reputation and traceabilty of the food supply chain
DESCRIPTION
Part of a webinar sponsored by Food Manufacturing magazine in September 2013. Event called: Food Safety & Traceability: Supply Chain Visibility from Farm to ForkTRANSCRIPT
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Linda Locke Principal
Traceability: The Key to Food Manufacturing Reputation
18 Sept 2013
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Our ultimate business goal is to be trusted
Risk is predictable, if…. • You know your stakeholders • You understand what drives their
perceptions • You are aware of their values • You listen to them
Act With
integrity
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A strong reputation can enable a company to succeed
v
Provided by Trust Across America
Based on: Financial stability Accounting conservatism Corporate integrity Transparency Sustainability
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Reputation advantage
Reputare Consulting LLC Chart: Yahoo! Finance
Apple Stock Price vs. DJIA: 2007-2012
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Reputation penalty
BP Stock Price vs. DJIA: 2007-2012
Chart: Yahoo! Finance
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Reputation
• Customers • Suppliers • Investors • Advocacy groups • Regulators • Policymakers • General public
Reputation = judgments and perceptions of stakeholders
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Why reputation matters
• The intangibles can comprise more than 60% of a company’s value
• Public perception impacts profitability, book value, sales • Strong reputation can result in strong stock price growth • Investors use reputation in purchase decisions • Companies with a strong reputation can:
• Charge premium prices • Hire the best candidates • Attract the best business partners
• A strong reputation can be a competitive differentiator
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For the food industry: operations = reputation
• Industry focuses on both quantity and quality – Consumers want food that is safe, fresh, nutritious
• Supply chain integrity is not just about operations, but about reputation – Consumers reject products seen as harming the environment,
workers, and communities
• Companies that experience supply chain disruptions saw shareholder value drop; recovery can be lengthy
• Traceability is key; Consumers want to know the origin of food products, including location and life history
• Rapid response in a crisis is essential to protect reputation
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The dimensions of reputation
How do you
make me feel?
Adapted from Reputation Institute
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Supply chain integrity delivers reputation risk resiliency
• Two sides of risk resiliency: Preventing conditions of risk
Managing consequences of events
Source – Carnegie Mellon Software Engineering Institute
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Risk = Hazard + Outrage
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The causes of outrage
“Do I put up with this?”
Awareness Choice
Detectability
Pressure Groups Nature
Scientific View
Dread Media
Equity
Have I noticed pressure groups focusing on it?
Was there a problem? Did you let me know about it?
Did I choose to take the risk or was it imposed on me?
Is the risk natural or man-made?
Do I fear this risk?
Can I touch/see it? Is it quantifiable/ Containable?
What does the risk do for me? Is anyone bearing the risk who doesn’t benefit from it?
Do experts understand it? Do they agree/disagree about it?
Have I read about it/seen it in the news?
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Three phases of outrage
Sloth
Greed
Pride
Wrath
Envy
Sloth
Lust
Young
Elderly
Human error
Media-attractive
Abuse of Power
Lack of Responsiveness
Impoverished
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Many organizations are not prepared to manage reputation risk
Reputation literacy not on risk agenda
Risk literacy not on reputation agenda
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Reputation competency requires the right tools and perspective
Data-driven insight
24 x 7 monitoring
Outside-in perspective
Willingness to engage, act
Enterprise-wide understanding
Protecting revenue
and reputation
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Monitor how you are seen
Source: evolve24
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Consider the role of emotion in stakeholder reaction
Source: evolve24
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Know how you compare to your competitors
Source: evolve24
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Traceability and transparency can help sustain the business
• Traceability enables recalls to be targeted to the origin instead of the entire industry… – Think spinach, peanuts and pistachios
• Full backward and forward traceability provides authenticity to claims of: – sustainability, – halal, kosher, allergens – safety – organic origin – Fair Trade
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Supply chain integrity requires traceability
• Consumers expect manufacturers to be knowledgeable and forthcoming about the origin of food products, including location and life history
• In a crisis many stakeholders will hold the manufacturer, distributor, and grocer responsible for the entire supply chain
• A robust traceability program can enable rapid identification and containment of the issue – Protects the industry – Calms fears of consumers – Mitigates amplification by the media
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Linda Locke Principal [email protected] Twitter: Reputationista 314-435-3428
Thank you. Corporate reputation consulting Reputation Strategy Reputation Risk Identification Measurement Internal Alignment External Engagement Crisis Management and Communications Strategic, Executive Communications