Allergens, contaminants and supply chains

3 December, 2018

Supply Chain network with earth globe on white background

“Free From”

EU regulations already require allergen labelling on food. Recent tragic cases have focused more attention on policy and practice in this area, and blame has been passed back and forth between suppliers and retailers.

 

Similar to the horsemeat scandal of a few years ago, this issue is eroding trust in food retailers, and resulting in some significant PR problems. Retailers are examining their labelling practices, revisiting quality control procedures and hopefully clearer warnings and stricter controls will avoid future incidents.

 

There are some lessons to be learned here though, particularly around supply chain management.

 

What are you buying?

Most contracts for buying goods focus on issues like price, payment terms, when the buyer owns the goods and when they take on the risk of the goods. For good reason too, those are all important issues. If the contract is just for the sale of paperclips, there might not be too much concern either about quality control. However, for contracts involving regulated goods, like food or food ingredients, there’s a lot more to think about.

 

Buyers will obviously want warranties that the food complies with applicable regulatory requirements, and with their description. But that’s not the whole story. Buyers will need to consider:

  • A specification – to set out in detail what they’re buying and what standards and contents they expect. If a seller can’t commit to an exact percentage or ratio in relation to something, consider what level of leeway is acceptable.
  • Indemnities – additional contractual protection can make the process of recovery simpler and more comprehensive if there is an issue with the goods.
  • Specific practices – rather than just relying on the specification (which only deals with the end product) buyers may want to consider specific requirements about the product process itself (including the environment in which the goods are processed and packaged).
  • Notification – buyers may impose specific notification requirements on sellers if they discover an issue, or require regular reporting on their production practices.
  • Audits and inspections – whether carried out by the buyer, or an independent standards body, buyers will often want the ability to verify compliance.

 

These points are all useful tools to ensure that buyers are protected, but contractual rights don’t eliminate risk. Buyers will need to examine their own quality control, as well as deciding how (and how often) to verify supplier compliance.