How the Food Industry Can Prepare for New Era of Risk Management

Food logistics companies can apply the principles of Assurance 4.0 to make data-driven decisions and move to a model of continuous assurance to identify threats and protect their operations.

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It is a rare day if an event doesn’t happen that poses a potentially serious impact on the food supply chain. The past four years have seen a list of global and economic upheavals cause the unfortunate closure of many food businesses. Those that have survived have only done so through great sacrifice, strategy and skill.

Winston Churchill wrote that those who don’t learn history are doomed to repeat it, so what can the food supply chain learn from the period that has seen a global pandemic, war, accelerating climate change, and increasing consumer expectations? How can we apply the lessons of history to the challenges of tomorrow?

The evolution of assurance

Supply chain risk factors are generally categorized as being within one of six pillars. These pillars have helped dictate assurance needs for a wide variety of businesses, including those involved in the production, transport and supply of food.

The six pillars include climate, technology, sourcing, supply chain, cyber threat, and brand reputation, and assurance needs to evolve to match the increasingly complex factors driving risk in those areas. As part of the evolution into the era of ‘Assurance 4.0’, there is now a crucial new development to recognize: interconnected risk.

There is growing likelihood that a major change in one pillar will have an impact on others. In just one example, a growing emphasis on reduced emissions is raising questions over the efficacy of temperature-controlled transport. Similarly, the selection and implementation of new technologies is prompting concern over their exposure to risk of a cyberattack.

Interconnected risk is emerging as a vital consideration for all businesses tasked with safeguarding food, so it is imperative that actions are taken now to keep our supply safe in the coming months and years.

What can food logistics companies do now?

Supply chain executives need to be able to deliver transparency and traceability across the food supply chain, from the animals reared to produce it to the packaging used to protect it, plus how it is handled and transported at every stage.

One way to address this new challenge is to consider using owned data more effectively, extending the assessment of risk. This involves looking beyond owned operations and considering potential impacts of a broad spectrum of risk factors on products handled and transported.

Leveraging extended data sources that best determine risk impact is a shift in thinking that is critical for keeping up with fast-moving targets. A comprehensive understanding of where the data with greatest value exists – and how that data can be captured – will be a vital part of building a holistic risk profile based on quality data, which truly informs risk management over the next several years.

Aggregating a large amount of meaningful data can truly inform where risk resides, so logistics companies can better understand potential impacts to product safety, brands and ultimately to consumers.

Data also helps establish where future risk is more likely to occur and where it isn’t, enabling resource to be focused on areas where the greatest value is at stake. When data is leveraged for predictive analysis, businesses responsible for food logistics can transform risk management programs and strengthen their critical link in the overall supply chain.

The lessons of history

From the disruption to the transportation industry caused by Covid, to the security concerns over exporting from Ukraine in the wake of the Russia’s invasion, food logistics businesses must be ready to face further challenges.

The recent events in the Red Sea have seen supply ships reroute to avoid the Suez Canal, instead sailing around South Africa’s Cape of Good Hope. This change, while necessary, adds at least a week to the amount of time goods spend in transit. This can shorten shelf life and the added miles increase the carbon emissions associated with the final product. In the realms of heightened environmental, social and governance (ESG) expectations, fragmented global supply chains and cyberattacks, a new, digitally enabled approach is needed to navigate these global trends.

With such large scale and unpredictable changes becoming more commonplace in food supply chains, annual snapshots of risk are no longer sufficient. Food logistics companies can apply the principles of Assurance 4.0 to make data-driven decisions and move to a model of continuous assurance to identify threats and protect their operations.

Partnering with global assurance providers means businesses working in the food industry can have expert guidance as they navigate responsible sourcing, product integrity, assets and management systems, cybersecurity and the energy transition.