Disruptions in the food supply chain are no doubt the ‘new normal’, whether that is labour shortages, wholesale energy prices, shortages of carbon dioxide (CO2), more friction with border documentation and checks, or supply chain restrictions related to Covid-19 and EU Exit. The conflict in the Ukraine has caused even greater concerns over food supply restrictions over the short to medium term.
Pressures on labour availability means that the practical, managerial and leadership skillsets, required across the food sector, vary from business to business being readily available in some sectors to being niche and in short supply in others. The economic, environmental and social challenges we have seen in the last two years are causing businesses to reconsider their reliance on people for tasks and decision-making and to turn to automation on manufacturing lines, and artificial intelligence and machine learning, to reduce their vulnerability to labour issues. These supply chain disruption issues singularly, or in combination, create multiple challenges that businesses need to address by embedding mitigation strategies in their business planning. This means that business approaches to risk identification, assessment and management need to be reviewed and revised as the world becomes a more uncertain place to do business.
As a result, business continuity planning has never been more important for all food businesses, from multinational corporations operating across the world, to micro food businesses developing food products and meeting the needs of local customers. Every food business has its unique continuity challenges, whether associated with particular food ingredients, packaging or materials, used in their processes, location, relationships with its supply chain or final market or consumer trends.
Horizon scanning is a systematic approach to considering evidence of particular trends, and then actual and potential scenarios, in order to determine whether an organisation is adequately prepared for established and emerging threats, has appropriate risk identification, assessment and management procedures in place and if suitable controls are implemented, can readily adopt adequate measures for threat elimination, mitigation or control. Pinch point mapping and analysis is one form of horizon scanning to determine business and supply chain vulnerability and measures to reduce such vulnerability.
Pinch Point Mapping and Analysis
Vulnerability, in this context, is the extent to which an organisation, or supply chain, is at risk from, or susceptible to, a threat or incident, an economic shock or squeeze in the supply chain, or other action or activity that could seriously affect the business(es). Pinch points can be physical strategic points or a distinct problem area within a business, or locations in the supply chain, within an organisation or process that are bottlenecks, sensitive to disruption, regulatory pressure or where the organisation may have limited capacity to act or react. Examples would be border crossing points where delays may occur, or reliance on a particular machine part, or processing aid that is difficult to source from an alternative supplier. This limited capacity of the organisation, or supply chain, to act or react, can also result from a public health incident, political or social unrest, financial shock or as a result of localised environmental failure e.g. pollution incident, pest infestation or business failure. Pinch points have also been described as problem areas within the management system, where management focus or intervention is required e.g. insufficient labour skills or weak traceability systems.
Pinch points in food supply chains are not unique to a particular country, such as the UK, but have become increasingly complex, as a result of the connectedness of global trade and the multitude of shocks or squeezes that can occur. Identification, assessment and preparation for potential issues is key to be able to mitigate their impacts, as is sharing insight within networks.
Most businesses will have business continuity plans that address key risks, or disruptions, that can occur and how they can be mitigated. To make these plans even more resilient, and ensure they consider challenges throughout the whole supply chain, many food businesses are developing vulnerability maps, or ‘Pinch Point Mapping’. So how can a business start to do this?
- Map all activities within the organisation and externally with other organisations in the supply chain. Include all suppliers (direct and indirect); packaging and services (utilities, labour providers, infrastructure, transport, social media etc.). Consider intended and unintended feedback loops, such as the impact of a change in hydrocarbon and fertiliser production on CO2 availability, as well as forward product, economic and information flows. Forward product flows may be influenced by pinch points that are outside the control of the food manufacturer e.g. a cyber-attack on the logistics company that usually transfers the finished product to a retailer, which means an alternative logistics company is required at very short notice. Economic flows can be disrupted when consumers are faced with an economic squeeze, e.g. increased energy prices, which means they will potentially substitute or fail to purchase particular products. Alternatively, a growing economy may mean there is more money available for spending, so product sales may increase. Information flows will vary from supply chain to supply chain. In some, there is open availability of data and information, and good feedback loops which drive lean and agile networks. In other situations, there is greater information asymmetry created which can affect the degree of supply chain interaction.
- Identify the issues that could impact the business operationally. Here it is important to exhaustively identify the different types of problem and where they can occur. This is a far-reaching exercise that should consider food safety, quality and food crime issues, supply chain constraints (infrastructure, capacity etc.) and materials which, if they are in limited supply, could prevent your business producing food.
- This Supply Chain Constraint Assessment should take a system-wide approach and include the entire network of suppliers and service providers to the organization, and also forward to the customers and final consumer. It should also consider the cascade effects that could occur at the system level. Vulnerabilities do not occur in isolation. If multiple incidents occur, how could they develop impact greater than the individual issues? For example, what is the cascade effect of what could be isolated incidents, such as lack of CO2 or a sudden rise in wholesale gas prices? What is your mitigation strategy? How does this affect your business continuity plan?
- Pinch point analysis means identifying where those points are now and potentially in the future, if certain scenarios were to happen. Where are the hotspots and how can you develop a mitigation strategy? Can you have a ‘Plan B’ for all supply chain vulnerabilities that could occur? Are there some vulnerabilities that cannot be mitigated, but could cause the organisation to cease trading? When you design new products, are you designing them with intrinsic vulnerabilities that will need mitigation?
- Lastly, what are the early warning signals of a potential problem? How do you develop a surveillance system to capture the early warning signals if they arise, to minimise the impact? Who are the Subject Matter Experts within your business, or network, that can provide intelligence on the issues identified in your assessment?
An illustrative example of one of the possible threats would be a bakery in the UK that only uses French flour in their products and supply is disrupted due to either a poor harvest, border control delays or supplier ceasing trade, for example. Are there alternative sources that can be used without impacting any labelling claims? Can packaging be quickly changed to remove any on-pack labelling claims? What advice and support can networks provide, e.g. IFST, trade bodies, federations, business related?
Food supply chain organisations are operating in more uncertain times and pinch point analysis is one approach to identify vulnerabilities, and where they occur and can inform business continuity planning as an agile, dynamic process.
Christopher, M., & Peck, H. (2004). Building the resilient supply chain. International Journal of Logistics Management, 15(2), 1-13. https://dspace.lib.cranfield.ac.uk/bitstream/handle/1826/2666/?sequence=3
Read, T., & Tilley, N. (2000). Not Rocket Science?: problem-solving and crime reduction. US Department of Justice https://www.ojp.gov/ncjrs/virtual-library/abstracts/not-rocket-science-problem-solvi
Soon, J. M., Manning, L., & Smith, R. (2019). Advancing understanding of pinch-points and crime prevention in the food supply chain. Crime Prevention and Community Safety, 21(1), 42-60. https://doi.org/10.1057/s41300-019-00059-5