NUREMBERG, Germany -- I've spent this week in Europe for Embedded World here but transited through the UK, and it's hard to miss the top news story here: The unfortunate discovery of horsemeat in frozen beef burgers on what appears to be a massive scale.
The scandal has provoked a recall of the burgers with "equine DNA" from supermarkets chains such as Tesco (NASDAQ:TESO), Asda (owned by Wal-Mart (NYSE:WMT)), Sainsbury's (LON:SBRY), and the institutional caterer Sodexho who supply schools, hospitals, and the military.
Completely transparent: The horsemeat scandal in the UK highlights the need
for visibility throughout the supply chain -- any supply chain.
Just to make sure we aren't being too complacent here in the United States, it is likely that horsemeat may have made it into your local IKEA's Swedish meatballs -- don't forget that food is a global industry with a huge supply chain. It seems that horses from Eastern Europe were shipped to slaughter houses in France and Ireland for processing and somewhere in that chain the meat was disguised or fraudulently introduced into ground beef to cut cost.
Britain, in particular, is a horse-loving country, so this has been a shock to people. But I think the real news is the highly complex and opaque supply chain that led to this debacle. Looking at the scandal, some key themes emerge:
- Suppliers from a wide geographical area sending raw material to a few large processors
- Differing regulations and cultural attitudes between the countries that are trading
- Razor-thin margins
- Lack of traceability of product
- Rising commodity prices
- Products changing hands many times without an audit trail
- Inability to spot counterfeiting or tampering
Does that sound suspiciously like the electronics supply chain? Any global supply chain is vulnerable to these factors, and the potential for fraud or malfeasance is part of human nature. But the question is "What are you doing to secure your supply chain?"
Here at Embedded World, I heard that Green Hills Software is launching an end-to-end system authentication platform that can trace systems from the chip to the board and the system software so that is worth a look in a future story.
I also think the old Ronald Reagan quote of "trust but verify" comes into play, and the onus is on you to work with partners you know and trust. It's a fact of life that we will always have a grey market but how much do you know about the parts you are buying?
There is a stern lesson to be learned from this saga and we should prevent this happening in our industry. One meat processor even blamed the victims by stating that the ridiculously low margins forced on him by huge buyers made this inevitable.
Not a smart move, but how rough are you on your suppliers?
Caveat Emptor still applies, my friends.