Retailers step up unannounced audits to fight fraud

By Rod Addy

- Last updated on GMT

'The UK supply chain system was audited to death': Prof Chris Elliott
'The UK supply chain system was audited to death': Prof Chris Elliott

Related tags Supply chain Audit Financial audit

Supermarkets are shifting to unannounced audits of suppliers in efforts to make their supply chains watertight in the wake of the horsemeat scandal, according to professor Chris Elliott.

Speaking at an agri-food seminar organised by analysts from Shore Capital, Elliott, author of the review into the food supply chain after ‘horsegate’, said retailers were anxious to avoid similar incidents.

“The UK supply chain system was audited to death and yet it did not protect retailers from horsemeat, because auditors did not look for fraud,”​ he told delegates at the event, held at the Royal Institution of Great Britain in London.

Fortunately, the climate is changing, with the British Retail Consortium (BRC) revealing earlier this year that it was seeking to introduce fraud detection modules to its Global Standard from 2015.

“What you don’t want to do is give criminals notice,”​ he added. He told he could not vouch for some of the top grocery multiples, as he had not had a chance to properly consult them yet, but he said: “More than 50% of Tesco audits are now unannounced. Asda revealed that all its audits were now unannounced a few weeks ago.”

Sheer weight of audits

However, Elliott recognised that one of the key challenges remained the sheer weight of audits suppliers had to manage. Major supermarkets operate their own audit programmes in addition to the BRC and independent certification schemes, such as the Red Tractor Assured Food Standards scheme.

One major poultry supplier at the seminar told this site at the event that some of its factories had to deal with three separate unannounced auditors showing up at the same time.

Elliott met with BRC representatives yesterday (November 6) to discuss consolidation of audit schemes, as well as planned changes to the BRC Global Standard to be published in January.

Retailers anxious

Major retailers were also now so anxious to avoid the public blow to their reputation from food fraud that they were not content to conduct audits further down the supply chain, said Elliott.

“Tesco is conducting mass balance checks,”​ he said, explaining that this meant checking weights of products supplied by producers at source and tracking them through the supply chain to ensure unknown elements had not been added.

At the moment, the government and industry were pulling together to tighten up the supply chain, said Elliott, but he warned the pressure had to be kept up.

Consumer groups remained vigilant, with Which? running a continuous food fraud campaign to spot product substitution, he said. “The world is watching … The message to everyone is: the last thing you should do is relax.”

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Posted by Chris,

I remember attending an event in 2013 where a Sr. manager from a large supermarket stood up and blamed their involvement in the horsemeat scandal on price pressure from the discounters causing suppliers to cut corners! He also announced that his business was effectively providing free technical consultation for the discounters by ensuring factory standards!!! Irony overload! There are too many unannounced audits and it needs to stop or be restricted to high risk supppliers only, and by high risk I mean in terms of organisational risk and not product type. We have got more important things to be doing than going over the same stuff time and time again!

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Retailer Responsibility

Posted by Dr,Jo Head,

Less but more effective shared manufacturer audits to prevent fraud are required as advised by the GMA ( form a key part in prevention. We still have a fair way to go to achieve this judging by this article. Price pressures from retailers have most certainly contributed to the temptation for fraud. What are they doing to ensure they are not applying undue commercial pressures?

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Posted by Mike Hardy,

There is no ways ASDA are auditing ALL their suppliers unannounced. China would not allow and some countries are just too high risk As a Tesco supplier i have been audited unannounced for over 15 years.

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