European Horsemeat Scandal Network in Disarray Case Study - IT Assignment Help

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Case Study European Horsemeat Scandal – Network in disarray
The global headlines said it all: for several months during the first half of 2013, the whole of Europe was rocked with the news that unapproved horsemeat had found its way into the food chain and onto the shelves of the supermarkets. The media coverage was enormous. By July 2013, typing ‘horsemeat scandal’ into Google produced over 228,000 hits, from news organizations, government agencies, scientific authorities, food industry bodies, and not forgetting the almost obligatory Wikipedia entry.The scandal broke in Ireland on 14 January 2013, when the Food Safety Authority of Ireland announced the results of analyses of frozen beef burger samples it had tested in November 2012. The results indicated that equine DNA was present in the samples from several major food supermarkets: Tesco, Iceland, Aldi, Dunnes Stores and Lidl. The Tesco beef burgers, supplied by ABP Silvercrest in County Monaghan, revealed as much as 29 per cent horsemeat. Two other factories were cited as providing meat with lower levels of horse DNA: Dalepak in Yorkshire, UK, also owned by ABP, and Liffey Meats in County Cavan, Ireland. It’s argued that the scandal knocked almost £300 million off Tesco’s market value within 48 hours of the news breaking. This was a scandal that was going to run and run. In January 2019, two former managers of French meat-processing firm Spanghero and two Dutch meat traders were put on trial in Paris, accused of using cheap horsemeat in beef products that were sold across Europe. The four accused could face large fines and lengthy jail sentences if found guilty.Of course, horses are slaughtered for their meat in parts of Europe and horsemeat is readily available for sale in European markets. The issue wasn’t horsemeat per se. There was much confusion at first and debates raged about whether it was a food safety issue or a breach of consumer trust, or both. Products were recalled, food was taken off the shelves of the supermarkets, and food standards and safety authorities set about trying to establish what had happened.

Ultimately, at issue on this occasion was the fact that the meat in the affected burgers and other products was actually intended to be beef and should not have contained traces of any other animal product. Indeed, analyses of some samples of beef indicated that pig DNA was also identifiable. The concerns became more about consumer trust than food safety. The lack of traceability, for example, meant that people seeking to avoid particular foodstuffs (for example, for religious observance reasons) found it very difficult to know what beef products they could trust.By the time the full extent of the saga had been played out, 15 European countries had become involved. The European Union, including European agriculture ministers and the European Commissioner for Health and Consumer Policy, was involved in formulating responses at the highest levels. This included a very large programme of DNA testing of 2,250 processed beef samples across the European Union and further plans to bolster food safety legislation within the EU, including more money for food surveillance as well as stronger financial penalties for food operators that commit fraud or fail to comply with food safety laws.Along the way, a whole collection of household names in food have been affected. Horsemeat traces found their way into consumer food products either manufactured directly by, or sourced by the subcontractors of, Findus, Nestlé and Birds Eye. Own-brand beef products sold by major supermarkets were also affected. In addition to those announced at the time of the initial Irish investigation (Tesco, Aldi, Lidl, Iceland and Dunnes Stores in the UK and Ireland), Asda and the Co-operative Group in the UK, as well as Real in Germany and Ikea across Europe, also withdrew ranges of beef products in the wake of the scandal. Intermediaries such as foodservice companies and catering suppliers were not immune either. Brake Bros, a food service company which supplies the Whitbread Group of companies (which includes Premier Inn hotels, Brewers Fayre pubs, Table Table pubs and Beefeater Grill restaurants), found traces of horsemeat in its beef lasagne and burgers. Catering companies Compass and Sodexo, which supply institutional markets such as schools, hospitals and prisons, also found horsemeat present.

There has been subsequent criticism of the extent to which the meat supply trade within Europe has become too complex. One example, relating to how horsemeat found its way into products such as Findus beef lasagne, shows how extended and complex the supply chain can be:Comigel, a French company supplying Findus, among others, asks its subsidiary, Tavola in Luxembourg, to manufacture beef products (including Findus beef lasagne).Tavola orders the beef from a meat processor, Spanghero, in the south of France, which sub-contracts the supply to a company in Cyprus.The Cypriot subcontractor uses Draap Trading Ltd in Belgium to make the order of the meat itself.Draap uses two slaughterhouses in Romania (Doly-Com and CarmOlimp) for the supply of the meat, and the meat is sent to Spanghero in France from where it is then sent to Tavola, which makes the products for supply toFindus and retailers across Europe.Some attribute this longer and more complex chain to the way pricing operates within the meat production industry overall, arguing that prices are squeezed more tightly over time by the powerful supermarkets, which means that animals are sourced from lower cost countries for slaughter, and this creates greater opportunities for fraudulent activity in meat substitution. There seems to have been fraudulent behaviour in knowingly relabelling horsemeat as beef, as well as incompetence in the network in failing to maintain product integrity throughout the whole of the chain.

For companies like Tesco, it brings a salutary warning about relationships and networks. A company is only as good as the relationships it has (and this goes the whole way down the supply chain network). Other major supermarkets, such as Sainsbury and Waitrose in the UK, haven’t suffered the same negative consumer responses because their products had no meat substitution. Indeed, they have benefited at the expense of those who were implicated, by arguing that they use local beef from known sources and with supply chains that are much shorter. Relationships bring burdens that mean they will always require attention to what’s happening in the network overall. The costs of monitoring relationships and maintaining the quality and integrity of the product have to be borne somewhere in the network. The economic climate may well be a driver for reducing costs overall, but the question becomes one of where the costs are borne since they cannot be eliminated completely. Some of the typically very large companies further downstream relied heavily on the costs being borne upstream, without any real basis for trusting all the actors in the network and/or effective means of identifying and protecting the value chain from fraudulent behaviour. Given what Håkansson and Snehota (1995a) have called the unruliness and stickiness of relationships, where companies don’t have total control and are dependent on the associates of associates, in retrospect this appears to have been a risk that came back to bite them. Of course, it was possible for many of the big players to drop key suppliers quite quickly in light of the scandal as it unfolded. However, adverse consequences did occur, notably, damage to reputation, the likelihood of greater product assurance costs arising from the more stringent requirements of the food standards agencies, and the prospect of having to assume greater relationship costs in the future.
 

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