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Calls for stronger supply chain

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Posted on 2/01/2013 by Wayne Brophy FCILT

Poor weather and difficult growing conditions has caused fresh calls for a stronger supply chain collaboration within the UK, with management consultancy agency PricewaterhouseCoopers (PwC) leading the offensive.

According to the company, the food and drink side of the industry is particularly at risk, with serious volatility and stiff competition threatening the sector.

"Long-term volatility and short-term price shocks in the food and drink supply chain are set to continue," said agricultural partner for PwC Stephen Oldview.

He added that an "urgent and business-wide commodity risk management led by the boards of UK food and drink businesses" would be required to tackle the effects of price movements, as well as a collaborative approach with their major customers.

Mr Oldview's comments are supported by Peter Kendell, president of the National Farmers' Union, who claimed that the fresh food supply chain would continue to encounter problems would increase as the impact of global warming becomes ever prevalent.

"2012 has starkly demonstrated the cost that extreme weather events can wreak on farmers and the food supply chain," he told the Daily Mail.

The impact on the supply chain is likely to be passed onto the customer, with analysts predicting today (January 2nd) that food prices will rise well above inflation throughout 2013 after crops were damaged by the wettest year on record.

However, in spite of a realistic threat to revenues, a PwC survey conducted at the beginning of December 2012 found that just 20 per cent of companies had taken some action to limit the impact, such as by generating additional supply chain jobs to cope with the issues.

Mr Oldview's comments were rounded off with a warning that logistics companies would be wise to adhere to: "In a period of short-term rising raw material prices, failure to recognise these issues could cause suppliers significant economic hardship."

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