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Better supply chain relations needed to build consumer confidence

Following the news that some Tesco 'red tractor' products, purported to be from the UK have actually been sourced from Holland, Dr Mark Johnson provides expert comment. Dr Johnson is Associate Professor of Operations Management at Warwick Business School and extensively researches supply chain management.

Dr Johnson said: “The news that pork from Tesco bearing the Red Tractor logo – indicating that it is produced in the UK - originated in Holland, though unfortunate, is not unexpected. All firms use suppliers to provide products and services, creating complex, lengthy and opaque supply chains. They use suppliers to provide things that they deem to be ‘non-core’ while focusing their activities on areas that they excel at. Tesco, as an example, are excellent retailers not farmers. Raising and slaughtering livestock for meat is done by someone else. Apple are excellent at product design and marketing. Assembly of the various electronic devices is done by someone else. This specialization allows firms to be more profitable and responsive but does have downsides.

“As firms outsource to other firms – creating supply chains – they lose control and visibility of what is going on as suppliers outsource to other suppliers in the drive for lowest cost. UK labeled Dutch pork is one example of this occurring, the recent horsemeat scandal another, with the Mattel recall of toys yet another. So, what can be done to ensure that consumers know exactly what they are buying? Firms with lengthy and complex supply chains need to understand what they actually look like. They also need to build relationships with suppliers to ensure transparency. In the short-term this is more expensive. In the longer-term, it leads to improved consumer confidence and can highlight areas where additional value – profitability or cost savings - can be made.”

To arrange an interview with Dr Johnson, please contact Ashley Potter, Ashley Potter, Press & PR Officer, Warwick Business School, Tel: +44 (0)24 7657 3967
Mob: +44 (0)7733 013264,