Stronger food and drink supply chain collaboration needed to deal with raw material price volatility

03 December 2012 by
Stronger food and drink supply chain collaboration needed to deal with raw material price volatility

Suppliers and their customers must work even closer together to combat significant food and drink raw material price volatility and a challenging competitive UK market, according to PwC.

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

"Volatility in availability and price requires urgent and business-wide commodity risk management, led by the boards of UK food and drink businesses, and a collaborative approach with their major customers to collectively manage the effects of price movement.

"Companies in the middle of the supply chain need to address what they are doing to manage their exposure to commodity price and availability risk and be able to explain it to their customers.

"Together, they then need to reach an economically sustainable solution to the way they do business with each other and not deal with it simply at a short-term transactional level. In particular, in a period of short-term rising raw material prices, failure to recognise these issues could cause suppliers significant economic hardship."

The PwC survey is based on answers voted for by an audience of 50 executives working with the food and drink industry.

According to a PwC survey, undertaken at a recent client forum around volatility in commodity prices, only a fifth of those attending said they had taken significant action, leaving the remainder not having really tackled the issue.

Hospitality must prepare for more increases in food and drink price >>

]( Lisa Jenkins

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