Supply Chain weekly wrap-up: 10/18 – 10/24

Amazon takes another slice of the pie

Amazon is once more expanding its e-commerce reach, with its latest venture being the sale of everyday consumer products such as baby diapers and paper towels. Amazon has partnered up secretly and operates in the warehouses of a number of important suppliers, and is also in clandestine talks with many others including Seventh Generation Inc., Kimberly Clark Corp. and Georgia Pacific Corp.

While household staples were once considered to be too “cheap and bulky” to be worth the cost of shipping, changing consumer habits and more efficient distribution could now generate an extra $10 billion per year in revenue for the online giant.

The program is called Vendor Flex, and involves utilizing a pre-existing company’s warehouse and logistics network.  One such partner, P&G, is currently allowing Amazon to operate inside several of its distribution centers, including locations in Japan and Germany.

There are benefits for both parties. Crucially for P&G, a company trying to boost online sales, any help received from a veteran of e-commerce is invaluable. It also cuts down on transport costs, by not having to transport cargo to Amazon’s regional distribution centers. Amazon also saves money by storing bulky items through co-location, which leaves more room in its own distribution centers for other profitable goods. The location of the warehouse is also convenient. Situated in northeastern Pennsylvania, it is 5 miles from one of P&G’s largest factories, and within a day’s drive of important cities in the American Northeast and Canada.

To read more, click here.

The Horsemeat Scandal— murkier details unveiled

The horsemeat scandal is probably the biggest food fraud of the 21st century so far. 10 months removed from the event, all the details are not yet clear as to how food products being sold by the likes of Aldi, Burger King and Tesco became contaminated. To further matters, all the major parties involved in the scandal, from retailers to suppliers, proclaim almost complete ignorance of both knowledge and involvement, and have thus far avoided punishment.

The Guardian has been thoroughly investigating, and published some startling revelations this week, which hopefully will shed light on the matter. At the heart of the story are the complex and confusing supply chain and murky business practices of those involved, as well as differing accounts of events and details.

The main protagonist of the scandal is Anglo-Irish Beef Processors (or ABP), the leading cattle processor in Europe, of which an estimated 50 million Europeans buy its products weekly. The question is: how did the burgers they produce come to contain horsemeat?

Willy Selten, a Dutch businessmen and the owner of a meat cutting plant in Oss, Holland, was arrested in May on charges of food fraud and false accounting, when 21% of the beef from his factory was found to contain horse DNA. Selten sold some of his meat through a trader to ABP. ABP have however blamed rogue managers at the Silvercrest site in County Monaghan for buying contaminated meat, who – without head office approval – used unauthorized suppliers for the frozen meat in its burgers. ABP does however admit that in doing so, it broke contractual agreements with supermarket and fast food chains.

Selten strongly denies the allegations of knowingly packaging and supplying beef contaminated with horsemeat.  Interviews with former Polish workers however contradict this claim. They reported that they mixed horsemeat, which they had received from slaughterers in the UK and Germany, with old defrosted beef. The beef was apparently so old it was occasionally green.

The next question is: Who were the slaughters who supplied Selten? To continue reading this twisting tale, click here.

Port fire destroys sugar and prices soar

A seemingly small incident with a big impact for the food supply chain: The international price of raw sugar rose to the highest amount all year, after 180,000 tonnes belonging to Brazilian sugar giant Copersucar were destroyed by a fire in the port of Santos, Brazil. Six warehouses were also damaged.

Port authorities reported that it took six hours reign in the blaze.  The cause of the fire has also yet to be determined. It is believed that the fire originated on a conveyor belt transporting raw sugar into one of the warehouses.

The leading global sugar exporter, half of the sugar sold internationally originates from Brazil.

To read more, click here.

Have a nice weekend!