal the results in the coming days of tests they have been ordered to undertake by the Food Standards Agency on all processed beef products.

Some retailers have already recalled products they found to be contaminated – including Asda whose beef bolognese sauce was removed from sale on Thursday and was the first fresh beef product to be involved.

Aldi, Tesco and Findus have also withdrawn some beef-based ready meals.

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