Business Continuity Management in the Food Service Sector

Final Report to the Department for Environment, Food and Rural Affairs

Prepared by

Dr. Helen PeckSecurity Studies Institute

Cranfield UniversityDefence Academy, College of Management and Technology

Shrivenham

September 2009

List of Contents Page NumberList of Contents..........................................................................................................ii

List of Vignettes........................................................................................................vi

List of Tables...........................................................................................................vii

Acknowledgements.................................................................................................viii

Executive Summary......................................................................................................ix

Section 1. Introduction.................................................................................................1

Research Objectives and Terms of Reference............................................................1

Research Objectives...............................................................................................1

Terms of Reference................................................................................................1

The Food Services Market and Industry Structure in the UK....................................2

The Food Services Market.....................................................................................2

Market Trends and Segmentation..........................................................................3

The Vanishing Distinction between Food Service and Retail...........................3

The Profit Sector................................................................................................3

Business Contract Commercial Catering...........................................................3

The Cost Sector..................................................................................................4

Purchasing in the Cost Sector............................................................................4

HM Prisons.........................................................................................................4

NHS....................................................................................................................5

Ministry of Defence...........................................................................................5

School.................................................................................................................5

Social Services...................................................................................................6

Industry Structure...................................................................................................6

Operators............................................................................................................6

Wholesalers and Distributors.............................................................................7

Who took part?...........................................................................................................8

Limitations and Issues of Access.............................................................................11

Structure of this report.............................................................................................12

Section 2. Findings – Business Continuity Management...........................................14

The Food Service Operators and Their Customers..................................................14

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The Small Business Perspective...........................................................................14

The Branded Restaurant & Grab & Go Chains....................................................16

The Public Services Organisations.......................................................................21

Food Service in Secure, Closed or Hostile Environments...................................25

Business Continuity in the Big Contract Catering Companies............................28

Business Continuity Higher up the Supply Chains..................................................37

Business Continuity in Wholesale/Distribution...................................................37

Business Continuity for Suppliers of Foodstuffs.................................................41

Section 3. Findings – Actual Disruptions and Known Weaknesses..........................47

Everyday Hazards: The Small Business Perspective...............................................47

Fire...........................................................................................................................48

Flood........................................................................................................................49

Water, Water Everywhere…but Not a Drop to Drink.............................................53

Weather, Transport, and Climate Change................................................................54

Commodity Prices, Failing Suppliers and the Downside of the Global Market......56

Local-for-local?........................................................................................................61

Livestock diseases....................................................................................................63

Food Safety..............................................................................................................66

Reputational Risk and the Media.............................................................................70

Skills Shortages........................................................................................................71

Section 4. Findings – Widespread Systemic Disruptions..........................................73

Loss of Power...........................................................................................................73

Fuel Shortage for Road Transport............................................................................81

Pandemic Flu – Loss of People................................................................................86

Facing a Pandemic: Views from the Hotels and Retail Front Line......................87

Pandemic Planning for Vulnerable Populations..................................................88

Pandemic Planning by the Contract Caterers and Wholesale Distributors..........94

The Food Processors and Importers.....................................................................97

Unanswered questions..........................................................................................99

Doing the Right Thing.......................................................................................100

Section 5. Findings – Withstanding an Emergency.................................................102

Buffer Stocks, Surges and Waste Disposal............................................................102

The Hoteliers, Retailers, Restaurant Chains...........................................................102

The Public Sector and Closed Environments.........................................................104

The Wholesale Distributors....................................................................................107

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The Contract Caterers............................................................................................109

The Food Processors and Importers.......................................................................112

The Cash Flow Question........................................................................................116

Section 6. Conclusions..............................................................................................117

The Extent and Quality of Business Continuity in Planning.................................117

Size, Complexity and Business Models.............................................................117

Regulatory Compliance as a Driver of BCM.....................................................119

Customer Pressure..............................................................................................120

Actual Disruptions, Near Misses and Known Weaknesses in BCM......................120

Localised disruptions.........................................................................................120

Sudden On-set Emergencies and Systemic Disruptions....................................121

Pandemic Planning.................................................................................................122

Minimising risk......................................................................................................123

Global v Local and the Transport Questions..........................................................124

Appendix A................................................................................................................127

Business Continuity Management in the Food Service Sector - Interview Schedule127

Part 1. Interviewee Profile & Business Continuity Management within the Organisation...........................................................................................................127

Part 2. Disruptions, Near Misses and Known Weaknesses....................................127

Part 3. Widespread Systemic Disruptions..............................................................128

Part 4. Stock Holdings and Inventory Management..............................................128

Part 5. Beyond your organisation?.........................................................................128

Part 6. Other...........................................................................................................129

Appendix B................................................................................................................130

Review of Literature & Other Research.....................................................................130

Sustainability and Food Security context...............................................................130

Sustainability and UK Policy Perspectives............................................................131

Food Security and the UK: An Evidence and Analysis Paper...........................131

Promoting Sustainability within the UK................................................................133

Public Sector Food Procurement Initiative (PSFI).............................................133

Research into Food Security and Defence in the UK.............................................135

Research into BCM in the food sector supply chains........................................135

Oxford Brookes University: Sustainable Food Procurement for Contract Caterers............................................................................................................................136

Chatham House: UK Food Supply in the 21st Century: The New Dynamic......136

International Concerns: Contamination and the Fear of Malicious Interventions. 138

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Protecting the Global Supply Chain...................................................................138

Food Security, US-Style.........................................................................................139

The US Food and Drug Administration (FDA) Centre for Food Safety and Applied Nutrition...............................................................................................140

Industry Self-Assessment Checklist for Food Security.....................................141

Food Emergency Management in the US..............................................................142

Operation ‘Flu for Thought’...............................................................................143

Academic Research in North America on food chain security and defence..........143

Michigan State University..................................................................................143

Georgia Institute of Technology........................................................................146

University of Minnesota.....................................................................................146

References..................................................................................................................148

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List of Vignettes Page NumberThe Buncefield Fire: An Immediate Response………………………………………18

Lean Production Principles for the Hospital’s Catering Operations…………………23

‘Rat Packs’: A Taste of Home……………………………………………………….27

Managing Conflicting Demands……………………………………………………..36

Planning for Business Recovery: Examples of Depot Events………………………40

Buncefield: The Retailer’s Response ………………………………………………49

Summer Flooding: Lessons from a North East Coast Town………………………...50

Feeding the most Vulnerable………………………………………………………...51

Contingency Planning for a London Hospital……………………………………….53

Ready Meals: Getting the Price Right…………………………………………….....59

Security of Supply or Greenwashing?..……………………………………………...62

New Processes for the Fast Growing International Chain…………………………...68

The Impact of Sudan 1……………………………………………………………….69

Fresh Produce………………………………………………………………………...70

The Undercover Journalist…………………………………………………………...71

Energy Policy?..……………………………………………………………………...73

Limiting Factors……………………………………………………………………...82

Preparations in Prison………………………………………………………………..90

The Hospital Caterer: First in the Queue?..………………………………………….91

The Plea for Joined-up Thinking Off-shore……………………………………….....93

Demands and Difficult Decisions……………………………………………………97

The Undeclared Emergency………………………………………………………...105

Pay-As-You-Dine…………………………………………………………………...107

The Supply Chain For Deployed Operations……………………………………….108

Contract Changeovers from a Unit Manager’s Perspective………………………...111

Cash Flow at the Catering Company………………………………………………..116

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List of Tables Page Number

Table 1: Sample Company and Respondent Profiles…………………………….. 9

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Acknowledgements The author acknowledges the support of both the Department for Environment, Food and Rural Affairs and the Centre for the Protection of National Infrastructure, as commissioners of this work.

The author also wishes to thank Lt Col Marc Haywood RLC, for his work on the preparation of this final report. Last, but not least, the author wishes to thank the organisations who participated in this study and the managers themselves, who gave up their time and shared their knowledge and experience for the benefit of us all.

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Executive SummaryThis report presents the findings of a study of business continuity management (BCM) in the food service industry. The aim of the research was to ascertain the state of BCM in the food service sector. The work was commissioned by the Department for Environment, Food and Rural Affairs and the Centre for Protection of National Infrastructure. The work builds on and complements an earlier study, Resilience in the Food Chain, conducted in 2005 in the food retail sector.

The purpose of the work is to contribute to evidence-based policy making, in relation to Defra’s responsibilities as Lead Government Department for Food and Drink under the Cabinet Office Capabilities Programme. The supply of food and water are two of nine elements of the UK’s Critical National Infrastructure.

The research is a qualitative study which draws directly on the knowledge and experience of 41 managers from 26 organisations across the food service industry. They included some of the best known High Street chains; leading contract catering, facilities management and wholesale distribution companies; owner proprietors of a small sandwich bars and independent hotels; managers from a hospital trust, a city council and representatives of the armed forces, together with suppliers of fresh produce, meat, ready meals and a representative of an industry association. The interviews were conducted over a 10 month period between September 2007 and June 2008.

The findings of the research show that in terms of BCM, there are in effect two separate agenda running in parallel across the industry. One is everyday BCM/operational risk management, including food safety and everyday commercial risk. The other is pandemic planning.

The study found that in both the private and public sectors BCM provision is more or less fit for the purpose. However, fit for purpose does not mean that the organisations could continue operations in any circumstances, or that they are rigorously implementing best practice, as set out in the British Standard BS 25999. It means that the private sector organisations have, for the most part, implemented measures to comply with regulatory requirements in terms of food safety, traceability and recall, and have complied, where appropriate, with Stock Exchange requirements for corporate governance. They have taken steps to safeguard their businesses from the most obvious threats/hazards to their mission critical assets and activities where a business case exists.

In the public sector, organisations are also planning around mission critical activities, but usually focusing on core service provision. Food service is a support activity for most of these organisations, not a core service. Key food service suppliers are increasingly being required to undertake BCM as a contractual requirement, but their planning tends to be based on maintaining operations in otherwise normal circumstances – often with bought in sandwiches as a default option. They are not planning for prolonged national emergencies. There are of course exceptions, e.g. PFI prisons, where pandemic planning is a requirement.

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The larger food service companies have looked at the problem of pandemic planning – often in response to the demands of their customers. The financial service sector has been influential in driving this forward. The City has been putting pressure on its own service suppliers, and the insurance companies have been offering consultancy services to help larger companies understand the requirements. Some of the food service operators have already established contingency menus and protocols, some had asked their wholesale or distribution companies to prepare pandemic plans. Beyond that they are maintaining a watching brief of the World Health Organisation’s advice, and looking to Government for further instruction.

There are already shortages of skilled and unskilled workers in many parts of the food service industry. In a pandemic demand is expected to fall in the most profitable areas of food service, but a surge in demand is expected in other critical areas, including sections of the low-margin cost sector. Staff shortages are expected to intensify in all areas, including processing and distribution. The contract catering companies are essentially people businesses; they raised some important unanswered questions about human resources management and their legal positions over duty of care. The operators providing food services in secure environments and to vulnerable populations would also face particular problems in finding replacement staff quickly, because of the requirements for security and Criminal Records Bureau (CRB) checks.

The Department for Health and City firms have encouraged suppliers to engage in pandemic planning exercises. These were reported to have been useful to those involved. There were requests that similar direction and coordinated planning be given to food service companies supporting the off-shore industry and across the distribution sector. The regional hotel proprietors (owners of large independent regional hotels) also expressed a willingness to engage actively in supporting Government efforts to assist their local communities.

Food scares were always damaging, but for other localised disruptive events such as fires or floods, larger multi-site companies had coped well with the loss of single sites. The food service operators rely heavily on the ability of the wholesale and distribution companies to help them overcome disruptive challenges. The Buncefield fire demonstrated that a major event close to one of the distribution hubs can knock out several different businesses’ distribution centres, as they cluster at the same locations. Nevertheless the distributors have demonstrated an ability to overcome localised or short-term problems. For small single site businesses the loss of their operating premises is more likely to be catastrophic.

Some of the larger food service companies had experienced localised disruptions from flooding in 2007, but had successfully switched activities to other sites. Most of the large operators and the military had received requests to assist with supplies of bottled water. In the worst affected cities the large supermarket chains had also supported local authority emergency planners with supplies of infant formula, as well as clothing and essential supplies of personal hygiene products. There were specific lessons learned about managing the feeding requirements of distressed and displaced people.

The managers involved in this study reported few problems from the 2000 fuel protests, other than that staff in some areas had been unable to get to work. Food supplies were maintained. Some of the food processing companies did envisage

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problems in event of a prolonged fuel shortage. The operators and wholesale distributors were perhaps over confident that they could rely on fuel suppliers, public service customers and, ultimately, the Government’s priority user scheme to guarantee supply.

Some of the managers also clung to a belief that they would receive priority status for energy supplies, and for generators in an emergency situation. Few had thought through in any detail how their businesses would cope with a widespread or prolonged failure of the national grid.

On a day-to-day basis the food service sector is inherently resilient because of its diversity. The combination of very large and very small operating businesses, using a variety of business models, also adds to its flexibility.

The contract caterers’ business models avoid the use of working capital (they rely on takings to pay suppliers), as such they are designed to minimise financial risk. However they are susceptible to cash flow problems, whether caused by late payment or rising costs and slowing demand. Loss-making contracts would render small companies bankrupt, larger ones are more likely to withdraw from the contract.

The distribution element is also a combination of a few very large businesses and thousands of small ones. The wholesale distribution business is the most consolidated, and is recognised across the industry as the point of greatest vulnerability for larger food service operators, and for the cost sector as a whole. If one or both of the two largest wholesale distribution companies failed, few of the other businesses could step in quickly to manage their volumes.

From across the food service operators, the public sector, and the food suppliers themselves, there were reports of exceptionally high instances of supplier bankruptcies, including some very well established food production and supply businesses. Successive shortages of foodstuffs, rising fuel and energy prices, together with changes in the exchange rate, were all affecting the food service supply chains. Suppliers were refusing to renew supply contracts for more than a few months, others were walking away unless terms were renegotiated.

Despite the problems with food inflation, or perhaps because of it, the sector is moving forward in other ways on the whole question of sustainability. It is recycling packaging, composting food waste and switching vehicle fleets to run on bio-fuels, often using its own recycled cooking oil. Demand for locally-sourced produce has also grown in recent times amongst clients and customers. Local-for-local is the mainstay of some of the smaller operators’ food service offer, but the UK as a whole could not switch to indigenously produced foods. The sector remains heavily dependent on large volumes of imported foodstuffs, including meat, cereals, fruit and vegetables. Any disruption to international trade would rapidly impact upon the food service industry, particularly the high volume and low margin cost sector.

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Section 1. IntroductionResearch Objectives and Terms of Reference

Research Objectives

The purpose of this study is to ascertain the current state of BCM in the food service sector; in particular the scope, extent and limitations of continuity planning, practices and procedures. As such it builds on and complements Resilience in the Food Chain, explicitly addressing its two stated limitations:

It acknowledges that food chains are increasingly international. Whilst this study still addresses the supply of food and drink to England, it accepts from the outset that there are UK-wide and international dependencies.

It recognises that a serious disruption to supply in one sector (food retail) will likely result in a displacement of demand to others. Limitations of time and resource precluded the inclusion of the catering sector. This study addresses that shortcoming.

The work will contribute towards evidence-based policy making in relation to Defra’s responsibilities as Lead Government Department for food and drink supply under the Cabinet Office Capabilities Programme (Cabinet Office, 2006). To that end it will aim to provide some indication of the wider resilience of the system and insight into the scale of event/potential disruption that could absorbed, given current planning assumptions. It is anticipated that the proposed approach will allow conclusions to be drawn about where industry does not provide resilience, and enable generic improvement options to be identified that would reduce levels of risk.

Terms of Reference

1. To assess the extent and quality of Business Continuity Planning in the food service sector: public sector; restaurants (including fast-food and takeaways); pubs and hotels, and the supply chains on which the food service sector depends.

2. Identify cases of actual disruptions experienced, near misses and known weaknesses in this sector that illustrate the extent and range of significant disruptions, for which measures should be undertaken to ensure Business Continuity.

3. To highlight (without identifying individual companies), potential or actual shortcomings in Business Continuity Planning processes within the companies studied.

4. To identify generic options for improvement that could be used to minimise unacceptable levels of risk, identified as likely to cause significant disruption to the food service sector.

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5. To consider the extent to which the Food Service sector supply chains are becoming increasingly international and whether over-reliance on food imports could make the sector susceptible to disruption, if transport / logistics and other dependencies were to be disrupted.

6. A systems-based approach will be used to identify linkages between threats to food supply and to identify monopoly suppliers and their significance in relation to food security.

7. The researcher is to undertake a selective review of the relevant literature and related research programmes, building on that carried out for Resilience in the Food Chain.

The Food Services Market and Industry Structure in the UK

The Food Services Market

Put simply, the food service sector comprises all outlets involved in the “provision of meals out of home” (IGD, 2005).

A number of industry associations with interests in the food services sector, including the National Farmers’ Union and IGD (formally the Institute of Grocery Distribution), provide freely available and user-friendly guides to the industry, its structure and purchasing practices. In-depth studies of the market, with statistical data, are also produced for some parts of the industry by the British Hospitality Association and by authoritative independent market research sources such as Mintel, Key Note, TNS or Datamonitor. Defra’s own Survey’s, Statistics and Food Economics Division reviewed a number of these in January 2007. The resulting report Food Service and Eating Out: An Economic Survey provides an overview of trends and current issues within the industry, together with key statistics. It highlights the absence of common definitions or basis for collection of statistical data between different sources, making reliable comparisons between sources difficult. Consequently, figures vary on the annual worth of the UK food service sector over recent years, but it was estimated to be worth £33.2 billion pounds per year (NFU, 2006) and growing.

Market Researchers Key Note (2006) predicted that the catering market would grow by just over 4% year on year to 2010. Clearly these predictions were made before the credit crunch and indications of recession were clearly visible, but they give a feel for the extent of economic activity and recent long-term market trends. As to the number of outlets, in Horizons for Success (2005), it was calculated that there were almost 263,000 food service outlets in the UK, serving 8,583 million meals per annum in the UK.

This review does not seek to provide in-depth critiques or replicate any of these earlier market research studies, but draws on a number of these sources, notably the concise and accessible introductions to the food services market prepared by the National Farmers’ Union as a guide to its membership (NFU, 2006a,b), and Mintel’s detailed (2006) report into Contract Catering in the UK.

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Market Trends and Segmentation

The market tends to be referred to by the independent market research agencies as falling into two sectors: ‘Cost’ and ‘Profit’. Cost is largely public service, whilst profit tends to be direct to the paying consumer. However the distinction is not always clear, with arguably a third ‘Business Contract Commercial Catering’ somewhere in between. We will come back to these later in this section. In practice though these distinctions tell only part of the story, as the grocery multiples are increasingly blurring the boundaries of the category itself.

The Vanishing Distinction between Food Service and Retail

In 2006 market research analysis group Mintel (2006a) predicted they by 2012 the food service sector in the UK will have grown to match the food retail market in value, though it is becoming increasingly difficult to distinguish between the two. The grocery multiples are encroaching on all areas of food service market, with the exception of closed environments (e.g. prisons and off-shore rigs). The supermarket and department stores are revising product ranges and store formats to include take-away food counters as well as in-store cafés and restaurants. This is fuelled by two distinct consumer trends: (1) working from home and (2) the erosion of the formal lunch break.

Mintel’s Marketing to Tomorrow’s Consumer, published in September 2006 (Mintel, 2006b), reveals that just under a third of adults working full time had been offered the option of working from home. Those who continue to work from their employer’s premises are increasingly snatching a few minutes to go out onto the high street to purchase ‘grab and go’ foods, to be consumed as they work back at their desks. The culture of desk dining reduces demand for on-site meals-on-a-plate and is increasing demand for (biodegradable) packaging.

The Profit Sector

The Profit sector includes those sections of the hospitality industry that cater direct to the public, via pubs, hotels, restaurants, cafes and some leisure venues. It is potentially high margin and is where the grocery multiples are focussing their attention. It is larger than the cost sector in terms of number of outlets and meals served, accounting for around 70% of the total food service market by value (NFU, 2006b). In terms of value and number of outlets, it is concentrated in large urban areas, with a bias towards London and the South East. Within the Profit Sector, the British Hospitality Association (BHA) provides more recent figures for the food purchasing bill for the restaurant, hotel, pub and catering sector, placing it at £10bn in 2007, with a further £14.5bn spent on purchasing cleaning materials, alcohol, and cold soft drinks not to be served with food in pubs (BHA 2008). Sales for this sector are of course much higher.

Business Contract Commercial Catering

Staff canteens, leisure venues, corporate hospitality, and buffet lunches might all be considered to fall into this grouping. Trends in this area include growing demand for healthier, freshly prepared local food. Civic Catering may also fall in this category, as it comes in at the high end of Local Authority catering. It too tends to lean towards

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high quality food, usually cooked from fresh, often using and promoting local produce.

The Cost Sector

The Cost sector is principally about public procurement. It is typically characterised as low margin and contract driven. It is concerned with providing essential, often subsidised, meals to institutions such as schools, hospitals, prisons, specialist care homes, government and local authority services. The totality of spend on Food Procurement in the Public Sector (encompassing food , Catering Services and Catering equipment) is estimated at £2.1 billion. . According to Mintel, it has suffered a marked downturn since 2005, with significant number of schools and hospitals opting to bring sourcing and catering activities in-house following bad publicity over the nutritional content of the meals (e.g. the Jamie’s School Dinners TV series).

Purchasing in the Cost Sector

There are marked differences in procurement practices across the public sector in terms of purchasing structures and methods, and over quality, volume, frequencies of deliveries (NFU 2006).

HM Prisons and Ministry of Justice

The National Offender Management Service (NOMS) which includes HM Prison Service supports 128 public sector prisons with catering for 79,000 prisoners 24 hours per day, 365 days per year. The supply of food to prisons is managed by a specialist team of category managers who are responsible for sourcing, pricing, buying and specifying products for three national contracts:

• Fresh bread

• Grocery, chilled fresh produce

• Frozen food – which includes meat and poultry

All prisons buy from these contracts using an electronic ordering system; the available range is controlled by the use of electronic catalogues. Key stakeholders within the service determine this range to meet religious, cultural and medical needs. A challenge for the service is meeting the need for local menus and providing local choice. A regional team of contract managers are responsible for the management and implementation of national and regional contracts and are based out of four regional offices.

Contracts are awarded by NOMS to national wholesalers in the interest of cost efficiency and consistent standards across the service. Each food product used in prisons is delivered by one of these contracted suppliers. This reduces the number of deliveries, road miles and gate openings, and so increases security. These first tier suppliers then contract with their second tier food suppliers, including local farmers and growers. NOMS encourages them to use local suppliers where possible.

Food in the wider Ministry of Justice is provided by catering companies who offer a range of services that include full on site restaurants, delivered sandwiches and vending machines. A combination of contractual models are used depending on the

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requirement and commercial benefit ranging from national frameworks with national or multi-national companies to local owner-managed providers.

In HM Court Service there is a legal requirement to provide refreshments to jurors in retirement over lunch but food provision is also made for judiciary, staff and the public.

NHS

NHS Trusts are all budget holders so can procure from wherever they wish although the main food contracts are through the NHS Supply Chain. Some choose to use the NHS Purchasing and Suppliers Agency (PASA) to negotiate contracts on their behalf. The latter operate under accredited framework agreements, e.g. there are 20 approved butchers in England who are able to trade with the Trusts, though the local hospitals are under no obligation to do business with them. PASA lets contracts on a 3-yearly basis, but negotiates prices quarterly on behalf of the Trusts.

Ministry of Defence

The Ministry of Defence manages its contracting through a centralised contracting service via the Defence Equipment and Support Agency. Procurement was previously via a 7 year contract, but as of January 2006 this has been reduced to 3 years. The contractor sources and distributes all foodstuffs within the UK and theatres of operations worldwide. What to procure is reviewed quarterly by panels in the UK and overseas where forces are based, with new product approval processes taking up to 6 months. All food must be EFSIS or BRC Higher Accreditation. Meat is delivered frozen, prices agreed at quarterly intervals. At the consumer interface the ‘Pay as you Dine’ (PAYD) arrangement, managed by food service contractors is gradually replacing traditional food charging arrangements for service personnel.

School MealsIndependent market research studies (e.g. Mintel – Children’s Packed Lunches (2006c) revealed that around a third of parents/guardians reported that their children routinely ate school meals (including those who qualify for free meals). 45% of parents/guardians always packed lunch for their children. These tended to be more affluent families. Some families switched between the two. A small proportion stated that their children either buy lunches elsewhere or return home for lunch. However the overall uptake of school meals fell after the screening of Jamie’s School Dinners (School Food Trust, 2006). Following TV chef Jamie Oliver’s campaign to improve school meals, the School Food Trust and Department for Children Schools and Families have produced guidance around food to support schools and Local Authorities on all aspects of food purchasing and preparation. There has been a slight increase in school food take in 2007 and 2008. New standards have been set for nutrition which come into force in 2009. Ingredients budgets have been increased and central Government funding is being directed into (re)establishing a school meals infrastructure, allowing more schools to prepare and cook food on the premises. Meanwhile lucrative vending machines selling fizzy drinks and confectionary have been banned from school premises. Whilst the removal of readily available confectionary helps the cause of healthy eating, it reduced revenue to schools and undermined the financial viability of some operators’ contracts. Despite the fact that

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some companies had dropped unprofitable state school meals contracts, the BHA reported a 25% rise in the total number of school catering outlets in 2007.

Social Services

Local Authority Social Services Departments are responsible for the provision of meals on wheels and residential care homes. Meals on wheels are usually frozen ready meals, reheated and delivered. Residential care homes tend to have meals cooked on site, from a combination of fresh and frozen ingredients.

Industry Structure

The structure of the food service industry is more complex and opaque than grocery retailing, with the largest players often appearing in several guises within the supply chain. Taking the section of the supply chain between producers/manufacturers and the end customer, there are two broad groups of activities: operators, and intermediaries in the form of wholesalers and/or distributors.

Operators

These organisations operate food outlets, either undertaking in-house or contracting out some or all front and back office activities, including the spectrum of kitchen operations and meal preparation. In terms of size, they can include ‘Profit’ sector branded fast food franchises (e.g. McDonalds) through to single site owner-operators of restaurants, sandwich bars, and delis.

Contract caters are another major class of food service operators, active in the Cost sector and/or business-to-business Profit sectors. They rarely own the premises (unless a subsidiary is involved in PFI contracting), but provide catering services. The industry is polarised between a small number of very large players (some multi-nationals) and a number of smaller providers. Contract caterers are essentially people businesses, supplying low-overhead, usually minimum wage manpower. Staff costs account for almost half of industry turnover. Food is the other major cost, equating to a third of total turnover. Equipment, energy and distribution costs make up the balance. Despite a surge in recruits from the EU Accession States, from 2004 management and skilled staff vacancies in food services can be hard to fill (Mintel, 2006a).

Some of the largest food service operators have been steadily expanding their offer to provide a one-stop shop to large customers (businesses and Government departments). They are seeking economies of scale by bundling catering into a single contract that covers other facilities management services, including cleaning, reception services, security, waste management and laundry. In doing so the operators are moving into direct competition with some of the largest facilities management companies. As the larger companies diversify to pick up ever larger contracts, smaller local companies (often owner-managed) with flexible business models step in to service focussed catering contracts and smaller businesses.

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Wholesalers and Distributors

The food service operators are supplied by one of two routes. The first is directly by the food producers or manufacturers. The second is through intermediaries – wholesalers and/or distributors. For the purpose of this report a distinction is made between wholesalers and distribution activities, though they are often bundled together in a service package.

Wholesalers purchase from manufacturers and produce suppliers, they may then deliver the goods directly to their customers or sell on to food service outlets from wholesale sites or cash & carries. Alternatively, the food producers or the food service companies may contract transport and distribution companies to provide these services.

According to the NFU around half of all food supplied to food service operators in the UK is delivered to point of use by wholesalers. Wholesalers include cash & carry companies, as well as some of the multinational food service companies. Just as in the other parts of the food service sector, there is an extreme polarisation in market share for wholesale and distribution to services. The two largest specialist distribution companies account for around 13-14% of the wholesale market and over a quarter of the total market share for distribution to food services1. The rest of the market is fragmented amongst thousands of smaller companies.

Some of the largest wholesalers are moving on from their traditional role, and are looking for opportunities to broaden their service offer, through vertical integration and a range of other services, from purchasing and distribution, through to manufacturing, new product, brand and menu development and even kitchen design.

Meanwhile, below the largest wholesalers a growing number of smaller organisations are springing up, providing regional hubs for locally produced foods. Their ability to process and supply a large number of small orders makes them invaluable to smaller food service operators, who are more likely than the larger businesses to opt for locally sourced produce. Consumer demand is nevertheless prompting even some of the largest food service companies to offer a ‘local-for-local’ option. The Regional Food Groups, often supported by Regional Development Associations and the NFU are facilitating this process.

1 Figures provided by the companies themselves.

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Who took part?A total of 41 managers representing 26 organisations took part in this study. Seven of the companies had ownership links to one or more of the participating businesses (subsidiaries, joint ventures, consortia etc). The organisations ranged in size, reach and purpose, from life and death public services, to global fast food giants, and a single site proprietor-run sandwich bar. Table 1 provides a summary of the actual company and respondent profiles. To protect commercial confidence individual participants and their organisations are not named in this study. Where company names do appear they refer to third parties.

In designing this research, the original aim was to replicate the research design used in an earlier study of the grocery retail supply chain, Resilience in the Food Chain, including the adoption of a similar sampling strategy. In the event this proved to be impractical, because of the more diverse nature of the sector at the consumer interface and the profiles of the organisations in the food service industry.

The final research design involved some of the country's leading food service and facilities management companies, serving both closed and open environments for some of their largest cost sector customers - including representatives of critical elements of the public sector. Soundings were also taken from operating companies serving the public directly, such as restaurants, hotels and sandwich bars. Going backwards from the retail/customer interface, the study brings in companies providing wholesale or contract distribution services to the food service sector, some food manufacturing companies and their suppliers, and a representative of one of their industry associations. Given the ultimate purpose of this study, the sampling is purposefully skewed towards the public sector and other vulnerable groups.

In value terms the food service industry is heavily weighted towards London and the South East, but a conscious decision was made not to allow this study to become South East-centric. Consequently opinions were sought from managers from all over Great Britain; from London and the South Coast, to the West Country and the Welsh Valleys, through East Anglia, and via the North of England up to Aberdeen. The challenges they faced ranged from providing fine dining facilities in the City of London, to the provisioning of High Street burger bars or the gas rigs of the North Sea, to school meals for children made homeless in the 2007 floods and feeding the troops in Afghanistan.

Requests were made to each organisation for interviews with at a least two managers, who had responsibility for logistics/supply chain activities, business continuity, risk, security or quality management. Due to the different size and profiles of the service providers involved it was not always possible to secure individuals with the specified responsibilities. Some companies had no nominated specialist because that aspect of their business was handled by a contractor. In other businesses managers would be responsible for a sector or specific client, rather than a discrete functional role, while owner proprietors took responsibility for everything. Consequently, in comparison to Resilience in the Food Chain, there were marked differences in the numbers and functional range of the managers put forward by the organisations participating in this study.

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An interview schedule was used to provide a framework for discussions (see Appendix A). The interviews averaged 2 hours each, the shortest lasting one hour. All but three were conducted face-to-face at the interviewees’ offices. Three were conducted over the telephone to overcome diary or logistical constraints. Whilst most of the managers were interviewed alone, some managers requested that the interviews proceeded with other colleagues present.

Analysis and the presentation of findings proceed through thematic coding of answers, with direct quotations used to allow the voices of the interviewees to be heard. The results have been presented here in a style which protects the identities of individuals or organisations concerned.

Role/Industry Position Job titles Date1 Ministry of Defence: Defence

Equipment & Support Agency, Integrated Project Teams

Food Supply Management*

Catering & Leisure*

Food Supply Management*

3.10.07

2 Local Authority School Meals Head of Health & Wellbeing 2.11.07

3 NHS Hospital Trust Assistant Director of Emergency Preparations/Resilience

22.11.07

Table 1: Sample Company and Respondent Profiles.

* Armed Forces Personnel

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Role/Industry Position Job titles Date4 Facilities Management Company

(Military Mess)Assistant Mess Manager

Head Chef

11.10.07

5 Food Service Consortium (Military Operations)

Business Management Controller 11.1.08

6 Facilities Management Company (Hospital Services)

Catering Development Manager 22.11.07

7 Facilities Management Company (Prisons)

Healthcare Advisor 2.10.07

8 Facilities Management Company (Offshore)

Director Offshore Division 29.1.08

9 Large Food Service & Facilities Management Company

Corporate Affairs Director

Strategy Director Healthcare Service

2.10.07

10 Large Food & Support Service Company

Director of Risk Management

Supply Chain Director

26.10.07

11 Large Food Service & Facilities Management Company

Safety Director

Purchasing Director

18.2.08

26.6.08

12 Independent Contract Catering Company

Supply Chain General Manager

Head of Health & Safety

22.2.08

13 Food Service Wholesaler/ Distributor

Technical Director

Audit Director

30.1.08

14 Food Service Wholesaler/Distributor

Director of Operations: Services 12.9.07

15 Branded City Hotel Owner/Proprietor 17.4.08

16 Branded Rural Hotel Owner/Proprietor 14.5.08

17 Department Store Restaurant/Grab & Go Food Retailer

Technical Manager

Food Logistics Manager

Trading Executive

26.2.07

Table 1: Sample Company and Respondent Profiles (continued).

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Role/Industry Position Job titles Date18 International Café/Restaurant/Grab

& Go Food RetailerCommercial Director 16.4.08

19 International Sandwich/Grab & Go Chain

Director of Operations (Europe)

Food Technologist

13.1.08

20 International Fast Food Restaurant Chain

Supply Chain Manager 10.1.08

21 Independent Sandwich Bar Joint Owner/Proprietor 5.3.08

22 Producer/Supplier Chilled & Frozen Meals

Site Director

Technical & Quality Assurance Director

Purchasing Director

Logistics Manager

13.3.08

23 Importer/Distributor of International Food Products (including meat)

Finance Director

General Manager: Special Contracts

11.1.08

24 Fresh Produce Supplier (International)

Technical Services Director 31.2.08

25 Fresh Produce Supplier (UK) Technical & Quality Director 13.5.08

26 Industry Association: Chilled Foods Secretary General 18.12.07

Table 1: Sample Company and Respondent Profiles (continued).

Limitations and Issues of AccessIn most instances access to the public sector organisations was secured through indirect personal contacts. For the large food service companies it was obtained through ‘cold calls’, and later, by word-of-mouth contacts from other participants. All were willing to participate, even if arranging diary dates proved to be a challenge. The wholesalers/distributors and ready meal and sandwich providers were brought in by referrals from customers, or by the smaller industry associations.

From a ‘cost sector’, public service perspective, the major limitations were that organisations devoted to the provision of food services and food stuffs for the elderly are underrepresented in this study. Ideally the research would have included a provided of social care for the elderly (e.g. meals on wheels) and the manufacturer of specialist nutrition products for the elderly and infirm. No specialist service provider agreed to participate, though this shortcoming is mitigated to some extent in that two of the respondents in more general roles did have experience of caring for the elderly. A leading producer of specialist nutrition did agree to participate, but the researcher was unable to secure interviews with the nominated contacts.

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From a ‘profit sector’ perspective, it was access to the retail side of the food service and hospitality sectors that proved most difficult. The principal problem was confidentiality; high street branded chains and big name hotel groups are notoriously reluctant to place senior manager’s contact details in the public domain. Consequently access has been through cold calls to their press officers, who act as gate keepers. Most did not return calls or simply declined to be involved. The very large international hotel groups were particularly reluctant to engage in the research. One spokesman for a big-name group explained their refusal to participate: firstly, because it had no policies in this area, though that was currently under review; secondly, despite the approach coming from a researcher at a secure military site and via a Ministry of Defence email, the hotel group felt that the researcher might pose a risk to its security. This shortcoming was mitigated with the help of one of the international branded marketing groups for independent hotels, who arranged contacts with two of their smaller hotel chain operators. This had the advantage of improving the representation of regional small and medium sized businesses.

Structure of this reportThe main body of this report is structured into six sections. The review of other relevant literature and research is presented at the back of this report in Appendix B.

Section 1: Introduction, sets the context. It gives an introduction to the research, its objectives and terms and conditions, followed by a brief overview of the food services market and industry structure in the UK. This section also gives the reader an indication of the number of organisations and managers who took part, along with the limitations of the sampling strategy.

Section 2: Findings - Business Continuity Management, examines business continuity management in the food service organisations, beginning at the consumer interface and working backwards through the supply chains to the food producing, importing and processing companies.

Section 3: Findings - Actual Disruptions and Known Weaknesses, covers the problems experienced by the managers and their organisations, ranging from fire and flood, to livestock diseases and fears for food safety, through to the difficulties associated with labour shortages, soaring commodity prices, and climate change.

Section 4: Findings – Widespread Systemic Disruption, looks at the loss of power, fuel for road transport and the loss of people from a flu (Avian Influenza) pandemic. It covers the views of hoteliers, contract caterers, distributors and others along the supply chain, and considers the key HR questions that would require resolution in the face of a pandemic.

Section 5: Findings - Withstanding an Emergency, looks at the buffer stocks held throughout the supply chains. It answers questions such as how long organisations could maintain operations if the movement of good were stopped, and whether waste disposal would become a problem. It looks at recovery times for the supply chains and raises questions about cash flow.

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Section 6: Conclusions, examines the findings in the light of the terms of reference of this study and its stated aims and objectives.

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Section 2. Findings – Business Continuity ManagementThis section reports on Business Continuity Management (BCM) within the participating organisations. It describes the scope of BCM measures in place, why they were introduced, how the measures are being introduced and who is responsible for them. As such it aims to:

Assess the extent and quality of Business Continuity Planning/Management in the food service sector: public sector; restaurants (including fast-food and takeaways); pubs and hotels, and the supply chains on which the food service sector depends.

It begins with an examination of the business continuity provision within the food service operators and, where appropriate, that of their public sector clients. This is followed by the findings of interviews with their wholesalers and distributors, suppliers of prepared ready meals and produce. Each outlines their own internal BCM provision, tools and techniques in use and their interactions with their own suppliers.

Just as in the earlier study, Resilience in the Food Chain, no attempt was made to provide academic or otherwise predetermined definitions of the meaning of BCM. The respondents were allowed to interpret Business Continuity Planning and BCM in the way that was most meaningful to them and their organisation’s circumstances.

The Food Service Operators and Their CustomersThe managers interviewed for this section of the study represented 13 of the larger businesses involved in food service operations (or their subsidiaries) across the various sub-sectors. Four of the operators are stock exchange quoted companies, others are wholly owned subsidiaries of these or other listed companies, private equity holdings, or international franchises or contract-based consortia. Three public sector organisations and three small owner-run businesses are also represented.

The Small Business Perspective

The small independent businesses were all consumer facing, providing food services direct to the general public. One was a successful sandwich bar that also did outside catering for businesses, doorstep deliveries to local businesses, catering for weddings and other social events. The others were small hotel groups/independent hotels in rural and capital city locations. They catered for the tourist trade and/or their local business communities. The interviewees were all owner/proprietors, who had been put forward for this study by their respective industry associations or marketing groups. Within these smaller businesses formal BCP was not always in place, but the businesses are the proprietors’ livelihoods, so contingency planning was certainly considered. External factors, such as power cuts and memories of terrorist campaigns factored into their thinking.

“I had not heard the term BCM before being contacted about this study, but understand it to mean ‘Does life continue as normal in various circumstances?’…

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We’ve had no serious disruptions – but have lots of contingency plans in place e.g. the day I took over the business they were building the by-pass and we lost the phone to a mechanical digger. The chef was way ahead of his time for those days and had a mobile phone. We diverted the calls to that for 2 days…We’ve had power failures, but usually just internal electrics fusing, but I’m practical and can work it out. After we had a problem we split the power supply into two - didn’t do this personally. Now we have the front of shop and back of shop on two separate circuits to reduce the chance of losing all the power at once”.

“I’m the Managing Director so I should be involved in this, but there are no specific actions in place for business continuity. We need to create a generic plan to cover as many options as possible…My gut feel is that people in the [hotel] industry have IT covered but not terrorism. We have back-up for IT, we have a fire safe and take stuff off site…There has been no great change in my thinking on this over recent years, most of the issues have been the same for 30-40 years because of the IRA. The RUC used to use our hotel sometimes when they came to watch the rugby. We didn’t admit they were RUC. No one knew they were here, we referred to them as ‘Mr Smith’s party”.

“Business continuity tends to be basic. Each business I’ve worked in has plans in three areas: Succession, sales and purchasing planning. The businesses all do their own thing, but the hotel is typical of a ‘business out in the sticks’… The business has external IT back-up facility. If everything crashed we could bring back up accounts and reservations independently. The accounts facility is with the accountants, and the reservations and client-based information is done through another third-party agency. The hotel has never done a planned drill, but it has had power interruptions and the back-up systems have worked. The last time was in February 2008, it was off for four and a half hours”.

In terms of the risk management and business continuity tools, the three businesses gravitated towards those that might most readily improve their chances of attracting good publicity and more business. Insurance also had its place.

“We are audited by the British Sandwich Association and the Local Authority is adopting a star system. I’ve applied for that but they are dragging their feet. I’ve approval from all the relevant departments. We have business interruption insurance and loss of stock insurance – you always need that. My policy is a standard one. Don’t know how widespread these are amongst small sandwich shops. My wife and I are covered in case we can’t work”.

“We update risk assessment charts regularly. These are held in hard copy in reception. They are broken down by business area/functions e.g. kitchen, housekeeping etc. We don’t do quality approvals and have not heard of BS25999”.

“We are part of a franchise, which means we are governed by Head Office on branding issues. There are no operational requirements for business continuity etc, but this may come in time. We are part of a smaller hotel group which is representative of more than 50% of hotels in Scotland. I like to think we are forward looking. We have a Green Tourism Award – the first business in the area to gain this. Your questions prompted some thinking, it would make me years ahead on this issue”.

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Not surprisingly none of the small companies required suppliers to engage in BCM. Supply chain resilience was about switching options and basic quality issues. They used specialist wholesalers. Two stressed the importance of local-for-local food networks and the advantage of being ‘big fish in small pools’, in terms of service and the ability to source food prepared to their own requirements.

“We have a fishmonger, a meat guy and a fruit and veg supplier. We get supplies from specialist wholesalers and adjust menus e.g. if there was a terrorist threat to the scallop industry, we would switch to squid. The hotel industry is well geared up to cope with most disruptions because we are flexible and find ways. For national or regional restrictions on supply to businesses, the threat to the supply chain would have to be serious enough to affect the big retailers. That would affect us, but if it was that bad footfall would drop off a lot anyway”.

“Don’t ask for it, the business takes the lead on any situation. Our suppliers fit into 2 key areas: Local for fresh foodstuff – don’t have single suppliers. Have three meat suppliers, same for dairy and frozen so the company can switch between them. We have one French company that does desserts to our specification. If they went down or went bust we’d rethink. We use local-for-local specialist food networks. We are the major hotel for the local area, purchasing around £350,000 food per year. We try to do the majority locally. It is the culture of the business. For non-perishables e.g. electrical appliances or linen can switch suppliers. There has never been a business need to single source”.

“Business continuity, no but there are quality requirements. If the suppliers are chilled they have to deliver and record temperature, which is standard practice. We tell them not to deliver at lunchtimes, we are too busy. With the vegetable supplier for example, tomatoes have to be firm. If not I will find someone else. I’m a big customer of these although I’m a small business. We buy in bread and cooked meat – use just small local suppliers who can vary recipes to your wishes. Local-for-local is a massive thing now, but we’ve been doing it for years”.

They ability to switch to another supplier within 24 hours meant that the hotels didn’t see the loss of any supplier or class of supplier, or any customer, as a threat to the continuity of their operations. Neither had had to help out suppliers, though one had to help a customer overcome a major cash flow problem with an agreed payment plan. It was different for the sandwich bar; the loss of a supplier would be more keenly felt.

“Most devastating would be fresh produce – meat and veg, I’m known for using this….If I need something urgently we send someone to collect, or meet the supplier half way, or even collect for others, its part of being in an informal network of local businesses. I’m more than glad to help out. Never know when I’d need them”.

The Branded Restaurant & Grab & Go Chains

Still serving the general public, but at the other end of the size spectrum, are the large international fast food chains. They were all well known ‘High Street’ names, thought their businesses were increasingly developing around ‘non-traditional’ locations – mostly locations at stations, airports and motorway services.

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All four of the ones participating in this study had formal crisis management structures and arrangements for IT disaster management in place. The newer ‘grab and go’ branded chains were both under a form of private ownership. Their views and BCM priorities were not very different from the small businesses owners’, though the scale of their operations was much bigger.

“The company is not implementing BS25999, it is not the style of the business. All plans are based around how the organisation works and what fits your business. They are not explicit. The policy is to keep it simple, to avoid bureaucracy – we definitely don’t go there here. We are not interested in things like Investors in People. As the Commercial Director, I’m involved in monitoring everything from chicken flu to poisoning. The complete supply base – around 60 suppliers – comes through my team. I’m involved in any and all forms of crisis management/disaster recovery”.

“We have a crisis management team, driven from the European Head Office. They have just done a review of the members. Members are linked to big markets and the US. It is a multi-disciplinary team. We have a regime in place for bi-yearly IT reviews to stay on top of this, involving the big markets and the US…All European offices back up IT daily. Individuals have independent hard drives to back-up. They are reviewing the infrastructure, but have uninterruptable power supplies (UPS) in the stores, which is OK for short-term power cuts. The European Head Office could step in and the data could be redirected. They had a total systems failure. The Head Office couldn’t function for a day, but operations could continue. They have changed their IT supplier and invested in more back-up services”.

“We don’t use BS25999, but are familiar with HACCP. Consultants have been engaged [by the Group] and are working with the company on some areas –such as communications and horizon scanning e.g. for 5 hygiene certificates for food outlets. They are looking to see how we can help franchises to keep high scores”.

For the two longer established big names on the High Street (both public limited companies), the crisis management and business continuity structures were more mature and formalised.

The logistics and supply chain specialists from these two ‘Blue Chip’ giants explained where they fitted into the corporate BCPs and how high profile external events, such as Avian Influenza and the Buncefield fire, had impacted or were shifting priorities.

“We have had the IT centre for 20 years and some form of BCM/P for at least the last 15…We have a BCM team. If there was an explosion or disaster the BCM team would be mobilised here or at [another location] where we have our IT centre and rooms set up with positions and screens to use at short notice. We have exercised two times per year, some involving people going to the crisis facility… We did an exercise on Avian Influenza last year – it was business-wide which included all area of the business. It was at a time when pandemic fears were high. All parts of the business were involved in case Avian Influenza jumped the species barrier. Also did a pandemic exercise when the phone goes and we test reporting procedures across the functions to have a quorum at the crisis centre, a twice yearly call tree test”.

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The Buncefield Fire: An Immediate Response

The first thought was in a few seconds, ‘what is the status?’ As soon as the scale became known, a full crisis management team assembled and recognised there was a supply issue.

The first notification was of a fire incident at the depot. Then we realised that an exclusion zone had been enforced and there was a big plume of smoke. The business continuity plan accounts for 35% of capacity. There were concerns about staff and the local area. We formed a crisis management team and noted that the emergency services would need food.

A crisis is a call to arms. Everyone wants to make sure that the business continues.

Staff commitment had a huge bearing on the eventual outcome. I used to work for one of the big supermarkets, but this company has a unique culture and structure, to do ‘whatever it takes’. It is the hardest and most demanding company I have ever worked for in terms of commitment. Buncefield kept burning for a week and the site was off limits, we had expected to be back in after 2 days. We had to have a contingency DC, which is shared with a wholesaler, and a limited range for the restaurants. Part of the plan is that the company goes to limited range of 400-500 stock keeping units [SKUs]. Most business comes from 20% of the SKUs. We can structure the menu to provide a core menu e.g. burger, fries and shakes.

“The company has been doing this for the 4 years that I’ve been here, can’t say how much further back. We have a generic plan – a crisis management action manual which sets out things like ‘how do you define a crisis’. The number one priority is Health & Safety for employees and the community. Reputation is second. Third are operational concerns. We have a structured plan with named individuals. Plans are updated at least once a year, but that is ongoing and it is down to the individual departments to ensure that the contact lists (internal and external) are kept up to date. There is a named core team of HR, Supply and PR, Marketing/Quality and Security. We don’t do drills – not in the last 4 years. For a business of our size we should. We expect it of our suppliers. Don’t know if we are following a given standard, the company has an action manual with templates etc and a policy document which outlines the overall approach. We do risk assessments and media training etc once a year, but the communications team/execs handle the media…Buncefield was a call to arms”.

The business models adopted by some of the largest and most international fast food chains mean that almost everything is outsourced, leaving the brand name companies themselves primarily responsible for overseeing brand management, finance and the governance structures imposed on the franchised outlets. All other ‘non-core’ activities, including supply chain management (purchasing and logistics) are outsourced to single or dedicated suppliers. In terms of maintaining incoming food supplies, switching options were the mainstay. However there was a growing

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emphasis on sustainability in the sourcing policies. At the consumer interface, outlet franchisees tended to organised themselves into informal local mutual support networks.

When asked whether they required their suppliers to engage in BCM the fast food or grab and go company managers responses were as follows:

“Yes, always have done. It was introduced in the supplier management/assessment audit – the SQI – supplier quality index. That comes from the US and is a Toyota-type supplier quality management system. All this is scored and rated annually – whether they have BC plans is an explicit requirement of the SQI monitoring. It includes capacity assessments and we ask for proof. We could improve on verification. We are erring towards looking for assured supply & food safety, less emphasis on suppliers HR equality and IT etc…There are informal networks of local stores which move staff around. There is a huge range of people who think they are our key stakeholders, who want to be informed. [Purchasing & Supplier Management Company] are the distributors/ finance purchasing & supply for the supply side. They are a dedicated Third Party Logistics supplier. If sales fall it causes a clogging of the Distribution Centre. Customer service calls are a good indicator of an issue. In a major event there is a template for key suppliers – a very structured process for coordination with [Purchasing & Supplier Management Company] in a crisis. They deliver, place daily forecasts with suppliers and get inputs on promotions etc and schedule inbound products from suppliers. [Purchasing & Supplier Management Company] do all the operational elements of inbound”.

“[Purchasing Company] will have formal agreements and procedures depending on the centrality of the supplier. There are whole plans for proteins and bread. For the cheese supplier we are the 3rd biggest customer. The supplier wanted to raise the price, so we went to another supplier for new business. Chicken is either sourced from South America (Brazil) and Europe. Asia is a contingency to avoid reliance on South America. There are single suppliers, the US has one, but it has multiple sites. Europe is not so single sourced. Mostly the direction is to have two suppliers…They would have switching capability… Europe is independent in its sourcing via [Purchasing Company], e.g. when there was a worldwide shortage of tuna, UK was supplied via the US. They had to find additional supplies for the UK and Germany. They are not reliant on single US source, but have a source approved to UK quality. Poor forecasting is at the root of the problem”.

The operator of in-store cafés and a ‘grab and go’ retailer had done some work on continuity planning for supply chain disruptions two years earlier (2005), but was not looking at this on an on-going basis.

“Did some work two years ago on supplier contingency planning. Looked at the top 25 suppliers that equal 75% of turnover. There were massive inconsistencies across the supplier base. Some of this has been followed up – but if the shepherds’ pie factory burns down we can have chicken pies instead. There is some resilience in the range of the product offer. There are lots of factory fires – fat fryers etc – e.g. for crispy bacon we had to locate another factory and approve it. That was sorted in 10 days. We put an able and experienced team on the job and did it quickly. Can never plan in detail, but we have resources. The real risk for us is chicken – it’s the biggest raw material. 30% of total turnover includes chicken. If there is a problem with

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chicken, that’s a big risk. You can switch to other meats and recipes if you can manage the volume. I can see this coming with Avian Influenza. We may well have to withdraw chicken from infected farms and would have to withdraw it all even if it is not a health risk. We would have to withdraw it and incinerate. It’s sleepwalking into disaster. There’s a certain inevitability about Avian Influenza”.

On the logistics front, the grab and go retailer described its contingency plans and the involvement of its 3rd Party Logistics supplier (3PL).

Our core [Logistics] supplier manages the depots and I work with them on logistics continuity and depot recovery plans. This has been the case for at least 5 years…I ‘own’ the food logistics BCP. The company has a food BCP and within that a logistics plan. It follows the company’s standard template. My job is to maintain it. Unlike other business units, we have a depot recovery plan, which transfers those stores to other depots, underneath it a plan to recover the original depot. We don’t have any redundancy, but can push through for a short period. We have 7 depots, but no spare chilled capacity anywhere. Growth of the stores means it is more difficult to go down to 6. The network growth is lots of small sites selling food. We don’t do drills for the Distribution Centres, but we do have disaster planning exercises for food. We had an exercise in February [2007]. A representative from [3PL] took part. Food have their own crisis management team and their support team, it has representatives from the Trading Groups, Food Technology, IT and HR. Beneath that is a support team which includes logistics managers to manage processes for operations… People, property, brand and profit are the drivers, its good business…Over the last 2 years there has been a change, the focus is on Avian Influenza and pandemic, it was loss of site”.

All four companies outsourced logistics to either dedicated suppliers (i.e. ones with no other customers) or single sourced to one of the largest specialist food service transport providers. Most of the managers agreed that the loss of their road transport suppliers and/or one of the major food commodities was the thing most likely to halt their operations.

“The 3PL. We have another on a delivery only contract. Another manages frozen but the impact would not be big. Poultry would have a big impact. Have not had to help suppliers…not that I’m aware of, but would look at helping find vehicles e.g. if we lost our primary haulier [3PL] or would help find storage capacity”.

“We have a big national transport supplier and bread contingencies. The biggest weakness is the big logistics provider. e.g. when they had an ammonia leak in the warehouse. They had to evacuate the warehouse and no one was allowed back in until specialists had sorted it out. No product was contaminated but all deliveries were delayed. Have 3 warehouses at 3PL, in the short term we’d be stuck if we lost one, but long-term could switch. We use only one depot. One logistics supplier delivers ambient produce, the other fresh. A disruption would have to affect both. Blowing up the M40 would affect us”.

“We have three DCs. We know that if we lost the smallest DC we could, with some time delay, still get by with most of the current range. If we lost the largest DC we definitely would not be able to continue with a full range. Nothing we could do in the

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short-term. The level of disruption would depend on the time of day e.g. during the morning pick”.

The Public Services Organisations

The three public sector organisations were obliged to provide meals as part of their public service mandate, though their core activities were not food service provision – they were health, education and defence. Within each organisation there was an implicit recognition that contingency planning was required on two levels. The first was BCM to ensure the everyday ‘business as usual’ delivery of core services was not disrupted, whether as a result of catering problem or any other form of internal failure, local or targeted event. At a second level there was the need to ensure that the organisation could rise to the challenge of providing those services and more in the event of a national or civil emergency. The provision of food services therefore formed an integral part of wider site and organisational BCPs and Emergency Planning Provision.

“Resilience is a big feature of the NHS. It is a core role, a primary function for me. I spend 50% of my time doing this. I manage the risk registers for the Trust, Health & Safety, Emergency Planning and BCM…The Civil Contingencies Act put BCM on the agenda. It is an excellent tool to highlight the importance of BCM. The CEO was always interested in the topic – he had previously been in Birmingham and had experience of problems caused in the community by the riots. I was appointed to this post on 6th July 2005. The organisation and staff were very ready to listen to requests to fund BCM e.g. £500K on all aspects of EP and BCM including the enhancement of decontamination units in A&E. BCM is very much driven from the top. The Board wants constant assurance of BCM. The EP department is required to report quarterly to the Assurance and Risk Committee on Trust-wide risks and BCM”.

“We are part of the Council set up to manage emergencies. Frameworks are in place. There is a heightened awareness in the City because of the floods and a heightened awareness of the effect on day-to-day activities, awareness that things can go wrong and of preparedness…The difference between profit making and public service roles is that public servants have to do whatever it takes”.

“The Integrated Project Team’s Business Continuity Plan is linked into that for the site plan. BCM is based on priorities. [Military] Operations is the number one priority. There is a cascade system if there is an event… All Government Departments can request military aid to civil communities but they are not aware that the Armed Forces are geared to look after 200,000 people, not 60 million. There is no fallback for civilians to use ration packs. We couldn’t man elements of mainstream industry, but there are lots of reservists with useful skills”.

The military had outsourced its food services provision. The officers involved in this study were members of IPTs (Integrated Project Teams) who oversaw the management of the food services contracts. These included all food supplies for the Armed Forces in the UK, on deployed operations overseas, and the catering for all bases in the UK, Germany, Brunei, Cyprus and Gibraltar.

“In May 2006, the IPT outsourced food supply. The contractor gets the food to the kitchen door, then it becomes the Front Line Command’s responsibility for catering.

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The contractor takes food to operations. Operational ration packs mean there is always a fall back, but it is robustness of delivery of fresh nutritious products that is the everyday business. All the ration packs are in one big site. For ops there are a number of days supply, positioned forward, for every man on ops. Each battalion submits an annual requirement for ration packs, but consumption is variable…”.

“I am quite heavily involved with BCM within this IPT, but there is very little involvement with industry. Industry is contracted to deliver. Ops and exercises are under one contract. For non-op forces there are several different companies that do the food supply”.

The NHS Trust ran two large city centre hospitals. It had retained food service provision because of the size of the hospitals, but brought in specialist consultants from a facilities management company to develop its catering operations, with a view to providing catering services to nearby NHS Trusts. One of the managers explained how the large Hospital Trust’s catering operations provided contingency cover for other public service providers.

“In Birmingham helped out a couple of trusts where the kitchen was being refurbished and one that was closed in February, within 2 weeks fed 500 for 18 months, cost them a lot! For the last 2 months we have supplied Rochester and Lewis prisons while their kitchens were refurbished – 23,000 puddings over 3 months”.

The City Council had also retained food service provision (for school meals) in house. It had historically provided free school meals to a high proportion of the City’s school children. It too operated under different constraints to a more prosperous neighbouring County Council.

“All catering staff are local authority employees. School meals are heavily subsidised. One secondary school opts out and employs its own staff. Potatoes come ready peeled, if not you need more staff. They use lots of pre-prepared food...The County Council can charge more than us, the demographic profile is different”.

Some large catering companies had famously walked away from school meals catering contracts after the dispensing machines for sweets and fizzy drinks had been banned from school premises. A manager from one of the big catering companies explained his company’s strategy for schools and education.

“We concentrate on private schools and further/higher education where it is much more like a canteen. Very good service levels, but they pay for it. The clients specify what they want. If a lorry doesn’t turn up they go to Tesco and buy the food. For disaster recovery a [wholesaler’s] credit card is held by staff to allow them to raid the local Tesco and Booker”.

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Lean Production Principles for the Hospital’s Catering Operations

Acute hospitals are always 90% (ish) occupied all year round. Average bed stay is 3.75 days, 7 days for the over 75s. It’s very full at Christmas, only maternity and elective surgery drop off. They have different demand patterns to Primary Care Trusts. Any major emergency in winter e.g. icy conditions and usual winter flu, the hospital has very few spare beds. Likely only one decamp ward (30 beds) for decanting etc and it needs staff. Almost all acute hospitals run at capacity all the time.

Patient feeding is all computerised so the system sits there with recipes and product information and it can generate orders. It has a 3 week menu cycle. We know exactly how many people we are feeding. Elderly wards like traditional and soft food. You can set quantities according to the ward profile. The food orders are placed 2 weeks before serving, hence 3 week menu cycle. The meals are produced 3 days before eating, they are brought on site the day before. The supplier needs 2 days to pick and pack.

One drawback with computerised set menus and service provision to other hospitals means you are committed to providing the menus as stated, regardless of price, “just have to take it on the chin. In a real serious emergency, we would just have to put stickers on the menus saying sorry. It would be a national problem, covered in the press. Patients would understand.

We did 500,000 meals per year with our catering supplier, approximately 20 roll cages per day. If the depot was short on drivers the hospital is always first in the queue because of the volume. We are able to negotiate price reductions against economies of scale. At my previous hospital, we had quarterly meetings to review service with suppliers’ depot managers, sales and the purchasing managers. The Birmingham hospital would specify specific lines – there was no excuse for non-availability, and all conditions were in place for JIT arrangement. That is not in place at here yet, but will be. This is basic good SCM, not specific ‘what ifs’. Its about making people (including telesales) understand the process. Biggest problem is that people don’t know or want to know how the process works.

In all three public sector organisations, business continuity planning had been in place for some years. The City Council was reviewing its plans in the light of lessons learned from the summer floods of 2007. The other two public sector organisations outlined their BCM provision, including tests. There plans had also been refined with experience and changing circumstances.

“Two years ago there was a complete BCM strategy; based on project management principles, but the Trust found it too complex, too detailed and top down. Months later it was reappraised and we did a simplified version from the bottom up. People were doing lots at the departmental level anyway. It has two strands, one is cross functional and covers utilities, power, water etc, including IT. We use the Business Continuity Institute’s audit tool and another, possibly the Cabinet Office’s, but our

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own is as effective as anything. We are currently merging the new BSI 25999 information into the Trust BCM plan…All Trusts are required to conduct a live exercises under Civil Contingencies Act Regulations…The 7/7 event was considered a live exercise in that it tested all procedures. The Department for Health funded EMERGO and the trust self-funded exercises in September 2006, December 2007 and February 2008”.

“We have alternative locations for IT, we have mobiles and lap-tops. The team would either work from home or relocate to a nearby [Defence Equipment & Support Agency] site. We do tests and do drills, but what are we testing for? We do tests of the call tree system etc and brief on BCP to our staff…”.

“….BCM/BCP has been around for a few years, pre-Y2K there were lots of meetings, but there has been much more BCM focus in the last 12 months, with the new contractor. It is essential that the food chain contractors are robust. In 1997 with BSE we had to have contingency plans for feeding the troops overseas…We have e-learning for BCP. I image that the DE&S will have drawn on those”.

Looking at BCM within the supply chains and their critical service suppliers, the MoD was concentrating on maintaining supplies to deployed forces. However, staying on top of the situation, with business contracted out to ‘virtual businesses’ with shifting ownership structures, added a new dimension to this.

“The Prime contractor is very important. We had plans with [previous contractor]. The new contractor had teething problems with volumes. In the last few months they have got the teething problems sorted and the service is operating well, now looking at other issues like BCPs”.

“I work in conjunction with one of the contractors – meeting them this afternoon – they have a depot (a consortium member’s deport), a shared facility. Two stakeholders have 40% shares each, stand-alone subsidiaries of the other consortium member has 20%. One of the 40% shareholders is now part of another food services company – the sale was a surprise to the MoD”.

The other two public sector organisations were looking at suppliers’ continuity management provision from a civil contingencies perspective, but not necessarily asking questions for BCPs for the food suppliers.

“It’s part of the contingency planning, part of the Service Level Agreements/contract specifications. It wasn’t explicit, but it will be. We rely too much on people responding, we are now asking suppliers to provide evidence of BCP. The floods changed that, we are working through this much more”.

“We don’t plan for major accidents, just continuity management for patient feeding. No, but yes as far as 1400 patients need feeding twice daily. Must be contingency plans in place for fridges and coolers etc, because you still have to feed. If the business grows [expands to other hospitals] that goes to 2000. In Birmingham we had a number of scenarios and actions e.g. if a hospital burned down. We had a plan, but it would have happened naturally. If we lost the site we would ring round and action suppliers (food service and frozen) and could set up alternative provision. There was no formal document – but logical courses of action. Any senior caterer

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would do the same. ISPO 9002 initiated crisis management for all facilities about three years ago – including electricity, e.g. what if the place burned down, what if the area suffered a major power failure etc. The tools in use vary from trust to trust. There is an emergency planning policy and catering will have just a line or two. Don’t need chapter and verse, we just need to be notified of a major incident.. Not asking suppliers for sight of BCPs. Don’t need to. If there was a major issue e.g. Foot and Mouth Disease, it would affect everyone not just our catering supplier”.

“Yes, we do. Our primary logistics supplier calculated stocks needed to function for 15 weeks…They have pulled together a total stock requirement for all of London for15 weeks. We worked with them to look at that. We are currently reviewing all maintenance contracts that have been outsourced. Asking all areas to calculate how long they could function without maintenance. Catering is in-house. The trust has carried out a lot of work around sterile supplies and have arranged appropriate contingency plans…For mental health facilities there would be big problems with feeding, similar to prisons, with added security issues, etc.”

Food Service in Secure, Closed or Hostile Environments

Only one step removed from the public sector are the private sector organisations, providing public services to vulnerable or ‘captive’ populations in closed environments, under PFI agreements or facilities management contracts. Representing the views of this cohort are managers responsible for custodial services (prisons, detention and immigration centres), military messes in the UK, and for food service and facilities management for off-shore oil and gas platforms. They presented here alongside some of those working with the Armed Forces in hostile environments, including off-shore. All the managers were employed by members of specialist consortia put together to bid for the contracts in question, or they were working for specialist divisions of facilities management companies, themselves sometimes subsidiaries of larger food service businesses. The section begins with the views of managers providing catering to the public sector organisations. It starts with the views of two of the managers who were ex-public sector employees, who had been TUPE’d out to the new contractors and were working in one of the outsourced MoD facilities.

“There are no formal BCM plans here. Have to risk assess everything we do. Any task involving any member of staff is risk assessed e.g. pulling a pint, frying an egg, washing a floor and hovering the dining room carpet. Each requires risk factors to be worked out. Risk assessment is to comply with the law…It’s also for our own Health & Safety, for us staff and for customers, must do due diligence. Sometimes it’s over the top. Have to reassess whenever you get new equipment. The risk culture has always been there, but it has got more and more over the last few years”.

“The company is a private sector provider of custodial services to the Ministry of Justice. We have only two customers – the Home Office and the UK Border Authorities (UKBA). BCM has always been part of running a prison, they have always had continuity plans e.g. for electricity failures. They are necessary for security and hostage incidents etc. BCM includes vital operating assets, sites have their own generator for electricity. Plans are tested regularly as part of the KPIs [Key Performance Indicators] in the contract. Plans are reviewed at this time, there are desk top exercises for hostage situation, loss of power etc. Each establishment

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director is responsible for BCM on their site, reporting to the Managing Director. The company is ultimately responsible for BCM under the terms of the contract. It has always been there – for the last 8 years. BCM is mainly tested in-house. Supply chains are not involved – that is one to take away from this – specialist services are assumed, according to the Service Level Agreement. Risk management tools in use are risk registers, COSSH and HACCP. I have checked with the catering advisor about the use of HACCP and risk registers …Do run a loss of kitchen scenario. We have had this twice at one prison. Part of the plan may be to buy from the nearby fast food restaurant which has worked well in the past. Could use [another prison] for support. Catering staff and prisoners were moved and the prisoners worked really hard. We have tested this twice.”

“My primary concern is risk management, risk to employees from a safety perspective, not business risk. Technically it’s everyone’s responsibility. Officially direction comes from the Group, but that is pretty non-existent, they are doing it at HQ. Most direction comes from the oil majors – the big customers…One of our major clients has asked us about it. Some suppliers are buying in from around the globe, e.g. beef from Venezuela. Foot and Mouth did affect that but we got round it. There’s probably lots of work going on around that… The biggest impact is the movement of personnel, including helicopter operations and offshore oil contractors. We are doing what we have always done, there’s been no change in the last five years. We have BCM on the radar but I’ve not seen plans so they are not integrated. Don’t want to get into a situation where I write a BCP that Mr Shell will just override. It’s evident that Shell, BP, Total and others will not have a joined-up approach and cooperate as an industry. For any risks that affect clients, their contracts say their procedure overrides everything else e.g. work permits… Have had a copy of BS25999 and gave it to a main supplier last week for discussion next time. That should throw up lots of questions. The oil majors say they are doing BCM. We have interface documents for Health & Safety”.

“I’m involved in the overall contract management and interface with the MoD. It is a partnering contract. Some elements of the MoD are still adversarial, but most people are keen on partnering, so elements of BCM have to involve them…We exercise with the MoD for business continuity, but not on the food supply side. It covers the whole gambit of risk concerns – natural disasters, a warehouse fire or a flood etc; loss of power, utilities, warehouse facilities etc. Have tested the drill in overseas locations e.g. routes but not tested plans in the UK….Have a comprehensive IT and communications package, both were presented when we bid for contracts. It was a requirement to declare risks and give plans for big issues”.

All of these private sector organisations had employees working in potentially hostile environments, where staff could be placed at additional risk from deliberate attack.

“Prisons do continual risk assessments. Health & Safety is the big thing and needs training. We have prisoners working in there alongside the chef and officers”.

“The locals are not easily put off. They don’t intimidate the truck drivers, only the interpreters, there are Afghanis working in the depots with ex-pat managers and ex-pats from Nepal and Pakistan, who do more labouring”.

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‘Rat Packs’: A Taste of Home

Military ration packs contain familiar brands of some products such as chocolate bars, which is important for morale, as well as high calorie foods in pouches provided by specialist suppliers from the UK and overseas. Considerable work has been done recently in developing new menus, with seasonal mixes. There are hot and cold weather variants for the 10 man packs, as well as vegetarian, Halal and other special dietary options. There are also catering packs of rations which include well-known branded products.

The First World War concept of Christmas Boxes has been reintroduced to make sure all the troops on operations receive some treats. They are provided by a charity led by the Duke of Westminster.

“Had people overseas – part of the business strategy, but pulled out of Nigeria because it was too dangerous”.

Several managers from these and other food service companies emphasised that food assumes a much more important part of life for those in closed environments or hostile environments. It has major implications for morale and discipline, it was a sentiment echoed by the military who had recently reviewed ration pack menus for precisely this reason.

“In prisons you can’t run out of some things e.g. Golden Virginia. There would literally be a riot, so we hold stock. We cannot run out, similarly on oil rigs. Some periods of bad weather where boats can’t get out, but we hold stock on rigs. Have helicopters as an option. Space on the boats is at a premium, if we get bumped off we can go to the helipads and the clients pay more to move the stuff out”.

Amongst the interviewees, some managers had explicitly sought sight of their suppliers’ business continuity arrangements, others were thinking about it, but all could describe some kind of supply side contingency measure. These usually involved switching away from bespoke arrangements and temporarily piggy-backing to some other allied organisations’ supply chain arrangements. Good will was an important factor here.

“We have a one-stop-shop food supplier for Aberdeen operations. They supply food and cleaning materials. Had talks with them to ask them how their suppliers were going to do this. It is possible to ask 3663 to be a contingent, but I need to talk to others in the organisation to see who is managing that. Don’t require that at the moment, but might think about doing it now. There are 3 big local companies in the food service supply here. We are supplied by 2 mains suppliers. Don’t know how many of their suppliers would pull together…We deal with local supply chains and suppliers. We don’t fit with central purchasing of [Parent Company]. We have to have local suppliers because customers’ change their minds too often and big national wholesale and distribution companies can’t cope with the last minute changes of mind. Often customers ask for something in the morning and then cancel in the afternoon because of weather changes or other demands take the available (transport) capacity”.

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“We have written to everybody that supplies food to us asking for copies of their BCP, but have not had a very good response. Not huge amounts of suppliers of food. A prison has a fixed number of ‘customers’ and the local catering manager will know who he wants to buy from. Not the volume that [Parent Company] has. Sometimes it’s cheaper linking into the prison contracts. The local managers like personalised relationships with local suppliers. There is very little volatility in demand. All prisons are at full capacity e.g. for one prison, the certified number =450, nowadays capacity is up to 495 by doubling up. The catering manager knows this. It’s a changing populations, but at full capacity and there are no seasonal variations…Have written to ask about a pandemic, it comes back to the good relationships with suppliers. Old fashioned relationships seem to work. We are working with [Parent Company] to explore the options to move away from smaller suppliers but at the moment small companies are our supplier base…We are not with Brakes or any big supplier, but managers could use the [Parent Company] network. … Catering managers do not have cash or credit cards to purchase emergency food supplies”.

“We are in the process of bringing that all together now, since July 2007 have been trying to get the partners to understand the level of detail. Had workshops with both subcontractors, which are driven by BCM, went to one last November and looked at IT systems, they were in the process of changing them... In ops areas we have alternative sites identified. In Afghanistan there is a huge Department of Defense warehouse. We could share with the US or have identified alternative facilities… The failure of a transport subcontractor could affect operations but we have alternatives”.

“The other Mess is all purchased by [Food Service Company]. They are PFI and have 85/10/5% split. 85% is from nominated suppliers, 10% from local and 5% is emergency option – can source where you like. The percentage will change when ‘pay as you dine’ comes in. Will be a core menu e.g. sausage and bacon etc. If you want extra you pay. [Food Service Company] as a group are looking at business continuity. We have a different main supplier – if they went down we’d have a big problem with meat, fresh and chilled”.

In terms of inbound food supplies - as opposed to catering operations - only the MoD made any direct comments about sourcing and sustainability. No single food supplier would halt operations.

“I have discussed BCP with industry, but this assumes that the farmers and producers have food to supply and those overseas can supply. That means we could be vulnerable. The farming sector is diminishing but the population is expanding. Self-sufficiency options are based on some heavy assumptions about the food supply which nations can produce and the transport systems staying up…”.

Business Continuity in the Big Contract Catering Companies

The next cohort of managers is drawn from the largest contract companies operating in the UK, though their views represent higher ‘corporate’ management perspectives. Their employers have stakes in some of the facilities management and specialist service companies covered earlier in this section. They have divisions dealing with all of the major public service sectors, including civic catering, school meals, leisure venues, and corporate cafes and staff canteens in the private sector. Three of the largest employ between 12,000 and 60,000 people in the UK and operate between

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1,000 and 7,000 sites. Most, but not all, of these large companies are international businesses. Some are stock exchange quoted companies, others are owned by private equity groups.

The big food service companies had basic crisis management procedures in place providing unit managers with instructions on how to proceed. They provide simple instructions on how to respond to the everyday mishaps associated with working in a food service environment. The emphasis was on keeping things simple and maintaining Health & Safety requirements, though one manager described how implementation had fallen by the wayside following staff changes.

“The company had a basic crisis management plan before BCM. Crisis management equalled don’t talk to the press, tell your line manager and phone central communications and PR – have to liaise with clients too. Things do happen because of the number of sites…We are at 3000 locations in the UK, run by managers who are ‘cook-mums’ upwards. We have to have a simple crisis management plan that works well, and will pass up the line to Corporate Affairs etc. “What to do in a crisis” goes out every 6 months”.

“Have a dedicated communications team who are responsible for crisis management. All 7,000 unit managers have a copy of or access to the crisis management policy, e.g. how to report incidents such as when someone puts their hand in the chip fryer or a food poisoning outbreak, or anything involving food safety and foreign bodies. A helpline puts through to Health & Safety officers who respond to incidents in the units. Health & Safety work with Environmental Health Officers to check schools’ hygiene and thermometer check food”.

“I learned risk management at one of the other big food service companies. It had to be very process driven to manage 4000 contracts. Expertise was very fragmented, e.g. there was a buyer for tin foil…In this company there are more general experts in their fields. The company culture is one where people talk to each other, it is very different from other food service companies. The company is very customer focussed. The CEO will go down to see the client to discuss any issues. The policy is that if a client picks up the phone you will have a board director down there the next day – each board director ‘owns’ a client. They will get a director, not necessarily theirs with specialists. If Operations are happy we will make sure they get all the legislative expertise required. We will not allow a customer to place the company in a position the company is not happy with”.

“We had an ISO assessment yesterday, part of the discipline is to make sure that procedures are in place and Health & Safety audits and assessments are done. The Safety Director picks up all Health & Safety and routine risk management procedures. She is very rigorous. This building failed recently. She is very good at pushing the risk and Health & Safety agenda when financial issues are uppermost. There had been a handover and things were just left in a box. They shouldn’t have been. Have had four lost time incidents here - that’s when someone is off work for three days of more from an incident at work. It’s all on the radar”.

Beyond crisis management, BCM measures were relatively recently introduced and either informal, or undergoing formalisation, though provision for IT and finance was well established at the corporate level.

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“BCM is a big issue in [company]. It first looked at BCM in 2003/4. A group got together- corporate communications, IT, Operations and Purchasing – and decided that IT and finance were the biggest vulnerabilities. We planned for loss of corporate offices, for 24 hours, it was maintained with regular updates. IT have a restore contract at IBM with 20 desks. Have not identified yet who would be sent”.

“The main vulnerability is if the IT systems go down and we can’t maintain the financial systems. I’m an accountant by profession and risk management is required by the Combined Code”.

“I turn up at meetings when the Safety Director tells me to. The company is geared up to respond on an ad hoc basis. A team has been tasked with doing a proper job, developing a coherent programme for the business. We had a session with [Safety Director] two or three months ago [Spring 2008]. My background is in supermarkets. Food service is much more decentralised. Its systems are decentralised. It relies on clients’ systems, if they are affected we will be, but only there. The rest of the systems are internally based. All IT is in another location, we have all the usual mirrored servers. If the London office gets blown up there would be no immediate impact. The other location is different because the IT is up there. We have other offices around the country”.

“I’m responsible for company-wide BCP. Each function and segment have a representative and deputy that sit on the steering committee. They have their own teams with safeguards that allow information to be cascaded down to site level. Depends on the site and the size of the contract, for big ones they have their own BCP but we have to link with the clients too…The company has been doing BCP for 18 months [from early 2006], most people had not even heard of BCP before then…”.

“The big PLCs have all this down in great detail with dedicated staff. As an independent, each relevant function head is responsible for business continuity, but we don’t formally do BCM. We have done some work on pandemic scenarios and others via our customers, and we have done key work on crisis management. There is a detailed plan which looks at key activities in the event of, for example, terrorism, pandemic, natural disasters. We have also looked at Avian Influenza. It has always been like this, at least for the last 2 years. We have a generic plan updated regularly. It’s the nature of the business…The company does not have a formal person looking at BCM, but we do have technical experts looking at the impact on each area e.g. I’m looking at the supply chain and talk to food safety and the IT people as appropriate…IT disaster recovery is the one area with the most detail i.e. which button to press at which time, because IT is critical”.

“Overall responsibility for BCP is with the CEO. In practice certain elements of BC fall under different remits. There can’t be dedicated staff, e.g. property related sits with the property and insurance executive. BCPs cover the set ups for critical functions at a displacement planning centre at Coventry. Clients ask about testing the BCPs, but tests have not been done yet. IT have tested the system, but have not done a migration for real. We are more likely to do a desk-top than physically do it because of the cost and disruption. You must look at the probability of an event…We are becoming more compliance aware”.

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The drivers of change, prompting the food service companies to formalise BCM were two fold. Corporate Governance, involving issues of operational risk management revolving around regulatory (financial) risk management concerns, and the related reputational and Corporate Social Responsibility issues.

“I’m Strategy Director for Healthcare Service, with interests in homes and services for the aging. I’m lead for the healthcare business continuity planning, as well as performing my ‘day job’. I’m part of the UK business continuity team. All senior people carry two A4 spread sheet folders with key information including strategy, healthcare and Health & Safety. They are self-selected because they know the people and the structure of the business and are familiar with the PR, Environment and Corporate Responsibility issues”.

“5-10 years ago the business was run as clusters of entrepreneurs who could do anything within the law. Now we have internal audit departments and have dedicated teams working on profit protection. The drivers are greater legislative requirements and more American-style suing and litigation… I’m a one man band who sits with the MDs of the operating divisions for the four sectors and goes through major risk assessment which is split into 13 predetermined headings (used worldwide) e.g. people management, vetting etc e.g. you can’t employ in education without CRB checks…When we have a risk that might impact our reputation e.g. the next Ian Huntley, it’s not a financial risk, but it is a big reputational risk…Lots of companies are jumping on the CSR bandwagon as a positive selling point – carbon footprints, selling to M&S etc. It can be profitable to introduce these”.

The compliance concerns are reflected in the introduction of formal risk management tools, designed to meet corporate governance requirements for stock exchange listed companies, and in the presence of consultants from financial services firms. The large insurance companies were pitching for business amongst the large food service companies in 2007/2008, offering business continuity and risk management consultancy services. One of the managers explained how his company was basing its risk management programme, which would be around the requirements for corporate governance compliance for US stock exchange listed companies and their suppliers.

“We are currently embarking on a ‘control self-assessment’. I’ve co-authored a control manual with Deloitte. It brakes down to 550 risks to different control owners. The directors have to declare that they have management checks etc. Senior management confirm compliance. The owners of the risks are categorised e.g. people management risk is the HR director and purchasing risk is in the supply chain. We also look at contract compliance, so not to impact on our reputation and corporate governance, i.e. systems of internal control breaking down. The tool we use is Control Self Assessment, designed for Sarbanes-Oxley. We have moved to a more centrally controlled model, using Sarbanes-Oxley developed software and Excel spreadsheets, but we only do this twice a year. For internal controls we have an online self-assessment tool (checklists) for managers and an audit assessment. Internal audit check the management responses”.

“Had a kick off workshop with insurance consultants, next step is for another workshop to complete the impact assessment. For the kick-off workshop we targeted key support function directors. This included 9 lines of business and the functional heads: legal, purchasing, corporate responsibility (including corporate

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communications) finance, HR and me. 12 out of 18 came. All agreed something needed to be done but were glad they’d not volunteered. Each line of business needs a BCP because of the differences in the businesses, but I am concentrating on the corporate level…Met with a major financial services client last week and went through their questionnaire, but at least now someone understands the questions. We are a key supplier. The bank’s BCM interest is general, including loss of facility, not really just pandemic. The people are the big issue for the latter”

Clients’ concerns were the second major driver of more formalised BCM. The financial services companies were very conscious of the need for pandemic planning, as were the public sector customers, though it was the big financial services firms in the City of London who were really pushing suppliers for demonstrable progress with their BCPs.

“Any government client asks for contingency. That hasn’t materially changed over the last 3 years. It’s not top priority, but the company is aware it can do more”.

“We do get asked by clients ‘what business continuity plans do you have?’. It is dependent on the clients’ BC plans, e.g. for a large investment bank on Canary Wharf we would follow their plan. Business continuity planning is provided by request for clients, but it is not a default”.

“Consultants phoned in, engaged by a big, big City firm developing plans for Avian Flu and offering to imbed a team. Some City firms are critical, they are alongside the essential services, prisons etc. There is a small vocal proportion in the big Blue Chip firms too. I need to know what offer do we have to support? Clients want to know where they are in the list of priorities”.

“This is very client –driven. In the last year or so, when contracting to the finance and oil sectors, they are increasingly looking at the robustness of the supply chain for their insurers. This is particularly so in the finance sector. We are generally considered key contractors in that sector… Very aware that we have not looked at the supply chain yet, it is probably the thing that will let us down. Can’t answer the clients’ questions on supply chains”.

“One financial services client spent 18 months writing, preparing and doing exercises, with certain meals required at each level. Customers are very dictatorial. They saw Avian Influenza as a vehicle for H5N1 (sneezing staff) transferring disease. I pointed out that staff could catch it on the tube…and we are a fresh food company…we don’t do pot noodles, but we would have to find them. The problem with clients is a little knowledge is a dangerous thing. Some clients are poorly informed. The key for Government is to keep the message simple, not going from Avian Influenza to plague in one leap”.

“BCM is driven by pandemic planning, which has led to broader crisis management. The organisation is going through a lot of change…Continuity requires total business engagement. The organisation is focused on the here and now, but I’m not letting up on supply chain crisis management plans. We have a depot and 2 main distributors. Have to make sure continuity plans are back-to-back with theirs. Will desk-top with distribution and then engage with the two customers from the City (who are screaming for this) and see how we respond and if it is good enough. It covers Avian

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flu and pandemic e.g. infected product in the supply chain, then at the second level a human gets infected in the supply chain, then level three (human to human transmission) humans being infected. How do we respond?”.

“The company started doing BCM about two years ago [in 2006], in recognition that we needed a more coordinated approach, also because we support several acute hospitals and have to support them too. There were a number of key drivers. There is an international requirement because of businesses in China and Thailand. That was driven by the presence of H5N1 and the possibility of a pandemic. It started with a key team and people from one of the insurance companies trying to get their head around PAS 56”.

Managers from three of the four companies in this cohort confirmed that their companies were aware of British Standard for Business Continuity, BS25999, or its predecessor Publicly Available Standard 56 (PAS 56). Some were implementing them alongside Health & Safety tools and HACCP, others were being forced towards adoption by their clients.

“I was aware of BS25999 through the Institute of Occupational Safety & Health specialist group meetings. There was a meeting themed on BCM. It had a few speakers. We use HACCP and have been using that since 1995. The food management systems are well established. Have ISO 9001 (quality) and ISO 14001 (environment). ISOs have just moved to the Corporate Social Responsibility Director and gone from IT based to hard copy. All manuals are accessed manually and via the intranet”.

“We use PAS 56 and were running a workshop this week. We have a battle box prepared – physical and electronic versions in case of computer viruses – it’s a unit-based tool with all they need to know for levels 1-3 pandemic….We have small ‘handbooks’, these are 15 A4 pages, as reference documents to use as starters. We are putting in CD updating… By the time we get to level 3, we will all have data for further stages. We will have details of the HR situation (duty of care etc). By the time we get to a full-blown pandemic we’d expect Government intervention”.

“I do horizon scanning, but don’t write it down because it is too quickly out of date… We have a fully documented Health & Safety system, HACCP and Health & Safety risk register and numerous risk assessments for equipment and operational safety standards. It’s a high risk industry. As you get bigger you reputation is more at risk. You also have the capacity to affect more people e.g. one of our butchers could affect tens of sites, a very big company could affect 400 sites. The only people who survive reputational damage are the Government. I’ve seen BS25999, after a client gave us a hard time”.

The large contract catering companies were relatively new to BCM themselves, they hoped their biggest and most critical suppliers will have continuity planning in place, but only one definitely asked suppliers. No one audited plans to check provision was in place, though in one instance the disaster recovery capability of a supplier was being used as a selling point for food service partners and their prospective customers.

“No, if I lost major suppliers I’d expect them to have BCP/BCM in place and would be horrified if they didn’t, but I don’t check. Tend to work with professional, well

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structured businesses and would expect them to have BCM in place, unlike smaller ones which haven’t resources. It’s not always appropriate. I’ve been in an organisation with just 3 people. In organisations like [national wholesale/distributor] risk is mitigated. We are joint-tendering for the prison service – see this huge box of tender! BCM is pitched as disaster recovery. Primary partner is [national wholesaler/distributor]. Their BCM/disaster recovery is the primary central plank of our tender…Most of our business is won through formal tender, especially Government”.

“Not at the moment but certainly will be put to them. The supply chain is very competitive for food services. We have more than one supplier listed for all categories, so that plays well to BCM and we can switch demand very quickly. It is very common across the industry. Said to [Financial Services Client] last week that the robustness of the supply chain is OK because we could fall back on the big retailers whose supply chains are robust and that is a better option that going to an unknown supplier”.

“Don’t specifically ask for plans (as we don’t do them). Apart from being legislatively correct, we make sure they can cope with the volume. We ask relevant questions…We specifically ask for traceability of product, particularly sourcing and also need to understand the length of the supply chain to see if they can supply. Also assess free range and organic”.

“The suppliers are all asked for BCPs but don’t know if they are audited. The suppliers do have BCPs, but not for a pandemic. Two big suppliers were asked to come and present but it was disaster recovery e.g. a lost depot…Have formally written to all key suppliers, 80/20 rule applied with 5 suppliers delivering 61% of volume. We are asking for confirmation that they have a BCP and inviting them to a one-day workshop on 14th November 2007, to work through their plans and how we can work together. That will put pressure on the not-so-good ones”.

“Yes, but we are still not where we need to be. We can only direct [food company] because we own it… so we are linked through them into vulnerable businesses, e.g. hospitals, meals on wheels etc”.

“Yes, we’d want to ensure that major strategic suppliers have them. We are very keen to understand what the big ones such as Brakes and 3663 are doing. These are the distribution hub operators. Suppliers supply them, instead of multiple deliveries all going in multi-ambient vans. Delivery costs are a big cost, we have worked hard at driving them down. This creates risk because we have more eggs in fewer baskets...Do drills with Brakes and 3663, doing desktop to surface what we don’t know. Our desired response is probably different to what they would want to provide. The next step is to look at the key suppliers above them, the top 2-3 and the other way to customers”.

There was universal recognition that the two largest specialist food service wholesalers and distributors were potentially single points of failure. All four of the big contract caterers named them as the suppliers whose failure would do most to disrupt their operations. At the same time they looked to them and to the wholesale distribution companies to see them through a crisis.

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“No, because of stockholding and the competitive market. Main supplier is 3663, but others would be delighted to have the business, but the switch might not be noticeable at the front line and in the meantime we would have been to the supermarket….Had examples in off-shore where local stores have arranged to get bottled water to the heliport”.

“Company has 2 routes to market - Brakes and 3663- wholesalers who act as distributors, they account for 70% of food spend. In a crisis would concentrate /consolidate operations through them. If we couldn’t get chips in a crisis we would draw on them as wholesalers as well as distributors…What if distribution goes down? If it’s localised it is possible for ingenuity to step in, but if it’s widespread, e.g. not just our IT… then this is planning for extremes. For minor stuff, e.g. if a truck tips over with 3 days of fresh fruit and veg for the whole estate, people stay up all night . If Brakes, 3663 or any big 6 suppliers e.g. Coke, [sandwich supplier], beer and wines & spirits. They would disrupt but not stop us completely”.

“Brakes and 3663, would disrupt, but not halt us. We do have alternative suppliers who would help if they had capacity. We could still clean and do security work - depends on the offer…Could go to sandwiches which don’t come through them. It all depends on the capacity of other suppliers”.

“Possibly single suppliers – but don’t think so. Logistics are more likely to impact than the loss of a food supplier…Was asked in a meeting today whether if we lost a big supplier whether we could use our buying power to switch. Use Brakes for transport and butchery (don’t use them for meat) use for grocery and frozen, just taken on fruit and veg. They are supply-side and distributors. They consolidate and supply. The company has taken out 28,000 food miles per annum by consolidating fruit and veg ..We might go back to the manufacturers e.g. Heinz – for 1 million tins of baked beans and tell them to deliver to Brakes or we can purchase direct from Brakes (their baked beans)… If Brakes falls over we are in trouble... Switching at a point of crisis would be very difficult. Them falling over is unlikely but we are talking to them regarding BCP ”.

“Brakes is our biggest supplier of ambient, frozen and chilled produce – deliver all non-fresh… If Brakes had a problem, we are less reliant on them than our competitors, who are more reliant on non-fresh. They don’t have catering skills in the business and are more reliant on prepared food…Part of the reason we take this approach is that we are very flexible. We don’t have direct supply from manufacturing, making the business less like a retail model than some others. We don’t have centralised distribution, so benefit from the capability to isolate and switch nodes and suppliers”.

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Managing Conflicting Demands

“There are predictable tensions between government bodies and industries, schools etc, e.g. with salad bars all year , the whole supply chain to be supported within 30 miles of the school not through national distribution.

I think the point here is that a centrally managed supply chain can be better managed during a crisis. A fragmented supply chain is potentially unmanageable during a crisis. The current demand for local sourcing has the potential to fragment the supply chain – in my view it is possible to have locally sourced product through a centrally managed supply chain – therefore the two are not mutually exclusive – providing local sourcing during normal times and transparency and close management control during a crisis.

Our supply chain is coming from a highly fragmented supply chain to a fully managed one. In the old environment it was OK, not seen as too risky for sustainable, risk and commercial issues. We are now centralising, but still have some local arrangements within the supply chain to provide some resilience. We aspire to have the lion’s share of spend through a heavily consolidated central solution. We still have regional suppliers - can give small local suppliers access to market….One size fits all purchasing doesn’t fit well with all markets. Still will have specialist niche suppliers, e.g. for health care. We are making advances in local-for-local (not sure what this means!). There might be a local specialist cheese supplier who we can still put through [national wholesaler/distributor]. It is an elegant solution. This is evolving with the supply chain strategy”.

The issue of centralised vs decentralised distribution was acknowledged as a factor in supply chain resilience. Some thought centralisation increased resilience while others thought it reduced it. The question of how to manage supply chains - to provide low cost efficiency for mass catering, bespoke and local-for-local supplies - whilst reducing food miles was exercising supply chain and purchasing manager. Small suppliers were seen as a virtue and a weakness.

“The structure of our supply chain is not like the centralised distribution model of the supermarkets. It is something of the order of efficiency and cost, plus the local baker. We have high volume suppliers contracted over long periods to deliver high volume low cost ingredients, together with a network of agile responsive specialists who can meet more unusual or quirky requests, e.g. for a special mug for a function or some high end produce at very short notice - at a price. In a crisis the smaller, agile, more diverse players come in. For example one client has a 2000-seater canteen, they want the cheapest mince. Upstairs in the hospitality suite they may be flying in venison from Balmoral. We have a bulk supplier for efficiency or use small specialists for truffle oil. We have a roster of specialist suppliers who can get something very fast, they tend to be owner-managed”.

“Government needs to recognise two very distinct ways of running the world – it will only look at the big retailers, but the small guys collectively have more capacity.

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Need to take care with the assumption that central distribution is the usual model, e.g. for priority schemes. Too easy to only think about big company supply chains and forget those who don’t have centralised distribution….Best advice: read your statistics. Food service is made up of lots of small businesses and a few large ones”.

“Lots of clients put pressure on us to buy locally – it’s a corporate responsibility issue, but am concerned that some small suppliers are not that robust, so may be a problem for supply chain integrity. Have an emergency petty cash option for managers to fall back on the supermarkets – but they get penalised if they do it all the time”.

“Day-to-day, e.g. if a supplier has gone bust, I know exactly the process to go through. Stop paying bills and get another supplier”.

Business Continuity Higher up the Supply ChainsThis section looks at business continuity in companies supporting the food service operators. All six companies are suppliers to one or more of the food service operators featured in this study. They comment here on their primary business roles within these supply chains, however the larger companies tend to be vertically integrated, so may also be involved in food production, preparation and/or distribution activities. These businesses source from around the world as well as in the UK, they sell and distribute to the food service sector in the UK, and support the armed forces in the UK and overseas. None are stock exchange listed companies, though one is a wholly owned subsidiary of a listed international company. All but one had been subject to ownership changes in recent years, or were engaged in contract-specific joint venture activities with other companies who had recently undergone changes is ownership.

Business Continuity in Wholesale/Distribution

The managers interviewed here were from large national companies involved in, amongst other things, the wholesale and distribution of food to the food service sector. They supply frozen, chilled, ambient foodstuff, including fruit and vegetables and catering supplies, cleaning chemicals and equipment, even cutlery and crockery. They serve schools, hospitals, defence, fast food chains, pubs, motorway services, department stores, restaurants and hotels.

“Most of the public eat food we have supplied. We are most visible via our fleet of vehicles and own much of the asset base, some is rented”.

Within both companies’ corporate risk management was a board level concern. They had classic crisis management structures in place, detailed provision for IT and risk management structures to deal with risk management for insurance and for Health & Safety purposes. Beyond that, the development of business continuity was in the first place internally driven, emerging initially under financial or security management remits. Nevertheless the operational imperatives of continuity planning were clearly recognised.

“BCM/risk is everyone’s responsibility, but it has to be led and instilled into the culture with board level policy support. We have Business Continuity that goes back

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about 15 years – with a 24 hour control room and number. The BCM team is the Board of Directors and we have crisis management teams in place for BCM, disaster recovery, HR, media/PR consultants within an overall framework with covers Buyers, Security, IT, MDs of Trading Companies, Director of Operations/Regional Directors. The HR response and media response are run from the Marketing team”.

“At the board level there is a risk map, listing the top 15 risks, including BCM. The scenarios are effects-based not threat based on loss of access/site…had identified critical Head Office functions. Things that you think are critical e.g. the buying function is not critical, but supply chain/logistics is. Buying has relations with suppliers and momentum, it is easy to remove elsewhere. Critical, means where can we relocate to? Can we move staff between sites or can they work at home? A large proportion of the management team move around between sites. Have a 2nd site near the Head Office which could take a relocation. We have identified essential equipment for one to two days and seven to 14 days”.

The approaches to BCM were very similar, both based on three tier overarching frameworks, with more detailed operational continuity plans. One company had implemented the framework in the last couple of years. The other had used the approach for many years, but is currently [Summer 2008] reviewing the plans in total before a re-launch at the end of the year. The revisions included the introduction of a more user-friendly format, quick reference cards and instructions of what to do in the first few minutes.

In both companies, fires had been the original drivers of contingency/continuity planning. Customers’ questions about pandemic provision had emerged more recently demanding reconsiderations.

“The BCPs are still evolving, the framework is more important than the detail. Developments for 2008 include roll-out for stand-alone operations in France, and to take in some smaller peripheral businesses and look at pandemic planning. We don’t have a dedicated BCP person, but think a devolved approach is better”.

“I’m the Director of Operations for Services…I’m about to inherit BCM and have been involved heavily with the company’s Security Manager, who had responsibility for BCM, but everyone has a role. Everyday BCM used to be part of the Security Manager’s remit because fire used to be the biggest risk to the business. I’m to inherit BCM because of the need for pandemic preparation. The approach is well documented because some senior managers were chatting about this and it seemed like a good idea, so they decided to formalise plans. The plans are updated every 3 months – but are quickly out of date! There is a receipted system in place to sign for updates”.

“As Audit Director, accountable to the board, I am responsible for assurance, risk management and controls, ensuring an effective control framework and for taking actions to address shortcomings. I have two reporting lines: one to the Chairman and the Audit Committee and the other to the CEO. I have a team of 9, most are in the UK. We work across the business. The role is very operational, you have to understand risk across the business. Part of the role is to help the business revamp its BCM framework… I arrived in 2005 and asked about BCP and empty templates… There was a factory fire affecting [a subsidiary] and it disrupted the business but with

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little impact on the customers. In 2006 the business decided it needed to improve BCM/risk and contingency management. The new framework was established in mid-2006. It has a three level risk-based approach. The top level would threaten the business at the regional level and/or be immediately visible to stakeholders. It would involve something like critical nodes of IT… BCM was devolved to the business units, but with the framework. More recently (2007) major customers were asking for pandemic planning and asked about the contractual requirement for BCP. In financial services I don’t think anyone is as far on as they say”.

One interviewee produced a detailed BCM manual, containing lists of ‘Depot Events’ graded as ‘disasters’, ‘crises’ or ‘incident’, with basic bullet point business recovery plans for each. The scenarios ranged from plane crashes to industrial espionage and visits from enforcement officers. The recovery plans included lists of people to be notified on a need to know basis and their telephone numbers; numbers for the emergency services and other key stakeholders; useful contacts (alternative cold stores etc). Similar effects-based lists had been produced for possible Support Centre Events and their respective possible solutions. Instructions for more specific scenarios had also been put forward.

In terms of other tools and techniques, the same manager made the following observation:

“Don’t use PAS 56 or BS25999, most people have not heard of them, but we do use the European Quality model, HACCP, and we have Health & Safety manuals and Environmental Management Standard ISO 14001”.

The general approaches and the design of their plans for their distribution networks were strikingly similar to each other, and to arrangements described by large retail companies, including one selling ‘grab and go’ food. They rely on the ability to switch deliveries to be covered by nearby sites within the networks.

“The plans are organised around hubs – radial distribution centres - one is ambient only, two are mixed and one is for frozen and chilled only. 90% of volume is based at the depot, with 10% (slow moving /small volume lines) from the hubs. We have identified alternative depot for hubs and the radial distribution centres have contingencies by postcode…We have local telesales but each trading company has a system where all sites can access each other’s inventory holding details. Telesales have moved quite often…We don’t carry spare temperature controlled vehicles, we would have to communicate with the customers and let them know what it would be, e.g. delivery tonight instead”.

“At the depots (30 sites), plans are owned by the depot manager. They have been in place since 2007, using a template. Each region has a coordinator, responsible for a plan. The key to this is reciprocal arrangements, e.g. in the event of a loss of a depot at Bristol they would look at which routes can be taken on by nearby sites, thinking of capacity constraints, number of trucks and people, the sort of produce etc. The depot manager is responsible, but the coordinators would work with Head Office supply chain team to redirect suppliers. There are regular audits and updates”.

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Planning for Business Recovery: Examples of Depot Events

‘Disasters’:

Plane crash, severe fire, gas explosion, direct terrorist attack, weather events, large scale racking collapse, whole building collapse (with and without loss of life), a major diesel spillage.

‘Crisis’:

Terrorism, riot, sabotage, food poisoning (internal and external), fatalities, flu epidemic, strikes, civil disorder, telephone crashes, loss or operating licence, asbestos scare, long term computer crash, long-term freezer failure, extortion, kidnapping, flu epidemic, lottery syndicate win.

‘Incident’:

Vehicle fires, road traffic accidents, blocked access, accidents to employees and non-employees, enforcement officer visit, loss of keys, power failure, generator failures, computer crashes, bomb threat, theft of vehicle, invasion by travellers, hub disabled, fuel strike, theft/break in, ammonia leak, industrial espionage, mugging – cash on delivery, sickness – water contamination.

From the wholesale perspective, both companies had considered integrating continuity planning with key suppliers. Customers were asking for assurances on this. Consideration had been given to key categories and the opportunities for alternative sourcing.

“The buying team have identified the top 30 ‘high risk’ potentially vulnerable suppliers, with high impact on this company, e.g. high temperature, not just single source, or financially. It includes some small companies. Some big companies are quite robust…On the supplier side, e.g. when a smoked salmon factory caught fire, we could use an alternative supplier already in the approved supply base. We have an approved international supply base, e.g. for poultry from Thailand, Brazil and the UK. It was prompted by Avian Influenza in Thailand. We have moved some sourcing to cooked not just raw. It means that contingencies/links are in place. The consolidator has a plan of its own – driven by us and it uses our template”.

“Government is asking Sodexho and Compass about BCP, who are asking about us. The key thing is knowing who to speak to, not necessarily having closely knitted (variable) plans”.

“Yes, semi-formal engagement with suppliers for the pandemic. Lots of customers insist on it - i.e. big food service companies and [branded restaurant chain] - and definitely for public sector….The company does try to secure priority customer status with suppliers but the buyers don’t always see the relevance in this, and suppliers don’t want to show favouritism”.

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When asked whether the loss of any supplier might halt their operations, the big wholesalers pointed to vertically integrated joint ventures companies involved in the supply of meat, or to shortages of fruit and vegetables resulting from crop failures.

Business Continuity for Suppliers of Foodstuffs

The manager interviewed here represented four foodstuffs suppliers, which were involved in the preparation of food supplied to the food service companies covered in earlier parts of this chapter. Three produced or imported raw foodstuffs from overseas (meat or fruit and veg), as well as processing some UK produce; two were involved in the provision of ready meals for public sector clients, including NHS Trusts and the Armed Forces; two of them provide prepared fresh produce to the big grocery multiples, as well as High Street ‘grab and go’ food service operators and branded restaurant chains.

In each case BCM was a board level responsibility, but drew on functional specialists to work through contingencies and assist in the development of BCPs. None of the companies had dedicated BCM managers, so technical/quality assurance or finance specialists took the lead. For one of the importers with major international trading interests, BCM was based on maintaining the Head Office functions.

“The logistics and trading team are very much involved…Don’t think security specialists are a concern. Continuity revolves around mission critical activities, the traders have to be confident that they could get other supplies at very short notice…It is a large part of the role in the finance side, which is audited every year. That includes contingency planning. It is reviewed regularly - at least annually…Have done this for at least 5 years. The company structure is one Head Office and 6 other smaller sites. Contingency planning is linked to the Head Office. The smaller offices could be run from other linked sites. Contingency planning is structured around IT, it became the biggest area of concern. Have discussed displacement plans but not done it for real. Don’t think it would disrupt the business. We would have to physically move people but it’s the same system…Have two servers, the other is in the second largest office. It mirrors every night. We take a physical back-up on disk every night and take them off site. It means minor glitches can quickly be restored”.

The other managers were more directly involved with the operational concerns of meeting contractual obligations, running factories, or preparation sites. The emphasis for contingency planning was a reflection of the profiles of each of the businesses, with some divisions or business units viewed as higher risk than others and therefore justifying more highly developed plans.

“The General Manager has overall responsibility for BCM. Others within the group have role responsibilities and resources that we’d call on. Within the Special Contracts Division it is the commercial managers and technical manager. We have a BCM team at this site for Head Office activities. We plan for that and across the board we analyse pinch points and critical failure points across logistics… The core division was set up to bid for a contract with the MoD for meat. Had to be more thoughtful about security of supply – it’s a unique customer. Unlike supermarkets and other UK companies, if the MoD need something, they NEED something and it really matters. It’s a challenge that we respond to and take pride in”.

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“As a board member I’m involved in business continuity/contingency planning, but primary responsibility is with the head of marketing because of connections with the press…it goes down from the main board to the executives, including heads of site and people further down the chain e.g. sales people and account directors” .

“I’ve been involved in basic disaster management planning – normally based around crises management plans. We have to have a crisis management team. Each of the businesses has a crisis management team. High risk chilled has the highest developed team because of the nature of the business…BCM is cross-functional. The business is too big and complex not to involve people from the business as a whole. All functions must play their part in these situations”.

In common with other managers elsewhere in the supply chains, they reported moves towards more formal contingency planning. Increased interest from customers was always a driving factor, but the wellbeing of the businesses was also a concern. In more recent times, the largest life and death public sector customers had been checking up on prepared food suppliers.

“The MoD is one of our most important clients, but it is only 10% of operations, when we supply key products for big brands. Very few customers insist on seeing business continuity plans, but we need to be very open with discussion on a ‘what if’ basis…Its not just customer driven. We have binding sales and purchase contracts, in and out, so the financial teams have a need to fulfil both”.

“The company has been doing business continuity management/planning in detail for 5-6 years, in less detail at least 10-12 years, as interest from customers has grown and because as the business has grown. The company realised a factory fire could affect its ability to deliver on contracts…Started revising the BCP last year, but this had to be put on hold in May/June 2007, not much has happened since then. There have been lots of position changes within the company last autumn and in the New Year. Customers mostly just ask the company to give an overview of planning and disaster scenario cover. New customers do ask for this. The top line has been reviewed in the last six months”.

“Different customers have come on site to talk about contingencies. We have had the MoD and NHS purchasing with [catering company] on site. They toured the factory to see how we’d cope in a pandemic. The MoD flagged up the expectation that lots of people have asked that the MoD would step in with staff. They were at pains to point out that they couldn’t come on site to run things. I had not expected them to come on site to run it, but I had expected them to ask how we’d support them”.

“Formal BCM has been in place for about three years, informally and intuitively, since about 1996. Three years ago we found ourselves doing different things for lots of people. There were more customer requests for BCM and a need for us to rationalise and audit approaches, to provide customer auditable systems”.

“It’s due thanks mainly to UK retailers and High Street customers – it’s a very competitive business. We have to have contingency plans”.

“Formal business continuity planning started with a crisis management plan, but 12 months ago [spring 2007] we looked at other possible events such as a fuel shortage.

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There are working groups on different aspects. Spent a day brainstorming what could go wrong – everything from plane crashes, terrorism to bird flu…We supply [branded restaurant chain], the plane crash scenario came from there”.

The tools in use varied considerably, but always included HACCP. The food suppliers were engaging with clients to exercise their contingency plans. The insurers were present too, but were mentioned only in the context of their traditional, asset-based, risk management role.

“The auditors are the 5th largest firm and they have a questionnaire about various ‘what if scenarios’. We have our own team of scientists who use HACCP. Also, our insurers give us advice regarding financial issues and risk assessments. There are not many risks because of office-based operations”.

“The insurance company has a table of recommendations and they qualify them, e.g. 90% cover for sprinklers. It’s a business decision based on calculation of the business loss if the system failed. It is up to the company whether it follows the recommendations or accepts an adjusted premium…This site is covered very well, but two of the freezer sprinklers don’t work properly – they were wrongly installed. The insurers review and walk through the site every year to check e.g. fireproof panels and they make recommendations, either changes are made in the business or insurance premiums are adjusted”.

“We are aware of BS25999 – not read cover-to-cover, but we’ve had advisors. Also driven by retailers who are bordering on the paranoid, e.g. asking what the contingencies are if the business faced a major crisis. Some parts of the business could use alliances, or move business to another site depending on the issue. We have contingency and operational agreements with competitors to work with each other in an emergency. Also, we have reciprocal supply agreements in place with other produce suppliers in times of shortage”.

“As the plans have developed, people from every other area of the factory have gone through the process and what was being planned, to get their input on if it is appropriate to the requirements. We have HACCP and ISO 9001 in place away. If we are looking at temperature equipment or replacement we asked the responsible person. It was very much worked through in lots of detail…my predecessor was looking at PAS 56 and starting to restructure everything into that format. We hadn’t got there by any stretch before he backed off. Have an impact x likelihood tool. It’s a computerised spreadsheet. HACCP is computerised, but we tend to use it manually …There are no BCP drills, only fire drills on Fridays at 8.30…There are 3 shifts, I drill per quarter per shift. Technical do traceability, e.g. date/code issues or bones in fish. They exercise as required by protocol”.

“Use purely in-house brainstorming of the board and two invited members. There are a number of issues, including an accident at a French nuclear power plant and radio active cloud. We prioritised and dealt with the top 30%. We prioritised by most likely, using a likelihood/high impact matrix. The top quarter of high likelihood/high impact was the focus of efforts…Where specific risks exist, e.g. corporate manslaughter, we bring in consultants for advice. Have HACCP in the factories. All quality standards and the technical data base are computerised…We do drills for [branded restaurant chain] because any kind of issue, e.g. a factory

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breakdown could stop the [customer’s core product]. We have contingency partners who we ring – ours is in Holland – who would take over and supply us. We have two sites 15 miles apart to switch between. [Big supermarket] likes to see internal switching options. One site is hard leaf e.g. iceberg lettuce for [restaurant chain], the second is soft leaf, which is bigger business now…We have moved equipment between sites progressively over the last 18 months. We have exercises to see that plans are tried and tested. The contingency planning is driven by us not the retail customer, partly because it is good to prove to the customer that we have contingencies, as well as good business sense for us”.

Only two of the managers in this group said their company actually asked suppliers about BCPs. None made it a prerequisite for doing business. The companies were mostly sourcing commodities. They also bought in specialist foods or packaging.

Contingencies were a combination of market-based switching, mutual support arrangements or competitive opportunities. The companies involved in meat-based or ready meals production cited instances where they had been asked to step in to the breach, to support customers in their hour of need. One of the ready meal producers admitted that it may have no option but to do that if its site was lost. Another manager from the same company mentioned mutual contingency arrangements with two customers, though there were questions over whether such high volumes could be switched a short notice. For the produce companies, a degree of cooperation and mutual support was the usual contingency option.

“We don’t formally do BCM with individual suppliers, we have a basket of suppliers. All have to be financially sound. Have a variety of approved suppliers in various places and of various descriptions that we draw on…the network is purposefully designed and in purchasing there is no one critical supplier. We have a basket of approved suppliers and a 2nd tier of intermittent suppliers for surge and emergency; 3rd tier approved but not in use. We have enough capability between them…We never help customers out financially, supply wise, quite regularly if a competitor has failed to deliver so the customer comes to us. It’s an opportunity”.

“Don’t have an alternative site. We could in theory use alternative sites, but we feed a million people per week (8 or 2 portion foils). Can’t switch those volumes. We’d be OK for 3 weeks from frozen stock. Other kinds of manufacturing would switch and the assumption is that you go to 24 hour working at another site, but we are very much exposed. From a supply chain point of view our 3 big competitors would step in to feed the patients. They could handle the volume”.

“[Parent Company] have 2-3 sites we could move to and have agreements with local companies to subcontract – at a price! Don’t know how robust that is. [Parent Company] has 2 smaller units with kitchens we could use and we could gear them up. One – an MoD site is involved. It is a run and built unit (PFI), modelled on how we produce, we run it for the MoD and have a mutual contingency arrangement”.

“Customers, yes ,we help if they lose freezers or kitchens through fire, e.g. at a London hospital - not one of our customers - they phoned and said can you help. We loaded a vehicle and sent it, made daily deliveries and arranged temporary storage at the site. They had lost the kitchen and access to the storage. It was a significant

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volume of food. …We do regularly have customers asking for help when freezers have gone down, occasionally, non-customers. We can react very quickly…”.

“Have discussed it in some areas with some suppliers…Have asked the question in supplier approvals…Have just reworked the questions but not moved beyond that. It is not a prerequisite that they have BCPs yet, but we may review that...We have back up for practically all suppliers. May have to switch, which might change the quality, but we can switch to alternatives. There are no show stoppers…distribution is leased own fleet. Have spare trailers and could get more tractor/trailers at short notice – that is tested fairly regularly!”.

“We ask them but they don’t share details, like we didn’t want to tell [branded restaurant chain] much detail. We expect to see evidence of contingencies ‘what ifs’ largely driven by traceability and alternative sources and they would ship/handle, but don’t get into the detail. …Majority of it is driven by logistics concerns, it’s the retailers, who don’t want to be out of stock even in normal times. Contingency can be Africa and South America. Some parts of the business could use alliances or move to other sites…”.

“No requirement on suppliers. For the supply chain we are not reliant on any supplier for ingredients or packaging. We always use dual sourcing. Have relatively few suppliers and work closely, so we do try and help each other out. No specific incidents but it is good business practice…There are lots of good business reasons for it, e.g. weather can hit leaf veg. One local area, e.g. Shropshire, can be affected. We grow in 3 areas of the UK and overseas. Its chiefly seasonal produce, so we switch between UK, Spain, France, Italy and the US, even Egypt… Might have to de-list or do product changes – but it’s like variation, its normal and we have a geographically diverse supplier base. A long very dry summer could leave all UK suppliers short of stock. It is theoretically possible to switch but do rely on the UK, because most other European suppliers would be hit because it was either too hot or they would likely be affected”.

The companies involved were all parts of vertically integrated businesses. The meat suppliers outsourced transport, the rest owned or operated their own transport or were involved in transport sharing agreements.

“We don’t have any transport and warehouse facilities of our own, that’s best left to specialists, we are not good at doing it in-house. It is the same across the rest of the industry in the importing business”.

“Sorting out the logistics is the least of the problems. The company owns some of its own boats and wagons. Some are contracted. Everyone shares transport nowadays. There are hubs around the country so even the retailers are sharing facilities. Produce is one of the best for sharing facilities, because of low value of produce the cost of many lorries into the depots are shared. The retailers are encouraging it. Saves on energy as well as costs e.g. running a load to Scotland, we can share with another produce company… we have helped out a couple of customers with transport and raw materials, but very unusual – only if we have the resources”.

“No. Don’t ask transport suppliers about contingencies. Can usually do it ourselves, there’s just cost implications. …The company has in-house transport. Northern

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Ireland is contracted out to a 3rd party, and the company employs one in Scotland for forward delivery. We send up one lorry a week and we store up there and deliver in smaller volumes to the hospitals… All our product goes into foils, it’s something that would stop us …Lack of foil containers. That could be a problem. Have at least one delivery per week, expect it to be about 3-4 days of product…Have had several issues in the recent past regarding taking deliveries. If it’s essential we will go and collect ingredients or packaging”.

“Fruit is rarely air freighted in our business. Avoid air freight at all costs…Bananas, pineapples and melons all go by sea. Try to fill the boats. The company owns the majority of the farms, it’s a vertically integrated company – it has control of its own destiny. While its still financially viable to ship by sea it will stay that way – has control of the major costs in the logistics chain…”.

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Section 3. Findings – Actual Disruptions and Known WeaknessesThis section:

Identifies cases of actual disruptions experienced, near misses and known weaknesses in this sector that illustrate the extent and range of significant disruptions, for which measures should be undertaken to ensure Business Continuity.

Everyday Hazards: The Small Business PerspectiveIt is well known that small businesses are particularly susceptible to failure after major disruptions, as a representative of an industry association pointed out.

“The smaller companies in the industry would have particular issues if they had an incident. [Insurance company] gave a presentation to members about how many companies were still in business after 5 years after an incident. If they are a single site and lose the site they go out of business because there is no product on the shelf so competitors get the business”.

The three small businesses involved in this study reported that although they had experienced disruptions, none had been significant enough to threaten the business. They cited occasional power cuts, disruptions to telephone services (mechanical diggers) and indirect effects of environmental campaigners. The hotels cited other service supplier failures and minor fires.

“We’ve had no serious disruptions …We had Swampy and his friends in the trees holding up work on the by-pass. The local authority did help support the local businesses”.

“Had only one in 10 years, a one week disruption to the linen supplies. They deliver 5 days a week. They had a machinery failure – we had to be supplied from Birmingham instead of Newton Abbot”.

“We had a small fire in the aerobics studio but that only disrupted operations for 10 days….Privately owned businesses are able to make decisions very quickly, it’s easier for us to make decisions then the big chains like Hilton or Marriott”.

The disruptions they had experienced were common to other groups, with suppliers of meat, ready meals, transport services and on-site caterers reporting similar events.

“We have experienced random power cuts, usually from diggers, but power is usually restored before generators are required… The company has a list of examples of Depot events, including Farmers for Action blockading a depot when the MoD was a client”.

“We lost the phones at one site. That was dug up 2 or 3 times this week”

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“We changed our name and BT switched the old internet name account off and forgot to switch the new one on”

“Fire in the production area would slow us down, but we’ve not had fires, have had near misses which were just very localised and contained. Had a very small fire but caused only 3 hours disruption while the fire brigade checked and gave everything the OK. A motor on top of an oven developed an electrical fault and caught fire”.

FireThe disruption from larger fires, that could threaten the survival of small single site owner-managed businesses, were ridden out by the larger groups.

“We had the smoked salmon fire factory. People intuitively know what to do with fire. Have 3rd party suppliers to call on, it an advantage of a broad supply base, most customers didn’t notice. The main concern was whether people were hurt or killed. Have had discussion with HR for major incidents involving casualties.

However, it was distribution centre fires that stayed in the minds of managers for the large high street chains, their food and transport suppliers. Distribution centre fires were an occupational hazard for the wholesale/distribution companies. The distribution networks for three of the four branded restaurants and grab and go chains reported being directly affected by the Buncefield fire.

“Had a fire near Crewe last year that shut a depot for 12 hours and the adjacent butchery. Impact on operations was 2 deliveries (am and pm)…It created a backflow of products – the depot turns over stock two times per day. Couldn’t get the stock out which created problems”.

“The biggest test was two and a half years ago, a major cold store fire. It was a logistics chain catastrophe. We lost £2.1 million worth of meat. One reason for the shortage of cold store capacity is no one can make money out of it. We didn’t miss a single delivery to a customer, partly due to efforts to ensure alternative sources were available. And the insurance paid all the costs”.

“Have an average of one incident per year and we learn from this. Have had fires in offices and a fork lift with a faulty connection in flames in a freezer – there was soot/smoke damage. There was only one flaw in our BC plan – the assumption that you could service some products held at only one depot, have since divided stock cover….Had a fire in the catering equipment office in March 2007, it destroyed the tale-ordering facility. We were going to relocate to another office in Scotland, but were able to move to the office next door instead. In each case local and national informal knowledge of the business was vital as was communication. The company is good in a crisis – could be world-beaters if we bottled it and used it everyday!

Do have minor incidents, e.g. loss of access from a fire in Camden a few weeks ago, they put a big exclusion zone so had to ferry in food from other sites.

In Terminal 1 Heathrow we set fire to a burger bar – it was the client’s responsibility to clean the extractor hood- and closed the terminal.

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Buncefield: The Retailer’s Response

A very good example was the biggest chilled depot was closed for 3 days by Buncefield. We lost a significant amount of stock. Around 40 lorries were stuck on site, around £2m worth of chilled food was lost. Our people were first on site with the logistics team. There was a big ambient depot on the same site, most was OK, but chocolate is susceptible to tainting. We had a taste panel to check it. It was all OK because the wind was blowing in the wrong direction. If we’d lost the chocolate we would not have been able to replace the stock. The chilled chain has a very short pipeline and is very quick to restock.

With Buncefield the real miracle was that the logistics team managed to arrive with [Logistics Service Supplier]. They knew the quickest time for each activity. By evening the logistics team had managed to work out work arounds from the other 6 depots. It is fantastically complicated with around 100 stores supplied by the Hemel depot. We were back up and running at Hemel after 5 days. Had to get the team through the police cordon a.s.a.p to check the damage, e.g. whether the doors were open and for pest infestation.

“Buncefield shut down one of our non-food distributors but worked around that, there were enough trucks, stock and capacity in the network”.

FloodThe floods in the summer of 2007 had impacted on two of three public sector organisations who had become more aware than ever of their civil contingencies obligations. The third – a large London Hospital Trust – was reviewing its flood protection in the light of recent events. However, the reality of maintaining food service to vulnerable groups in such a situation was most vividly described by a manager, who was responsible for the provision of school meals several months after the City was badly hit by the summer floods. In town and cities across the North of England schools were closed and thousands of people were forced to leave their homes.

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Summer Flooding: Lessons from a North East Coast Town

Contingency plans are in place for the kitchens that were closed because of the flooding. School catering had plans that they were able to implement, e.g. sandwiches not hot meals. They would have gone and bought them if they were not able to make them. It was the same when children whose schools were closed were sent to the stadium or museums. Because of the entitlement of all children to school meals, there was an obligation to provide. Non-entitled would have been asked to bring a packed lunch. The flooding affected schools from the end of June until the school holidays. One school went to a leisure centre to keep the kids occupied. Some kids were sent to other school sites. They received bottled water and sandwiches. Some teachers were affected as well as pupils’ homes. The kids tended to be off school for a couple of days.

It required a huge logistics effort. Displacement of children put extra strain on other schools free meals. It would be different now (fewer children now entitled to free school meals). There should be a no charge policy during an emergency. It removes the question of how do you find your £1.10 if you are not entitled to free meals. It meant that all kids could get a hot meal.

If necessary you could have asked the catering staff to cook for the whole estate – not just school club breakfasts. Some staff would have been affected by the floods, they are low paid so tend to live very locally. It’s possible to write the contingency into job descriptions as well as relying on their good will.

Its pragmatic experience that really counts….have to recognise emotional support issues – the interaction between the catering staff and children e.g. if children are very hungry they need different foods from usual. Consideration needs to be given to how you manage the distressed human side, e.g. it can take children longer to eat. Might have children in an area where one child of one age has a school open but not others. Could we feed siblings or teachers? The whole thing is very emotive.

One businessman thought that more could be done by Government, to help local businesses help their own communities’ preparations to overcome the immediate effects of flood or terrorist attacks. He felt that he and other local businesses not directly affected by the events could be given more information on how they might assist.

“We don’t know what would be expected of us by Government. For example we have a big swimming pool with potentially potable water in it. As businessmen we would like Government to give us some indications of what we can do to help in an emergency and how we could be more resilient. Directed emails at Head Offices etc….Thoughts to Government are to continue with what you are doing which is laudable – with financial support if appropriate. Think a survey of readiness with practical suggestions of what to do, e.g. with water in the swimming pools if that is needed to be made potable and possibly Government resources for that”.

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Feeding the most Vulnerable

Throughout the emergency hand washing was essential….brought gel hand cleaner for rest centres to be used before taking food. You can’t have diarrhoea and vomiting in these areas. Bought hand gels from Asda. The local Tesco, Morrisons and Asda were all fantastic. We need to strengthen links with them before something else happens. Lots of stuff was given free to start with then accounts were set up.

There was a need for bottled water and baby food. It has to be in jars and baby milk is really difficult, it has to be ready made. Hospitals have ready made and supermarkets donated stocks, but people’s homes were badly damaged and contaminated. There were no sterilisation facilities in emergency shelters. It was not practical to have sterilisation units there. They needed bigger bottles than those provided for hospital for new borns. They also needed bowls and little spoons not just food.

Some vulnerable people - disabled people and children need sterile food and tubes (£10 each). There was a need for supplies of gluten free and for diabetics too.

People need to keep their teeth clean. Water is essential.

One of the lessons learned is to put a more positive slant and disseminate what you would do differently. We have kept the plan and the lessons and need to look at the temperature controlled/chill chain.

Two of the big contract caterers, and both of the large wholesale logistics providers, also reported localised disruption to operations during the same events They sometimes brought to light flaws in building work, choice of locations and contingency planning implementation.

“When there were floods in the South West, we had flooded DCs and units. Local managers can respond quicker for a day or two, they can cope, but it’s not sustainable”.

“Lost the Rotherham office from flood, we shut it down and opened another office and relocated. We will not go back to the original facility, will go for a better site next time”.

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“The depot was under water with 2007 floods, had to close the dock loading doors for electrical safety. The staff loaded the vehicles on the flat – there was a very good blitz spirit…It is essential that senior people are visible at times like this. Leadership is vital. We try to learn from these experiences – e.g. where to park cars after the floods! We had the problem that the outfall drainage for this site was not as it was designed or required, but had been signed off by the Quantity Surveyor. When you are pumping the sites no-one thinks about where the drains go, or whether they fail or surface in the wrong place. We’ve have had other incidences of flooding at sites when guttering could not take the water because the guttering was not maintained, but there was no disruption to operations. We’ve had one office that had to be relocated and another where depot doors leaked and people brushed the water out”.

“Flooding in summer 2007 affected a depot. There were lessons to be learned and they were documented. The depot started putting reciprocal arrangements in place 50 miles away as the road flooded. The IT was OK but the loading bay was under water. Lap tops were working, but you had to swim to them. Not everyone takes them home. The supply chain team do, but others don’t always….Development for 2008 is we need to do more communication between people”.

The operations of the military mess had been directly affected by the flooding too. Its managers had responded to requests for help from a local business in providing assistance to stranded motorists.

“We can be affected by the inability to move staff e.g. in floods like July [2007] no staff live on site. The other contractors’ Mess was flooded, it was very badly disrupted. We supplied them for 2 days. The general manager slept on site and organised things over the weekend and helped. All the food was served in the other building because they had staff. All food service moved to the most disrupted site! They had enough food upstairs from us – the rations went to where there were staff. I asked the question what happens when there’s another down pour? The other Mess is built on a lake. The facilities management company ‘owns’ it - PFI – it is the big contractor for 30 years. MoD leases it on a contract for 25-30 years. The real owners are the big banks. Unless the two come together it won’t function… We’ve talked about the food chain during the flood, but we also lent the local Restaurant 50 blankets to help provide emergency accommodation for lots of stranded people. Restaurant phoned me and I said give them what they need. They were returned”.

Two of the big food service companies also reported direct approaches for food services during the Gloucester floods. The experience of some of the biggest international contract caters in providing catering for the Olympic Games and other major sporting events, means they have the know how to muster resources in major emergencies as two of the companies’ managers pointed out.

“The company is a global player, it set up feeding stations for Katrina. The company is quite flexible. There will be procedures for the clients’ sites if they need them”.

“We were involved in New Orleans, we operated the stadium and we went in and provided the food because we run the stadium…We have ‘star teams’ in the US we were always more structured. It’s semi-volunteering. Have teams of people around the country for if there is a disaster. We help out and not because we have to, but because it is part of good citizenship. Every year in the US they know there will be

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Contingency Planning for a London Hospital

The projections are for 1 to 1.5 m flooding. Over the last few months the Trust has undertaken a flood audit as part of the strategy. This was carried out as a 100% survey of all basements areas and the identification of the criticality of services located in these areas. The Trust decided to bring in a specialist to assess this problem e.g. impact of flooding on radio active sources.

At one of the Trust hospital the servers are on the 10th floor. Here they are on the ground floor but located on a plinth 1.5m off the ground. Estates have conducted a detailed review of utilities, as a result they have moved the generators on to the roofs of single story building to raise them above flood level. The trust has taken the view that it will do everything practical as there is a clear a cost-benefit in this investment to sustain clinical activity both in patient safety and revenue terms.

The Trust is currently looking at all plant rooms and assessing whether there is any value in putting in some simple flood protection systems to sustain operations as long as possible, this could take the form of putting in single systems e.g. 1m wall around the boiler to provide a stop gap. It has worked with the Environment Agency who ran a computer model of potential flooding from an over topping event or a breach of the river wall. The modelling identified that the threat would last for approximately between 1-3 hours and give a water depth of between 1 and 3.5 metres.

One of the benefits of the site is that the hospital has huge water storage tanks so can continue to function for several days - it was normal for buildings to be built that way 50 years ago. There is clear recognition at Department for Health of the benefits in looking at the design of hospitals. There is no clear indication of how much BCM is designed into new builds although I have attended a number of meetings at DH where lock down and other BCM issues were being discussed with a view to designing in these requirements for future builds…”

typhoons on the West Coast. Florida has swot teams ready…We served the police round Gloucester. They worked 24/7. We got mobile units out and brought staff in from other non-affected areas. That was business not charity”.

“Defra contacted us during the Gloucester flood (fed into COBRA). The request came via the BHA to ask what food services we could provide. We could let them have 150,000 frozen meals next day. Don’t know how it would serve them, but it was made clear via the BHA that it was appreciated”.

Water, Water Everywhere…but Not a Drop to DrinkThe catering companies themselves need a supply of potable water to maintain food operations if they are to produce the meals to rush to the rescue in an emergency. The reliance on the water supply was highlighted by companies involved in the production

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of ready meals and those involved in on-site catering in open and closed environments. In normal circumstances the on-site caterers had contingencies in place. Some coped better than others during the floods.

“The most serious threat would be lack of water. We have no workarounds. It’s unlikely but not impossible. That could bring us to our knees pretty rapidly”.

“One site lost its hot water supply. We switched from an open deli and bought in sandwiches within the day”.

“We have near misses with the occasional loss of power and water supply with all the building work on site. When no water is available we double feed in the other hall – we are flying down there with trolleys of food – ‘meals on wheels’!

“We experience degrees of disruption every day of the week, whether it is Anglian Water (yesterday), or flooding last year. We serviced the police involved in that”.

Managers from the catering companies, high street chains and the MoD reported suppliers and customers had been disrupted. Some had received requests for bottled water from emergency planners when the flood hit the South of England in 2007.

“When floods came, some suppliers were OK, but others were scuppered. Some e.g. Dairy Crest coped well. They had no water, but they had plans. They brought in bowsers and then supplied houses in the area around them. They were better prepared than the water people to supply the local community…Some food manufacturers were flooded”.

“We were approached when we had the floods, to provide 1 million litres, but don’t hold big stocks in the UK”.

“Quite a few of our clients were affected. We were not contracted to do anything, but it is good relations and it shows we care. We get some good PR out of major events e.g. the floods in Gloucestershire, we sourced lots of bottled water. Our supply chain connections enabled us to do that”.

“The client base is appreciative of anything we can do for them e.g. floods in the South West. Overnight sent bottled water to a client [Water Company] to issue from a car park to customers”.

The MoD had been involved in the distribution of water, they remarked on the very different attitudes of flood victims. Some elderly people with very little water felt they had enough to get by, but other took a different view…

“During the Gloucester floods we gave out free water – I pack per family… People refused to accept rationing”.

Weather, Transport, and Climate ChangeDuring the 2007 floods transport had not been a problem for the City Council’s school caterers, because the schools are located within the communities they serve. The catering staff were minimum wage workers living nearby. The transport situation was

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the same for a food factory in Wales, where snow could be a problem. It was very different for staff in public service and other catering posts in the centre of large cities like London, and of course those located off-shore.

“We have a microclimate – it snows here – but vehicles can get through most conditions. If it heavily snow we have arrangements with ploughs and a local JCB supplier. There’s a man with a huge tractor who lives locally. That can pull an articulated lorry. Have those arrangements renewed each October. Also have 4x4s to ferry staff in and out if there is a serious threat of snow and we keep the vehicles on site until the threat of snow has gone…90% of staff are within walking distance of the site. Have a system of approved ‘safe drivers’ to ferry with the 4x4s”.

“Transport is a huge issue. Like lots of Central London hospitals, most staff don’t live locally…Flooding would affect it”.

“Weather is a big factor for off-shore. It brings its own hassles. Aberdeen can’t sustain the population. There is a shortage of hotel accommodation in Aberdeen in bad weather. It has become very rotational. People book overnight 4 weeks ahead”.

Weather was also one of the few things cited by the large grab and go retailer as affecting its ability to supply. Demand for some foodstuffs is notoriously weather dependent – warm weather has customers reaching for the salads and barbeques. However it was the transport element that this manager highlighted specifically for stores across the Irish Sea. The suppliers of some of the foodstuffs most likely to surge in warm weather also highlighted the vulnerability of maritime supply routes to bad weather with stocks sometimes held off shore by storms or shipping failures.

“Nothing in my experience has actually seriously disrupted the company’s ability to supply food to customers. Have had different lines affected by different things, but no one starving. …..Bad weather does have an impact for 2-3 days each year. Most of the manufacturing base is in the UK, if the ferries don’t sail it means that the Irish stores go short. We are entirely dependent on the road network for delivery to stores – no alternative to road. That creates delays but not for longer than a day. There is usually enough in store for them to continue to trade – and customers stay at home and don’t shop, but then can come out and go mad! You see a big bounce back…”

“Do have weather related problems ‘blow downs/hurricanes. Shipping problems due to storms in the Atlantic are quite common”.

“Non-supply of certain tropical fruit to the UK would impact dramatically on our business - Disruption to international trade, or climate change driven issues - The majority of suppliers to the UK come from South America and Africa or the Caribbean…..Can’t think of any major disruptions – other than shipping. Most competitors are in the same position. Can only get produce from certain places at certain times of year e.g. melons. Bananas and pineapple are all year round and from Costa Rica, Brazil and Central America”.

Back in Great Britain, one of the produce suppliers reported a disruption to a facility caused by weather, and a more serious threat to the business from climate change. Climate change was recognized by some managers in both the contract caterers and the public sector as a direct contributor to rising commodity prices around the world

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“Had a section of roof blow off – weather damage is a contingency….Government policy is to surrender our area to flooding. That would separate the factory and farms from the mainland. This is a real risk now and we have to plan against it. The plans for the area have been out for some time. Some locals are still fighting it because homes and farmland would be lost. Climate change is a real issue for us. Lots of the contingency planning we did at first has been added to because of this”.

Commodity Prices, Failing Suppliers and the Downside of the Global MarketRight across the food service industry companies were reporting the impact of food price inflation. The small businesses who prided themselves on quality local ingredients were feeling the pinch:

“Commodity prices are rising, have seen the biggest increase of prices for everything in the last 2 years – more than the last 14 years…The minimum wage is part of this – the problem with that is that I have to pay ‘clueless’ the same as ‘good common sense’. Fuel is another one – have 3 delivery vehicles on the road every day. As soon as the price of fuel goes up, everything else does. As the end of the chain I’m wary about putting prices up because people can always buy cheaper. Fortunately we have a good customer base who appreciate quality”.

“Certainly seen big increases in the cost of dairy, cereals, wheat, meat (beef specifically). Has been a gradual thing this, putting profit margins are under threat. Working hard with suppliers in the last 2 months on this, have changed menus and re-priced. Customer-base is very price sensitive, particularly when family budgets are under pressure”.

The grab & go retailers, who also traded on the freshness and quality of their ingredients, were very much aware that they were feeling the pinch. One manager described the changing contractual environment, with suppliers less willing to enter into long-term contracts.

“Commodity prices: These are changing the rules of big retailer power. Wheat and dairy have hit us, so has oil and bio-fuels – all have affected costs in the food chain. We are no longer signing 12 month contracts, only 6 months because suppliers are worried about committing to longer-terms. Pig meat is disappearing. We are paying £1.17 per kilo at the moment, but farmers need £1.40 to make pigs viable. The withdrawal of dairy farming subsidies have changed things too”.

“People in the factories are under lots of pressure including food price inflation”.

The larger contract caterers spoke of shortages of some processed foodstuffs. They spoke of the difficulties of maintaining supplies, the quality of their offer, and their relative size disadvantage in terms of buying power compared to the large supermarket chains. Unlike the large supermarket chains, the contract caterers were contractually committed to delivering specific offers to their customers:

“We’ve experiencing food shortages e.g. butter and confectionary. Butter has been rationed, but we are coming out of that. Butter is to do with milk powder shortage. Chocolate is big name branded products. They are not Just-in-Time. We hold stock

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in the depots and units because they are sensitive to seasonal promotions….There is a general industry-wide shortage of chocolate (possibly fat/milk related). We are very small compared to the big retailers. We are bigger than all the rest of our major competitors, our delivery units are very fragmented with diverse order quantities, some are tiny. Our entire year’s demand is similar to 2 Tesco DCs…We are heavily focused on product quality. We are judged by retail customers, they compare us. If we go into a rationing environment customers buy what is available. It’s not the same with food service. The biggest single challenge is maintenance of quality of fresh produce in a complex distribution system”.

“Supermarkets can drive prices down, but food service is tiny in comparison and can’t compete on price, but they are still driving costs down….Most suppliers are financially vulnerable to interruptions”

The large contract caterers and ready meals suppliers reported a dramatic increase in bankruptcies amongst their own supplier bases in the early part of 2008. The expectation was of more to come.

“More suppliers have gone bust recently. Had 6 go bust in the last 4 months. These were medium-sized, well established e.g. Tindale and Stanton, a regionally based family business making pies went bust recently. London fish supplier McKeinzies did supply the top end. They failed without notice…The economic conditions are biting very hard, but no change for us in general contracting. We mostly have alternatives and others are ready to compete. Have been able to replace lost suppliers…Sugar is short in the UK right now. Rice is very tight. We are contracted - we don’t do as much spot buying as the supermarkets”.

“National meat supplier went bankrupt overnight. The purchasing department were inconvenienced but it didn’t halt operations. Purchasing has alternatives”.

“Have had suppliers go bust…Took a week to get a replacement…We were disrupted for almost a week. Had a butcher went down recently and managers were authorised to buy cash from big grocers or our other trade butcher….We have a nominated supplier for nominated products. Managers shouldn’t but do buy from nominated supplier – they switch categories within the nominated base. Shouldn’t do that but it means more options”.

The food industry’s long-standing reliance on market-based contingencies had also shown signs of turning sour. In theory there are always alternative suppliers, but as some of these companies have recently discovered, alternative suppliers are not necessarily automatically available. Some suppliers were simply deciding to say no.

“Yes we had an example of saccharine in China – cheapest source of production - it goes into a low calorie product. A problem in China meant sudden change in demand worldwide. Have a very strict global purchasing policy”.

“Had 5-6 suppliers go under in the 3-4 months. We can’t just pick up another the next day. Have to get audits and specifications sorted at the new factory. Can take a month (that’s quite quick) but could be up to 3 months, depending on the product and technical audit requirements. Also have to test the products for frozen and chilled….If one supplier can’t supply – the others know why you are going to them

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and charge more. We are loyal to our suppliers and expect it in return. Suppliers do stay loyal. They are mainly in the UK, some in Belgium and Holland (agricultural produce and bought-in manufactured)”.

“Northern Foods closed in Lincolnshire, but a company in Wales immediately picked up the business. A number of smaller players, e.g. for deserts, didn’t want to supply. A dumpling supplier has gone under; a bread supplier had gone under, but a management buy-out has just reprieved it. Can’t get chicken drum sticks anywhere”.

All the produce suppliers involved in this study imported meat or fresh produce from overseas, before undertaking ‘value-adding’ preparation activities in the UK. They corroborated the accounts from the ready meals companies. They too were feeling the full effects of currency fluctuations and global economic trends.

“Rising costs are becoming a major issue, but the company has been quite successful in getting money out of the supermarkets, but there are big problems with the Euro/pound exchange rate on raw material and commodity prices. It has been particularly severe this year. The business benefitted when the pound strengthened against the Euro, but it’s going to be interesting how this affects contracts next year. Next year, the suppliers will either get everything back in spades or they will opt not to supply… We’ve been in a situation of falling food prices for years. Industry had been robbed of margins for years, but it’s getting to the point where people are going to have to pay more for food. Government needs to think about this properly. Expect some Spanish suppliers to switch to other businesses as a result, it’s a major risk to this business. If there are any climatic problems then everything will be in short supply, so have had to pay more…Time for a structured sensible debate on GM engineering to increase food yields”.

“We have had foreign country restrictions. The Argentine president decided to reduce inflation and stopped beef exports overnight. The China effect is there - the Chinese middle class will be bigger than the US middle class and equal in 10 years. They will have money and demand for meat. The same is happening in India but slower. Brazil had a visit by the EU veterinary authorities who were unhappy about Brazilian progress on traceability, so have withdrawn lots of export approvals. Brazil accounts for 33% of world beef exports and is approved by all other countries but because of it’s disease record the EU tries to apply farm traceability controls etc. We have a system that is applicable to large scale intensive farms, but are trying to apply them to a system with farms the size of Gloucestershire, where you can’t go round and do the checking all animals every night, but the animals feed off the land naturally more. Irish farmers are complaining a lot (politically motivated after loss of subsidies). We’re feeling the currency collapse/volatility e.g. with the dollar… Need robust international banking systems”.

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Ready Meals: Getting the Price Right?

For business continuity it is vital to get the pricing right. This has been the worst year I’ve ever known – price increases everywhere. It has hit everyone since last September. It has affected dairy, flour, meat – especially beef. Beef is extremely difficult at the moment. Was buying from Brazil, but its now banned by the EU. There are other factors e.g. the Australian emergency. For manufacturing we buy International Tariff Quota, it used to be ‘intervention’ stock at approximately 50-60p per kilo, then open market price. People are allocated a fixed amount, regardless of the size of the business. We get about 10% of what we apply for.

If the price of something goes up we have to try to get something else to go down, e.g. frozen vegetable supplier – we get 25 pallets per week from him – but have managed to keep the price stable by going for bigger volume. We’ve been hit by the Euro, fuel, energy and raw material costs. Farmers have been switching land from vegetables to more lucrative crops e.g. bio fuels. Rice has doubled in price this week. China is asking $1000 per ton, up from $400 and Vietnam has banned exports. They have more prosperous domestic markets and increasing demand, it increases our costs by £200 per week, and we don’t use lots of rice.

We’ve been used to buying food very cheaply for the last couple of years. Suppliers now are not profiteering, they are just trying to stand still. Had a few suppliers that have said that their suppliers have said “no increase, no goods” because they are not prepared to put the business in jeopardy.

The main thing is everything we get in raw materials, especially beef, is going to be short. Don’t think fuel is going to get any better or beef over the next 6-8 months.

The Rural Payment Agency say it will take 12-18 months to have things back to normal when they give Brazil the OK. Brazil wants to get back quickly with Europe to unload steak. Different regions of the world buy different cuts. Brazil can get some price from Russia and China without the regulatory requirements. Don’t expect any improvement in anything this year, it will just get tougher. Expect prices to increase across the chain. For the last few months we have been using stock, the big impact will be when people restock.

All our product is delivered in foils. Had a good deal last year and another 12 months, but 13% increases in costs coming through. It used to be that staff wage increases would be off-set with production efficiencies.

The vegetable supplier has put up his prices by 25% this year. It would have been better to have 1%-2% per year over the last 12 years. Have a [Parent Company] supplier in Belgium, that was 10-15% dearer but we are now looking at them, but I’m not one to shift suppliers for a few pennies.

The whole food production and preparation industry is heavily reliant on migrant workers. The currency fluctuations were taking their toll there too. It meant that finding and keeping staff good staff was an ongoing problem for the fresh produce companies. Fuel costs were biting too, for all of the food suppliers and distribution companies.

“Things like huge currency fluctuations are one of the worries in terms of viability of shipping costs. Fuel costs are also now a major threat”

“Fuel prices are a massive on-cost. We’ve not been able to pass it on. Trying to pass it on but the NHS hasn’t the money to pay for it. It is eroding our margin – which isn’t there. Don’t see a significant change in the near future. Invariably we will have to pass on the cost but not likely to be anywhere near the cost to us. There comes a point where if you are not making money, maybe you have to stop doing it…With subcontractors we are paying the fuel surcharge. We have very little option. Lots of people are monopolised. If you switch it is not going to be any cheaper – it will already reflect the surcharge… In Scotland we use an international transport company, Northern Ireland it is a big Irish company. We are getting surcharges on deliveries as well”.

“We are very reliant on agency labour, mostly Eastern Europeans, but it is drying up at a phenomenal rate. We fly temps in from Glasgow for the food factory. For the last 3-4 years we had gone out to Poland to recruit and accommodated them on the farms. They had 12 months contracts, but we can’t get the Polish workers now. The Poles are going home or to other countries with the change in the exchange rate. We are getting Latvians, Russians and others but they are not as good as the Poles and there are not as many of them. Theoretically there is lots of labour around but we can’t go to the Indian subcontinent because they wouldn’t like the climate – we have to invest in automation”.

“East Anglia and surrounding area is very reliant on the migrant workforce. We are talking about highly skilled labour, not just about cheap labour”.

Even in the sandwich bar and military mess, finding and keeping good staff was also an on-going problem. Only the hospital caterer reported good staff retention rates.

“We do crisis management too, e.g. being short staffed. Have has staff shortages in the past, but likely to be more of a problem in the future because of increased dependency on migrant workers. UK nationals are not interested in being ancillary workers. Lots of people are well educated and staying in education longer. The only time they do this kind of work is as students. The first problem is that workers must live here in the UK for 3 years before we can employ them here. Front of house must speak good English. Language barrier makes supervision more difficult. Not sure how much training and Health & Safety they have understood. They are desperate for a job so say yes to everything”.

“We are very lucky with our staff, people want to work here, it’s a nice atmosphere and we all do the same job. We do lose staff to call centres who pay well, particularly graduates. There are a lot of well-heeled students around here. If staff are with us for more than one month, we put them through a food hygiene course at our expense. If they stay for a while, they do the intermediate level too”.

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“The majority of staff are long serving, its one of the beauties of the NHS. A chef in Birmingham did 40 years service in the same trust because of the pension and sick policy. People get locked into it”.

Local-for-local?The issues raised in the previous sections of this chapter highlight issues that can support or undermine the arguments for or against ‘local-for-local’ food supplies. Local-for-local is a popular marketing ploy, and for the smaller food service companies it is seen as offering security of supply as they tend to prepare food from scratch on site and could vary menus accordingly.

“If there was a shortage of raw materials – i.e. a problem for suppliers. It is fairly easy to switch menus and source e.g. early potatoes or asparagus from elsewhere. The local-for-local sourcing is part of the business’s marketing position and customers are much more interested….The local authorities are more and more insisting on local/regional food. We are asked more and more. We do conferences and seminars for local authorities who prefer Devon sourced”.

“All food is sourced in the UK only. Will not buy Brazilian Beef because it is cheap, have our own policy of local-for-local, which is why we have absolute faith in business continuity”.

For the high volume wholesalers and contract caterers the issue was much more problematic, particularly when it comes to the issue of meat.

“We have lots of fair trade and healthy products but are driven by customer demand. For Local Government, you get what you pay for. Food inflation now will make this worse. Food inflation is a risk that is appearing. Can get caught in 3 month contracts – have to be very careful on buying”.

“Lots of time and effort is going into sustainability at the moment. All are supporters of UK Plc. The balance of UK and overseas procurement and sticking to EU law has given us the ability to react and provide switching options”.

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Security of Supply or Greenwashing?

Company policy is irrelevant. It is driven by local or other restrictions. If we can’t import beef from Argentina we can’t. We don’t use British beef unless we can avoid it in catering. Use primarily imported meat because of the cost and quality. British product is not great. You only have to fly in a plane over England to see why. It’s a patchwork of fields. Beef in Argentina is consistent.

South American and South African beef is better than UK. They are very good sources.

It is one of the dilemmas with Government. We give clients what they want. For Government the room divides between accountants and government ministers on the use of British beef.

We import lots for cost reasons. Private sector clients are leading the way on sustainability, but it varies lots from client to client. The private sector concerns now are about recycling and the environment piece (not so on organics). ‘Must have’ is a Fair Trade agenda and a good proportion have a local-for-local agenda too.

I have a tool (spread sheet) for client presentations e.g. for meat/dairy I can show what comes from the UK and what is imported. I can take it down to regions e.g. Wales and Scotland. Next tier is South East/South West etc., then by county or 25 mile radius. I can tell you in 2 minutes what comes form where. It is increasingly important to clients. In the public sector they are talking about it, playing with it, and cheating.

There is an issue with suppliers/competitors ‘green washing’ e.g. saying all bacon is bought from British suppliers. Government goes “Oh good, well done”. We buy from the same supplier. We say 90% comes from Holland (reared and slaughtered) but is sliced and packed in the UK. It’s not British bacon, but supplied by a British supplier.

We do [Public Service Client]. The people there and in government are very engaged. The clients in there have high disposable incomes. They want free range poultry discussed – it is only a few pence difference on the plate price. The individuals would be happy to pay an extra 5p. Most of the cost is in labour and other areas. They could take a slightly more pragmatic approach.

The MoD contract managers did support the principle of local-for-local. One pointed out that over dependence on overseas supply could be a vulnerability for the UK. However there were volume problems and sometimes export/import restrictions to overcome when supplying Forces stationed abroad – mostly arising from livestock diseases.

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“The Cornish Health Authority is local-for-local. All contracts are supplied from the South West. The business volume is too small for Europe, but would encourage the MoD to do similar in the UK”.

“All the protein element (meat and most fish) comes in frozen and the UK general market is for chilled, this might be a complication for alternative sites. 50-55% of the beef is UK produced, the rest if from South America and Australasia…. Security of food supplies is key. A reliance on imports creates political, economic and social vulnerabilities. If a real threat emerges we need to change farming policy”.

“The FPIG - Food Procurement Implementation Group is part of PSFPI, which is applied to all government departments and agencies. The MoD is looking at sustainability and improving the percentage of British Food. However, something that is OK for the UK may not be OK for overseas e.g. having to go to Danish Gammon and to Germany for pork for operations”.

Livestock diseasesDisruptions from livestock diseases were a known hazard for the food service industry and something it had grown accustomed to dealing with.

“For known weakness, most of what I would have said 4-5 years ago have all happened e.g. Foot and Mouth, Avian Influenza and other animal diseases and border restrictions”.

The issue impacted almost every organisation in this study. The effects manifest in several different forms: movement restrictions, shortages, and food safety issues.

The manager of the urban hotel was one of very few who felt the impact on his business was negligible, but not so for the small sandwich maker and country town hotel. The latter were both active supporters of local-for-local food networks, who like the produce supplier were aware of restricted movement and exclusion zones.

“If there was a recurrence of foot and mouth disease it is a nuisance, but it would not really affect us”.

“Have never been in that situation of major disease outbreak, only the last foot and mouth outbreak. We don’t deliver out into the sticks. We would take advice as to whether it was wise to go, I would ask the local authority for guidance”.

“We have a plan for what would happen if there was bird flu in the area, but low risk because there is not much poultry in the area”.

The tourist trade dropped off the during the 2001 foot and mouth outbreak. It brought an unexpected surge in business for the country town hotel and a loss of business for one of the big international contract caterers.

“Foot and Mouth disease impacted favourably in 2001. We housed lots of the vets. We worked with Defra. There is no agricultural land around the hotel – disease didn’t reach the town. It had a positive effect – we were reasonably full at a slow time. We are a corporate hotel, the business is not tourism-based. We do 50

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conferences per week. 80% of customers are corporate. In situations like this it is vital for the leisure hotels that the message is put out that people can still visit the area”.

“Foot and Mouth, that impacted on our business because of cancellations of sporting events e.g. Cheltenham Gold Cup. To control disease, public gatherings are the first thing to be cancelled”.

The large independent catering company – also an exponent of local-for-local sourcing albeit on a more national scale – had found ways to deal with the imposition of exclusion zones following outbreaks of foot and mouth disease and H5N1 avian influenza in 2007. One of its larger rivals also reported monitoring the introduction of exclusion zones.

“Foot and mouth: We recently had a school within the Guildford exclusion zone, we used a supplier within the exclusion zone to service it. It was not that far away from the outbreak…During the famous Norfolk Turkey Disaster (November 2007), one of our farmers was 4km from the exclusion zone. Had to monitor supply from him and have a contingency plan in place within 2 hours…Clients don’t understand that there is no risk from AI and food in the UK – it’s the fear of death not the real risk”.

“…If there is a supply chain crisis we usually know before the employees do, e.g. with Foot & Mouth disease. This time it was in restricted areas. We publish on the intranet and reassure that none of our food suppliers/products were supplied by affected farms and we reassure that these were isolated cases and that we are working with Defra to monitor cases. It was similar with Avian Influenza and Bernard Matthews. It is safe to eat chicken, even if it is infected”.

The grab & go retailer had more general food retail interests. Its retail activities were hit almost immediately by the ban on livestock movements around Great Britain and import restrictions imposed by Ireland. The MoD, its contractor, the off-shore caterer and meat importer, were also affected by restrictions on the export of British meat.

“Foot and Mouth impacted on our capability to supply Ireland… Food scares trigger draconian responses in importing countries. Products with raw protein (meat, cheese etc) are stopped, then licenses are required, with vets. It’s a big additional burden and then finally licenses can be self-signed. We suffered in terms of sales from restricted range. With the UK mainland ban on movement and slaughter we started to go short on some cuts of meat within 5 days. If it continued, supplies of red meat would have run out in the UK within 2 weeks….If movement restrictions were put on poultry it would run out very quickly. If both meats were affected it would have a very serious impact, if we had two or three diseases together. Cheapest and most basic cuts would run out first. We’d be left with steaks because they are hung for 2-3 weeks. We would be looking at shortages in some cuts within 72 hours”.

“Livestock diseases: the question is how do we export food to the troops overseas? We worked closely with the contractor and diverted product from Germany. We kept usually imported food outside the country e.g. Bosnia 1990 wouldn’t allow food that had been through the UK to go to Bosnia because of BSE…All the overseas locations were supplied from overseas. Means you can’t store meat for export with meat for the

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UK after 15th July [2007], following Foot and Mouth Disease. People dealt with that well. Veterinary certificates problems have been managed well by our contractor”.

“Foot and Mouth: Most suppliers are in the UK, we were not really hit, but for the MoD contract it became a problem exporting. 100% of pork is UK sourced, (an MoD agreement which costs more), beef is 60-40% UK….We had alternative suppliers on the continent and started shipping from Europe instead of in and out of the UK. Getting meat to Northern Ireland was worse than Afghanistan. They had reservations about anything from the UK. We bought meat in via the Republic of Ireland from Europe and set up a temperature depot in Larne for protein items (including gateaux with cream)”.

“BSE meant no beef from UK, so had to use other things. The Norwegians wouldn’t let us bring in beef from UK. Had to supply from that side instead – no disruption to service”.

“The other really big issue is food scares – i.e. livestock diseases e.g. Foot and Mouth Disease, Avian Influenza or BSE, because the regulations affect movements around the world….Can’t do much to prevent this only have multiple sources of supply in multiple countries, with real alternatives somewhere else”.

For other catering managers – particularly those involved in supplying hospitals and other public services the problem was finding alternative meat supplies at an affordable price. In recent times these concerns had focused around alternatives to chicken in the event of a widespread outbreak of Avian Flu.

“AI made the Group more aware and kicked off planning. It came up as a food shortage/sourcing issue. People were aware that chicken comes from Thailand. Had lots of enquiries from clients, it was the same with BSE, but the reverse of where it comes from now”.

“Foot and Mouth: That was more about money in supply of pork and lamb and the price of chicken meat went through the roof. When there was the H5N1 outbreak in Thailand, 2 years ago everyone wanted British chicken. No one would touch Far Eastern produce. The price of British went through the roof”.

“Health and public sector customers often ask suppliers to demonstrate failsafe procedures In the last 18 months (from Spring 2007), the referencing has gone from people asking for general continuity to specifics re avian flu contingencies. It is very specific…The international plan interfaces with the UK plan and the supply chain, with suppliers. We do get together and share practice across the sectors in this company”.

For the other organisations serving less vulnerable groups of the generable public, livestock diseases were treated in the same way as any other food scare. Contingencies were about menu variation and management of the press.

“It is safe to eat chicken, even if it is infected. Have fact sheets to publish on the intranet. Employees and clients are asking what we’d do”.

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“Company notifies us, e.g. for Avian Flu there was information on poultry supply and suppliers (technical bulletins) and product recall notices. If the recall poses a risk to health it goes in the ISO 1801 safety manual. Others just go in the recall, into the technical bulletin file. It is kept for a long time, e.g. we had problems with apple juice”.

“Not affected by Foot and Mouth Disease or Avian Influenza, only from media enquiries. No supply chain issue – we were too small then”.

“The company does plan for major livestock diseases. These are commercial issues, but the company maintains a bank of recipes to switch to, to avoid various diseases…The company survived Sudan 1 and Foot and Mouth. No food company has an excuse not to have food safety plans in place”.

On the matter of livestock diseases, managers from the business to business and business to consumer sides remarked on the role of Government agency shortcomings and credibility problems in a food scare situation.

“After the BSE crisis the Government brought out 56 bits of legislation to protect the public but still no one trusted the Government. For BSE we were reliant on auditors and operations managers to sort out BCM”.

“The problem is that Defra (agricultural) and FSA (food safety) must understand each other and link up well. We are working the BRC and running scenarios to prepare. Other major competitors are also working with BRC”.

Food SafetyFood safety is one area that all of the managers interviewed agreed was a known weakness. It was a central plank of BCM because of the human, reputational and business costs of failure. The largest and best established food service organisations had technical food safety experts overseeing crisis management teams and strictly observed recall procedures.

“I’m responsible for Food and Technical Service and often chair a crisis management team. There are things going on all the time – its not all crises. If in doubt, the policy is to escalate it. Once there is a declared incident, the teams click into a set of procedures. There are lots of notes on the intranet, and they are constantly updating. If we declare an incident, we have an incident room and call in Logistics, PR and the Media reps. We use a Boston Box as a risk assessment and a 9 box likelihood x impact matrix. It relies on good skill and judgement. There are a series of measures to manage issues. We don’t have tests/practices, but get lots anyway… A learning point is that you must have a chair and delegate out, you can’t have someone involved in managing or with responsibility for an incident involved in operations”.

The high street chains accepted that microbe contamination was an ever present hazard. They gave examples of actual disruptions. Monitoring and careful supplier selection were the first lines of defence. Two of the companies had recently undergone rapid expansions in the number of outlets. Those who prided themselves on fresh ingredients and innovative menus noted that this demanded significant resources (in terms of sourcing and supplier approvals) to stay on top of rigorous food

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safety regulations. Meanwhile one of the international chains discovered that it’s reporting and recall structures needed upgrading in the light of stringent attitudes to food safety enforcement in the UK.

“Actual disruptions are part of day-to-day business. Once or twice a year there is a disruption to the supply of a key ingredient. All the food is very fresh so ingredients supplies are more sensitive to disruptions. Each batch of produce and each batch of egg mayo is tested for microbes, there have been examples e.g. when mayo has been withdrawn. Full systems are in place to investigate and warn shops etc. All the procedures for quality control and recalls are well established and all established with suppliers. All suppliers are British Retail Consortium accredited ‘A’ or ‘B’ grade, nothing less”.

“The business is all about high quality and differential. We do lots of new product development. It is part of the business model. It involves lots of new ingredients and suppliers which add a layer of complexity and means I’ve had to run faster. We are using ever more exotic materials…The Chain – distribution channels - are also more complex. It used to be stores, now it is services and service stations. Means lots more demands on working hours of suppliers…Have had to develop systems and processes a lot lately - issues/crises to deal with fuelled by legislation e.g. biscuits with milk in that shouldn’t have would have been viewed as an accident in the past, but now it is a public recall in case of allergy – must inform the FSA”.

The managers of the food service contracts to the NHS Trust and MoD also had experience of product recalls and procedures in place. They gave examples of problems with bought-in products which had to be recalled whether the product was in the UK or overseas.

“Have recalls for different foods e.g. bourbon biscuits with metal bits in. These recalls come through Hospital Caterers’ Association and from PASA, sometimes from the FSA – or all of them within a day!”

“Food recalls are a big issue, e.g. finding Cheese Whatsits that are recalled with a total of 18 weeks stock in the supply chain or in theatre. We work hand in glove with the MoD food inspectors and product suppliers and have a quality assurance guy with authority on food recalls”.

Large scale product recalls were rare in the food service industry, but the mass contamination incident involving Sudan 1 in 2005 was cited by the food processors, one of their customers and by a representative of an industry association.

“We have the infrastructure in place to manage such incidents from the farms to the retailers’ shelves…It was a similar situation with Sudan Red where we were commended for our speed of response. There was a lot of mistrust concerning the handling of that particular incident throughout the industry. People got involved with mercenary motives e.g. testing labs. All got very nasty. Withdrawal is obviously commercially sensitive and you can get unwanted adverse media attention”

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New Processes for the Fast Growing International Chain

The disruption was product related, two years ago. It was to do with raw chicken. It emerged on a Friday morning and we had no system in place for how to manage that. The purchasing organisation and Director of Operations and others were involved. We had to withdraw chicken. The supplier responded on the first flight, within 36 hours new chicken was delivered to stores. It was a huge problem, involved nearly 1000 cases across 400 stores. There was no communications system in place, no clear roles and responsibilities.

The new system is all in place now. Communications go out via the PR company, by email, fax and SMS, to everyone down into the stores as well as management. We are able to trace product down to the local level across the country….Have had near misses with tuna and seafood. There was an illegal additive in Canada. Had to reformulate and that recipe has now gone world wide. Bread topping: the supplier called to say they needed to reformulate to avoid a shortage. We approved the new mix.

We’ve also launched ‘Quality Net’ an in house system for product quality complaints at store level, e.g. out of date products delivered or foreign bodies. It has some cross-over with final customer complaints e.g. bone in chicken. It is an on-line system, which automatically generates notifications to the Director of Operations, Head of R&D for Europe, and the supplier. The supplier has 24 hours to respond, 48 hours for minor issues. They have a dedicated team managing that. Quality Net has been launched in the UK and in Germany. This has reduced our workload by improved efficiency e.g. for a complaint on Saturday at 10.30am of ‘bone in chicken’, within 20 minutes the out of hours call centre had called the Director of Operations to notify him. He called the franchise to find out whether the customer was injured etc. It was dealt with in 5 minutes and closed within 2 days. Senior management are on call 24/7, though they don’t get that many calls. The system filters quite effectively. It will be pan-European by the end of the year [2008], via an on-line portal…. In Europe food regulations are often not applied. The UK applies legislation, but others don’t take that much notice.

To open a store you have to go to the US and complete an intensive course. Constant training is given to franchisees and at store level. This is monitored and assessed. It covers all hygiene operations etc, day-to-day. The company have made an online training system a compliance issue for the franchisee. We have a very transient population now in Europe”.

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The Impact of Sudan 1

As soon as members heard there was a problem with Worcestershire sauce the Association started getting calls and advised the membership on decisions about shutting down factories. Had a call from the technical director of the world’s largest sandwich company, asking whether they should shut down the factory. They weren’t even handling Worcestershire source, it was just an ingredient in the flavouring in a sandwich dressing. They stopped production on the Monday and the issue with Sudan Red went public on the Friday. Everyone had stopped production days beforehand…Anyone doing ready meals had to check their supply chains but have full traceability to facilitate this- and stop production or leave out the ingredient…There was no risk to human health, but 600 products were affected.

The two fresh produce suppliers also had recall systems in place. The popularity of prepared fresh produce meant that a higher then ever proportion of the food service offer was ‘high risk’, i.e. it would not be cooked or washed again before consumption. One manager pointed out that the business for prepared salads is growing at 5-6% per annum, though it is weather dependent. The market for prepared fruit was growing at around 30-40% per year. For the fresh produce business there are the dual contamination hazards of microbes and pesticides. Wildlife could also be a problem in the fields as well as in the more conventional food factories.

“At a previous employers’ site an audit by [Retail Customer] revealed a pest issue. There was evidence of activity in an oven. [Pest Control Company] knew about the problem. It cost an extra £600,000 per annum in extra spend on cleaning, but it could have been a lost contract for £60 million as the site was a dedicated supplier. It was a case of the outsourced supplier not doing their job and we were not managing it properly. …Audits at this site are quite good. Here there are very few commercial decision needed, because of the Dispatches legacy”.

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Fresh Produce

Fresh produce tends to be about pesticides. We have withdrawn produce from the market place because of suspected pesticide exceedance. We are legally and morally obliged to withdraw it from sale…The French and US are now highlighting listeria as the biggest single killer, WHO is pushing for zero tolerance but these are often in countries where testing is least likely. UK retailers impose strict controls as do the UK businesses. They are legally obliged to do it, but it has always been the culture…There have been other food scares e.g. lettuce and salmonella – from smaller uncontrolled sources, suppliers at the bottom end of the market…The chilled food industry has tried to make a clear distinction between retail and such small food service outlets/suppliers…Things like Boiled Water Notices can have a huge impact upon food processors. Temporary closure of plants can have a huge economic effect. Plans are in place for such issues…

…The big players spend millions on microbiological testing, analytical/pesticide testing and control systems because there are such big risks involved e.g. from Sudan Red. There was an overreaction because of high profile media pressure, as was demonstrated by the approach adopted on the continent. The big retailers never bear the costs of such withdrawals, it is always the producer or importer.

Reputational Risk and the MediaBoth of the previous quotes make reference to the unwelcome attention of the media. An unscheduled visit from a TV reporter had provided the impetus for a total revision of crisis and continuity management planning in one of the food factories involved in this study. Another agreed to participate despite being openly nervous of any researchers investigating such a sensitive subject.

A brush with the media over food safety issues represented the worst fears of the all the food service companies. It was telling that the contract caterers offered no actual examples of food safety related disruptions (other than livestock diseases) but readily acknowledged the risk. The reputational factor was never far from mind.

“We are running with risks. There is always a risk of poisoning customers but lots of mitigation, due diligence with supplier selection and employee food safety training”.

“Anything to do with Health & Safety or food safety, we report it. Not so for suppliers going bust or anything like that. Some companies have gone bust after food poisoning. We take reputational risk very seriously”.

“Known weakness: A big food poisoning outbreak affecting a whole building hitting the gutter press e.g. Canary Wharf – but food safety is something we manage so closely because you really don’t want to poison people. An example would be the like at the Marriott on Park Lane with the Spurs Football team - that was viral not food poisoning, but the Hotel’s reputation was tarnished”.

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The Undercover Journalist

An incident with an undercover journalist filming for Channel 4 hit home. If that had gone badly it could have closed the business. The company needed a strong contingency plan. The journalist was on site from mid-September to the end of November, he was caught at that point, but they didn’t know who he was or what he was doing. He had 65 hours of filming, but only 15 minutes that could be used in the end. The company used legal means to buy time to challenge and make changes to correct or force the withdrawal of some material. The journalist was spotted using a temperature probe to check food temperatures on the Friday afternoon. It was not his job to do that and the supervisor recognised that it wasn’t the company’s equipment. They confiscated the probe and suspended him. It was investigated on the Monday. They identified the owner of the probe by contacting the calibration company who could identify the customer from the probe number. It was owned by a TV production company. The MD phoned the company and they came back and confirmed this on the Wednesday.

The reputational issues ran both ways for the contract caters, they offered opportunities as well as threats, but the media set the agenda for the smallest and the largest companies in this study. For the small sandwich bar it was easy to adjust its offer to take account of the latest food scare. The salt content of sandwiches could be reduced by a single phone call to the local baker. The stakes were much higher for the largest caterers in this study, whose business had been hit by the bad publicity surrounding the infamous ‘Turkey Twizzler’ in the TV series Jamie’s School Dinners.

"We’ve made no sweeping changes, we just adapt to trends e.g. dietary issues etc – usually what The Sun says is bad for you, but it’s easy because I reorder to suit. We prepare 90% of our own ingredients”.

“…Lots of companies are jumping on the CSR bandwagon as a positive selling point – carbon footprints, selling to M&S etc. It can be profitable to introduce these”.

“We work very closely with the schools. Some findings [of the programme] are factual, but we take the health of our customers very seriously e.g. the Turkey Twizzler, we sell small quantities, but that can focus attention. It takes time to introduce healthy options to children. The concern that we have is if the transition is not done properly, the children go to McDonalds and rogue burger bars appear….After Jamie Oliver we had to go round to schools and pull out of some because schools didn’t want to pay more and because of the restrictions/removal of vending machines. Government policy decisions have an impact”.

Skills ShortagesOne other theme that managers commented on in the context of food safety related weaknesses was skills shortages and communication problems. The task of implementing food safety and Health & Safety requirements was being complicated by the industry’s dependence on migrant workers, which exacerbated a skills shortage

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of food safety specialists in the industry and the enforcement agencies. Added to this was the lack of understanding of the different roles and imperatives for each of the parities involved. The problem stretched all the way through, from the food service companies to the public sector managers and even the emergency services.

“There are ever greater demands on skilled good quality food specialists. There is a skills squeeze, a shortage in technologists…..Food factories involve antisocial hours, cold environments and slaughtering etc. People who are prepared to work in these jobs need careful instruction – its part of the risk assessment”.

“There are lots of product recalls, e.g. wrong date (month), which is difficult to avoid if people don’t speak the language. It makes the supply challenges greater”.

“There is a shortage of environmental health officers – partly because of over bureaucracy – they need to spend time in industry to see how it works”.

“Some clients have Health & Safety managers but have nothing on food safety – no food safety/infectious disease training or knowledge… Facilities management companies are less well versed in the requirements of legislation”.

“Most organisations don’t know the difference between public health (e.g. how many people die of heart attacks) and public health protection (immunisation, salmonella etc). Most people including the Blue Light services don’t know the difference. It creates confusion over responsibilities”.

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Energy Policy?

One thing Government needs to think about is transport strategy, e.g. if fuel costs carry on rising it becomes unviable for us to move things about. Same for energy policy. I’m concerned at the relative inactivity on nuclear power – relying on whirly-gigs on hill-tops for large amounts of power, making it 10% when we are in the middle of an anticyclone. Doesn’t bear thinking about. Chilled food is very heavily dependent on energy, keeping everything cool is very heavily power dependent.

Section 4. Findings – Widespread Systemic DisruptionsThe widespread systemic disruption – loss of power, loss of fuel for transport and loss of people – are all known weaknesses. The findings of this chapter look at the likely affects of these three scenarios which were cited by many as drivers of BCM or events that would seriously disrupt operations.

“Drivers [of BCM] include foot and mouth, avian influenza and industry-wide events such as the fuel crisis. The UK has a history of infrequent big events that affect everyone. There have also been fires and floods to deal with”.

“Fuel Shortage, staff shortage, gas/electricity/water supply disrupted; flu pandemic”.

“Failure in the National Grid or failure to produce distribute and import. If import of food was banned we’d all be in a terrible state”.

“Storage of goods e.g. lots of power to refrigerators would stop the business. Might have to move the supply chain to daily deliveries”.

Loss of PowerWhen first asked about business continuity, power cuts had been one the first things mentioned by the smaller businesses. In a sustained or widespread blackout the regional hoteliers confirmed they would be badly affected. The question prompted wider consideration of how the problem might be addressed.

“Loss of electricity would give us significant issues. For an interruption of longer than 24 hours we would look at bringing in extra power. We have essential user status with suppliers. There is no formal contract, but there is a supplier in the town. We are the biggest hotel in this part of the county and if there was a major event people brought in would be based here. If there was a big utility problem, the specialists and engineers would likely to come here because we have accommodation and office facilities”.

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“The loss of electricity is crucial. We’d have no heat or lighting. We could use gas for cooking, but that’s all. That would be OK for 12 hours, but the big problem would be telling people how long it was likely to last. People would just go home. The big issue is how long it would last. Greater resilience could link into supporting the measures to deal with climate change, possibly grants encouraging people to invest in combined heating systems. That would allow people to switch power sources to enable companies to have emergency lighting (we have to have lighting). That would help keep our operations moving”.

The sandwich bars, restaurant chains and grab and go food retailers would also be badly affected at point of sale. The older department stores had generators, but most sites would close very quickly.

“We could continue for a very limited time – less than a day. We’d likely close up. As soon as food safety is compromised (chilled) you have to stop and get your [insurance] policy out”.

“Stores would fall down very quickly, within 24-48 hours, if power was lost. Most stores are very small, there are no big storage areas. They are very reliant on just-in-time delivery as back-up”.

“The shops only have electricity. Localised power cuts are common, particularly in London. The stores close. We don’t see the loss [of our business] being a big problem for the country. If we shut and can’t divert food, we just give it away on the street. Shelf life in store is maximum 4 hours before disposal is necessary”.

“Biggest problem is refrigeration – cold chain from manufacturer to leaving the store. Have local refrigeration failures. All stores have probes and guides and training. In a 1970s scenario it would be a very big problem. If the cold stores at sites are sealed it would be OK for a few hours, but display stock would be unusable within the hour. The older stores have back-up generators, not sure about the new ones or the franchises”.

“Stores have generators. A major power outage would not affect the stores. Don’t know about the suppliers, they are potentially the most serious weakness. In the UK big chunks of the food supply factories are in an East/West line of Birmingham. North Midlands/South Lancashire has a disproportionally high proportion of the manufacturing of chilled/prepared food. If that area was hit by a power shortage we would be hit. Think our competitors would be hit too. Lots of chilled/prepared and bakeries and pork pies, sausage rolls etc. It’s related to the M1 and A1”.

In the public service locations provision was usually better. The City Council had brought in generators to provide for the displaced persons during the flooding crisis. The prisons, hospitals and some military bases had generators on site, though managers responsible for one outsourced Mess thought more creative solutions would be required. Switching to gas was not an option because of upgraded Health & Safety measures.

“For flood hired generators. Hospital has its own. Hired them for the rest centres, together with Portaloos”.

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“In Birmingham, had contingencies with 3 days food produced. The ‘re-gen trollies’ had a number of sockets linked to a generator, they were still operational. Catering is one of those priority activities. Sure it’s the same here”.

“For product on the base we have emergency power/generators. Loss of gas would be more of a problem. We could use field kitchen capability (OFCS - Operating Field Catering System)…We try to make the kitchens gas and electric. Some are only one, but try to ensure a mix. The RAF have stand-by generators to feed all in the junior mess. In the UK there would be phased reduction in feeding – would go to austere feeding (less food and less choice). Some personnel live on base, but those that live off base are called in for exercises (e.g. cold war exercise). There is a big variability between bases of the number that live on site and the number off base. Its not just about feeding the military, its about feeding their families too”.

“We couldn’t function without electricity and the failsafe for gas which switches off for stoppage of electricity….No emergency generators. Some bases do have generators… Back in 1970s used candles, but it was a different system – wasn’t fail-safed, everything was gas and we could put up a field kitchen. Couldn’t do it here now. Have a few gas BBQs”.

The contract caterers relied entirely on the clients’ contingency planning arrangements, which varied greatly. One company had revised its contracts and added force majeure clauses for major events, another looked to skilled employees to provide work-arounds if the power was lost.

“We would be affected to the extent that the clients were. If clients had UPS we would be OK…If gas shuts down we are more affected…Could use electric”.

“If clients are affected we are affected. Bit of a cop-out, but that’s the actuality. It tends towards force majeure. We are putting clauses in contracts to avoid suing for breach in a pandemic, if the supply chain wouldn’t deliver, natural disasters etc. New contracts made specific reference to this”.

“Client base provision is mixed. City and hospitals would have back-up. Loads of them, e.g. small schools wouldn’t. Fridges and freezers are OK if not opened. We would have temperature control regime issues with suppliers. If it is localised OK, but for days we would have a problem. We wouldn’t have a business. We couldn’t operate tills or cook food. Biggest seller is tea and coffee. We couldn’t serve them. We would struggle to take cash, but this needs to be put in context. Whilst this would be damaging to our business many of our clients and customers would have other more immediate priorities”.

“We are usually hosted in clients’ premises, so depends on the client. Hospitals have emergency arrangements”.

“Could serve cold food. Generally speaking all food is prepared on site - mostly cooked from scratch. In the military the labour is for free, same with prisons – you can buy and prep. In education and merchant banks (Michelin Star quality) we will prep from scratch. People like the idea of fresh prep on site. Schools have our company dinner ladies – in some schools. Some schools have catering in central kitchens and import into schools as ready meals”.

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Moving back up through the supply chains, the distribution centres would be affected. The largest retailer, ready meals supplier to the two big wholesale and distribution companies, outlined the weaknesses in their own transport and distribution system.

“Depots have generators for a limited time. Depot are 30% ambient and 70% chilled. Loss of power across the network for a prolonged period - we’d be stuffed. ..If localised can serve from other depots and use generators. ..We’d be worse affected than the average retailers. Could pick in depots – would have to pick by label system and get scanned in, its semi paper-based. Could revert totally to paper pick. There would be an impact on the business with loss of sales data. Could repeat the last few weeks profiles, but it would not be accurate. Think we could go to paper-based now, but not in 2 years time”.

“Warehouse picking and dispatch is paper-based, but need power to print paper instructions. Refrigeration would go down but if everything stays locked it can be OK for 36 hours. Not inconceivable that there would be spoilage, it would be on the shop floor. Have an element of time for safe finished product in storage. Have emergency lighting only for people to get out. We would be looking at a stand-still”.

“Have generator at DCs. Equipped to deal with short run disruptions – but not go without power. If we lose electricity, lose power to fuel pumps”.

“Deports are built with plug-ins for generators and have priority agreements with third party suppliers. About 10% of sites have their own generators. We have calculated that the loss of power for multiple depots is infinitesimally low. The big sites would require huge generators. We would revise if the Russians cut off power supplies but it is very difficult to justify the business case….In a widespread cut we’d have difficulty, in a national outage it would be very difficult, local not so much…The big problem is that we pick at night, if it’s dark you can’t see the labels or the boxes, but we don’t perceive a big outage as a massive risk – if it was likely, we’d get generators. We do watch and follow Government advice”.

The contractors responsible for delivering food to overseas military operations, often in austere environments, were the most confident that it could cope completely independently of the National Grid.

“Have good plans for loss of power, as in bringing in generators. The depots have generators which cut in automatically after 45 mins. Fuels stocks: we hold 2 days worth of diesel in the generators. Depots do have back-up supplies. Have visibility of overseas depots even in a power failure situation”.

For the food suppliers – all principally engaged in the import and/or preparation of chilled and frozen foodstuffs – maintaining power to the cold stores and chillers was a priority. Production would grind to a halt. Contingencies were based on the assumption that the power failures would be local or regional. In some cases they relied on Government intervention, on public sector clients, or priority customer status to see them through.

“Companies are heavily-electricity-dependent to produce and store chilled foods. Production has to cease in most cases”.

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“The general business could rely on geographic spread of sites around the UK. No issues with cold stores and security of product. In the military business we would piggy back on their systems, within the general business not so well. Most UK businesses are not prepared to cover the cost of contingency. The military is unique…”.

“…Product issue would be cold stores. Cold stores can go for a significant amount of time (days) without damage to product and we have back-up generators. Don’t know if generators are a requirement but only use Lloyds approved companies”.

“For some things, e.g. electricity and water and gas, we are priority customers. It has been that way for electricity for as long as I can recall; water for the last 8-9 years. Gas is more recent…The electricity supply is now linked directly to the national grid not just the local supply, so power outages have been drastically reduced. We are isolated from the rest of the town, no longer affected if someone drives into an electricity pole. Have an agreement with the power companies that if there is an extended failure – 4 hours or more – the power companies would supply generators”.

“Problem internally would be chilling stock down to send out to customers. Use electric and gas for steam generators”.

“We’d be dead in the water. All power etc is electric. We have generators around to keep the cold stores cold, but not anything else. The stock in the cold store would be OK but there is not enough generator power to run the production lines. We’ve not had any big outages”.

“We have back-up generators. Currently we are running site on generators. We are pulling out and changing equipment (fridges). Have generators/or contingencies/suppliers mainly to support IT and EDI. Have had outages and had to wait for generators to come in. There is a lot of capital tried up in this type of equipment. People prefer to hire, most are hired…At one site the local electricity supply couldn’t be upgraded because national priority was for domestic supplies to be maintained. That was after the flooding in Yorkshire”.

Apart from the immediate problems associated with cooking, chilled storage, and distribution, the managers outlined the wider business implications of loss of power.

The hotels and small sandwich bar had no uninterruptable power supplies even for IT and telecoms, but they could all continue running their businesses on paper-based systems. There was an assumption that even if the IT failed, the options of fax and telephone would remain viable.

“We have no back-up power for IT, no uninterruptable power supplies. We do some ordering with suppliers by telephone, some by fax and some over the internet. We could switch if just one was affected”.

“No UPS but IT is backed-up on a daily basis so no more than 24 hrs data could be lost. Can run paper-based – wouldn’t like to but everything food related and the general business could. Know some small hotels that still do use paper-based systems”.

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“IT is a tool, but the business is not dependent on it. IT can be replaced by fax, phone, a calculator and common sense. All our systems are paper-based not automated”.

The larger restaurant chains, retailers, facilities management companies and contract caterers had UPS cover or IT back-up in place for their Head Office functions. The usual plan for a localised power outage was for Head Office staff to work at home. The assumption was that the homes would have power.

“The company has a plan. It has a disaster recovery IT provider, and is testing (further details not known). The company’s IT is based here in the London Head Office. Have a ‘virtual service’ provision in place, the next bit of this goes live in the next 2 weeks (April 08). This is a contingency office and wireless capability. UPS are in place to keep all the web-based stuff going”.

“Depends on the scale and the location. If we lost power in this [Head Office] building we can work from home”.

“Would transfer operations to suppliers and work from home. Most operations, HR and finance could work at home. Most critical is the personnel database. It is backed up every day. Maximum loss would be 12hrs overnight. It can be accessed through the group server, but is not dependent on one server”.

The larger companies were much more dependent on electronic systems to support the retail networks’ stock management, ordering and payment systems.

“I think we are more vulnerable than we have ever been, particularly since everyone went Just-in Time…Yes we could run on paper-based systems, it would be painful but we could do it. Everyone is trained to use modern technology and don’t know how to cope without it”.

“All everyday ordering (audit information) is basic EDI and FTP transfers at the supplier interface. Have a limited customer service centre which could take orders via landlines and phone through to the one of the Distribution Centres. It would be painful. It would be for the core menu only and associated packing, but could in theory do that as a work around. Don’t have pro-formas in place or protocols…Distribution system – don’t know if we could get by on paper. DCs are on archaic systems so that might be a good thing in a power outage. Traceability system is manual so that could keep going”.

“Honest answer to widespread blackout – don’t know. All food orders from offshore goes straight to food supplier, it’s a Vendor Managed Inventory arrangement. Our manager liaises with ops here and the logistics function. We use lists from approved suppliers…We have offices in Norway and Denmark, could pull on that resource. We have an office in Yarmouth and maybe could supply from Norway. Have huge potential out there. Could work on paper-based systems”.

The contract caterers and their on-shore commercial facilities management operations were divided in their opinions, sometimes with managers from the same company disagreeing about the viability of paper-based working. This tended to reflect functional responsibilities. Those with response for finance were more pessimistic

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than their colleagues with other roles such as Health & Safety or supply chain. One pointed out that the viability of paper-based working depended on the divisions’ client base.

“Internally could go to paper-based for long-term outage, would be a massive exercise, but it would be the same for everyone, assuming the rest of it was OK. Can’t do finance paper-based”.

“Clients would have power for IT, but the rest is ad-hoc. Could run on paper for short periods”.

“Maybe could have 5 years ago. The business is too big to run on paper-based, have a very high number of transactions. Might be able to run part of the business and divert people on to that. Payroll could go to last week’s and sort it out later”.

“No unlikely – but such a catastrophic failure is unlikely. We have SAP and are very dependent on it and we are becoming more centralised in trading. SAP introduction was “challenging”, are still implementing but we are delaying SAP HR for a year to get everything ready. More and more goes by EDI. Process 180,000 invoices…If we couldn’t rely on managers to process paperless and keep paper copies and catch up later. How do you know what you owe your suppliers? And can you bill customers? It equals cash flow problems”.

“Do have a paper-based system. Sure, we have some back-up systems. Had problems with BT fire in a tunnel in Manchester, but have a formal paper system, but in a real emergency might not have enough printed to get to all sites”.

“If we lost power at Head Office then the IT provision would kick in. Have had lots of offices lose power in the past, but only experienced localised minor disruptions. Believe so, still semi-paper-based. Will have better idea after impact assessment …We are very service-orientated and climb over hurdles on a daily basis”.

“Yes. On a mixture at the moment. Depends on the site. Lots of internet based working and rolling that out. In prison you can’t have internet-based. It’s different in different environments, e.g. off-shore…If the electricity breaks down we can phone or fax”.

The public sector clients’ could run on paper-based systems, particularly the food service aspects. Their biggest problem for them would be shortage of manpower to input the data once the systems were restored.

“Have occasional IT outages and do pre-planning for upgrades and switchovers. Current standby power facilities are sufficient for all key services for 7 days. Yes, could go to paper-based systems but there is a long term impact of having to put all that information back into the electronic systems. Therefore system downtime is critical”.

“The MoD ordering is done by telesales. The contractor rings each unit and takes orders. Everything is done by computer. Not enough people for paper-based working, unless the Government is not worried about accounting in the short-

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term….Traceability is temperature monitored – so a paper trail is there and visual checks are logged. Before it gets on the truck is more difficult”.

The facilities management and food supply contractors supporting the prisons, the military mess and Armed Forces on overseas operations were all confident that they could cope.

“If power went we would lose the IT. We could run on paper-based systems with no problems”.

“Yes, could run on paper-based systems. Main concern is security. Have over-riders on doors and still have manual keys. No problems going paper-based for food activities”.

“Power: IT is not affected or communications. For Ops our IT works via satellite links for communications and to see stock levels. Data storage is on the [a consortium member’s] system, which is run across the sites - all UK and overseas warehouses - and [another consortium member] have their own system which runs in parallel. We are moving to DAC Microsoft industry standard. Have manual procedures in place if IT falls over. Also processes and procedures to keep up finance, can do this manually…We don’t have to run much on paper-based systems. All ordering is by phone, not EDI. It gives a more accurate service level than EDI because the telephone operators have got to know the business. We would like to do EDI but the MoD can’t do it…The manual system is easy. Drivers delivering could just pick up the next order”.

The mainstream industry wholesalers could get by on paper-based systems too, but only for a limited period.

“Couldn’t completely run on paper-bases systems. Could do ordering for a short while, but there are too many transactions going through the call centres. Could do targeted, e.g. to hospitals. Have 2 telesales centres, we could do some switching”.

“Could run on paper-based for a very short time with manual phone orders, updating the system and the financial issue of accuracy is the problem. The longest time we’ve tried to do this was 3-4 days. We could revert to ordering from a price list (the old system) and use PCS and couriers”.

Amongst the food manufacturers, processors, importers and the industry association, the opinions were also divided on the viability of paper-based trading systems and contingencies for electronic transactions. For fresh and chilled produce the dependence on EDI was part of the quick response business model. For those working with mostly frozen foods, slower options were more viable. Again it was clear that some business activities were more dependent on electronic systems than others.

“Traceability is an issue since systems are nowadays primarily electronic/computer based. However, there is also a paper trail with raw materials documents. Loss of email would be a problem. Email is the primary means of communication between government and industry, and within industry. Most people have powered phones…Very few people have their own power supply - virtually no contingency. All go

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home? If it is nationwide everyone is the same…communication by non-electronic means, including faxes, would be too slow for short shelf life foods as they are produced daily to order”.

“For a short period of time there would be no problems, we wouldn’t lose data. Could do logistics manually. Yes, we could, did for many years and had parallel systems for quite a few”.

For IT - very short term possibility. More likely we could get a small generator or move to somewhere with power. The main software is held in Bristol at [company] who mirror our servers. Have limited short-term UPS (4-5 hours”).

“Purchasing is run on paper-based systems”.

“We are very computer-orientated, but could do paper-based in theory. The challenge is order management for customers. Have tried running paper-based scheduling and orders. Not tried traceability. Think we could do food traceability manually, but vastly different manpower requirement”.

“Can run on paper-based systems but have to ask customers’ permission to send in hand written notes. Systems guys say if we can’t get it down on paper you haven’t got a system”. It takes longer but it’s there as a back-up”.

Fuel Shortage for Road TransportA shortage of fuel for road transport was something everyone was aware could be a problem, although the food service companies reported very little disruption to their activities during the 2000 shortage and had tended not to dwell on the likely implications of another major event.

The country town hotel was most directly affected, but from the demand rather than supply side.

“We lost business in 2000. There were cancelled bookings and demand dropped. South West would be an area that suffers. We were able to keep food supplies running, it’s mostly local-for-local. There’s always plenty available and we’d have to be more selective”.

“2000 fuel protest: Every supplier used it as an excuse to put prices up. The rolling road-block didn’t go through Newcastle! It had no impact on our business”.

“The 2000 fuel shortage didn’t really affect us and I didn’t think how it might have affected us for longer”.

The retailer and restaurant chains assumed that their transport suppliers’ contingencies, or the availability of fuel from national strategic reserves, would be available to maintain their Just-in-Time supply chains. An important point here was that the grab and go businesses had developed significantly since 2000, so direct comparisons were no longer possible.

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“Our [logistics supplier] has big fuel tanks and buys fuel in advance. Don’t know how we’d fare. We wouldn’t be affected immediately, but the supplier would, e.g. delivering cheese from Italy. Our [logistics supplier] has 10 ambient distribution centres (storing things like almonds and packaging), but fresh produce shelf life is only 3-4 days. Most is in the distribution centre for only a couple of hours. The supply chain is mainly Just-in-Time because of the product offer. Food picked this afternoon is on the truck this evening, in store overnight and likely in the kitchen being prepared the next day”.

Limiting Factors

The (2000) fuel strike was over before our carriers started to run out of fuel. Because a high percentage of primary (from supplier to RDC) and secondary distribution is done by the same supplier it can make better use of the fleet, and because of the returnable tray system it makes sense to have a closed loop, with vehicles going back from store to suppliers. Demand doesn’t remain static. When water was panic bought, it reduced our capability to respond.

We are a different kind of business today. We have gone from 300 to 600 stores since 2000. Logistics and supply base are the same, have 3 sandwich suppliers, which is probably ideal – not single source, but not too many. We run on very short lead times. If the producers can get the work force it is very flexible. If we expect increased demand, we can flex supply if people are available. Not aware of any situations where the sandwich business has been affected, particularly not upward.

The sense is that in a crisis shoppers stock up and are less likely to go for sandwiches, other than if they are very busy doing something. If they can’t get out, they may buy more locally. We would expect distorted demand in a crisis.

“If we had another one and couldn’t access strategic fuel reserves, could manage for 3-4 days from on-site reserves. We don’t have any strategic reserves of fuel today, by ‘strategic fuel reserves’, mean those held at the national level”.

“Do plan for fuel shortages. Have back-up stocks and records of fuel stocks at sites. Have plans to restrict deliveries to some stores. Don’t know current states, but read something about it a while ago – there was a list…We don’t work on the assumption that we would get priority supplies…Our logistics contractor was very clued up, e.g. during the fuel strike they responded well. We were well supplied and didn’t have to be reactive. They had prepared”.

The MoD has its own arrangements for fuel and ‘loosely based’ plans in place. Amongst the other public service organizations and their facilities management contractors, there was confidence in the priority user scheme and therefore no perceived need to make other arrangements. The only problems raised by both the prisons and the off-shore contractors related to staffing.

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“No specific plans. Weren’t affected by 2001 fuel strike, might have been affected if it ran on for longer”.

“Fuel shortage – have an agreement with the MoD who guarantee priority for normal stocks or access to MoD pumps. We are trying to pin down the details…We have 7 days worth of diesel – that is kept topped up. There are worries at the moment about fuel and rising prices”.

“The fuel shortage didn’t have a big impact. Have 7 days stock of fuel for generators and priority status with the supplier. It’s more an issue for the ambulance and the Primary Care Trusts”.

“In the 2000 fuel shortage we had priority. Had a 7.5 ton lorry to move food to hospitals and were able to take advantage of priority user scheme. Suppliers did too. Anything major, we would still get priority status for fuel and anything, e.g. flour. Because we have to feed 1400 people 2 times per day and they are ill. People are in acute wards because they have to be there. Have an obligation to provide. Only prisons and possibly the armed forces are in a similar position. Schools could eat at home”.

“Biggest problem was staff shortages – had to get creative about staff travel. Doubled up and changed rotas – not between the courts. Had no disruption to the food supplies”.

“Been quite fortunate, fuel crisis had an effect. Some staff affected because they couldn’t get fuel. Supply chain was OK, carried on pretty much as normal…Nothing in my working life has had a huge effect”.

The big wholesale distributors did have limited stocks and contingencies, but also relied on the priority user scheme and access to customers’ fuel stocks.

“Have some fuel stocks but they are limited. We have priority user status”.

“Have two mothballed tankers, and a national agreement with Petrol Plus, with a weekly call-off agreement. In the 2000 fuel emergency we instructed the fuel supplier not to accept any order other than from central fleet. Told the depots and monitored stocks at the depots to make sure all depots had some stock cover. The fuel companies liked it. We delivered to customers with motorway services. Motorway services filling stations had told us they would provide fuel stocks if needed…Have slightly bigger tanks in depots now - 1 week to 10 days supply – because we are building bigger depots and allowing for growth.”

The contract catering companies did not envisage any impact at all, other than possibly a need to arrange transport for staff. They regarded this as their suppliers’ problem or something that Government could be relied upon to sort out.

“Fuel is not critical to us except for people getting to work and the supply chain. Our people can’t work at home. We would try to mobilise people the best we could, e.g. by running bus services, but it s not been a problem”.

“On the supply side food delivery systems it would be if a big supplier couldn’t supply, e.g. for fuel strikes”.

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“Distributors would be OK for a short period. They could become more prescriptive on delivery times and frequency. Office-based staff can work from home. All supply chain staff could do this – but customer base would also be negatively affected”.

“[Food and logistics suppliers] would be responsible. The company experienced no problems with the fuel crisis. [Food supplier] is used to maintain delivery to cover for failure by [wholesale distributor]. [Food supplier] has no redundant capacity for vehicles and drivers, only stocks of food. Relies on reduced complexity of offer in the food chain - e.g. instead of 4 options + one vegetarian, go to one plus vegetarian. There should be local protocols with customers to allow this. Have a traffic light system to identify high priority customers – lots would be red because of the nature of the business”.

“We use local-for-local sourcing – from farm supplier to grocer/butcher and they deliver to the units….Fuel doesn’t directly affect us, except staffs’ ability to get to sites. Our advantage is lots of business in business parks. We’d be OK for public transport as long as that stayed up…The Government will always protect the transport infrastructure, food and emergency services” .

“If it was regional or restricted we have resources around the UK and Europe. We can deploy if necessary. If there is no fuel in the UK at all, we are stuffed. Just Scotland would be OK. There is a period of grace, every site has a store cupboard. It’s all different between sites. Have stock of frozen and ambient on site, it would mean reduced variety but could serve for a while”.

The ready meals and other food suppliers’ attitudes differed depending on whether they ran their own fleets or not. However both of the ready meals producers had vulnerable public sector clients - NHS and MoD – so were covered by the priority user schemes. The bigger issue was rising fuel prices, which was encouraging increased fuel stock holdings and putting additional pressure on the profit margins of the food factories.

“Doesn’t really affect us except in the cost of haulage. Didn’t have problems in 2000”.

“Fuel – we have several companies – for most things we have several suppliers. We would change the offer. Lack of foil containers – that could be a problem. We weren’t badly affected in 2000 with the fuel protests because we are a priority user. Not affected by recent scares, we have on-site stocks. Even a whisper of any disruption and we keep it topped up…We have agreed priority because we supply the NHS. Have 2 tanks – for price and extra contingency. Some long distance tractors have additional fuel tank capacity to allow them to home-fill. Have a remote site in London, the vehicles could do hours to and from London”.

“We put a fuel tank in on site. We recently doubled that. Now have 3-4 weeks worth. We are also on a register as fuel priority users. In the fuel strike each key manager was issued with documents to get to the front of the fuel queues”.

“Some frozen food companies are putting through surcharges on fuel”.

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“In a previous company we were on standby to stop production because we were using red diesel for the fryers and they wanted to use it for the chilled business because frozen had stocks”.

The fresh produce suppliers’ industry spokesperson explained that the members also used red diesel when things got tight in 2000, but were running short of supplies by the time the protest ended. They too had increased stock holding because of rising fuel prices.

“On behalf of the membership I tried to get priority status access fuel, and got priority below health etc. They were able to use red diesel. Members were right on the edge when the protest ceased. There was a lot of activity at sites in rural areas, people couldn’t get to work as they weren’t allowed by train companies to take push bikes on trains, for them to complete their journeys to work. Have tried to get members’ transport companies together to discuss stockpiling…Packaging gas supplies were a problem with the fuel protests, no one in Government understood that”.

“We are quite well set up for the delivery vehicles because the farms have diesel. Even with the farms stocks we were down to one and a half days supply before we were in trouble. The farms were almost out of stock. We remember what happened then and make sure the tanks are full, but now it is financially prudent”.

“In 2000 the food industry had written permission from local authority giving us priority for fuel. We had the supporting paperwork and were given priority at the pumps etc. Proving it is business critical is not an issue. However it didn’t work everywhere and I think there would be a much bigger issue now, with the changing situation regarding energy sources”.

On a more positive note, four of the companies - a large restaurant chain, an importer and ready meals supplier and some of the big contract caterers - were taking positive action on recycling, to reduce their dependency on diesel.

“Have embarked on a rolling out of bio-diesel and are fortunate in that we own the used cooking oil to manufacture it. We recycle and convert for our own use. The smallest DC services around 25% (325 restaurants) and is 100% bio-diesel…Aim is to roll out bio-diesel across the network by the end of the year (subject to volume of in-house used oil). We would buy the rest on the open market”.

“Also green issues coming in helps reduce the risk, because you can use other fuels. Looking at recycling of cooking oils for fuels”.

“Have lots of people out and about in company vehicles. We are trying to get people to put a bit more thought into spending less time on the road and more into video conferencing… All our waste cooking oil goes for bio-diesel. All the industry does that and have been for several years”.

“We are looking at Smart Cars, lower emissions and more efficient vehicles”.

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Pandemic Flu – Loss of PeopleThe food service business is a ‘people business’. Under normal circumstances, the largest contract caterers and facilities management companies promote their ability to supply clients with skilled and appropriately vetted staff at any time. It is regarded as one of the principal benefits of outsourcing catering and other ‘soft’ services.

“We run the catering, staff, source and cook the food and do the admin, which is becoming more of a recognised expertise. Many businesses prefer to move to contractors, it can be cheaper and easier to employ us than in-house catering, e.g. if the chef is off”.

“Nothing would halt operations. We’d find a way to serve lunch. We’d adapt. We are working with staff with a reasonable level of professional skill who could work with few ingredients. They are chefs, some are top-end. They range from ‘cook mums’ working 4 hours per day. These are mums who can cook at home and come in and do it at school. The other end is chefs from top restaurants who have grown tired of unsociable hours. The hours are not worse than 9am to 9pm. They can cook at the same level and same fashion as at a top restaurant. We don’t have food just microwaved by 16 year olds. We don’t do that”.

In an industry that already struggles to find skilled and unskilled labour, anything affecting the availability of staff could be a significant problem. Strikes were mentioned as a possible risk to operations, but they are rare. The loss of know-how from staff turnover, direct attacks and disease also featured. However, the overwhelming majority of those interviewed saw the predicted human flu pandemic as the greatest challenge facing their organisations.

“When staff went on strike, had to put in a plan to cover – we made sandwiches (e.g. admin staff, teachers and catering admin) and kids were asked to bring pack-ups. It is not sustainable. It also requires dietary requirements for minority groups. Serving all vegetarian is the easiest option”.

“We don’t have any big labour issues here with strikes etc. It would be inconvenient but it’s unlikely”.

“A risk would be if wholesaler’s depot went on strike, we don’t have facilities”.

“We are looking at two responses to BCM incidents – incident response provision and resumption of normal service, e.g. a lottery syndicate winning in a key area and all members of staff from that area who were in the syndicate leaving work”.

“Capturing lessons learned, the weakness is I don’t know how good we are at tracking intellectual ‘property’ knowledge around the business when people change rolls. It is very useful for BCP preparation – best practice is managed succession planning for BCP”.

“There is a high reliance on corporate knowledge, but a high turnover in posts erodes that…The BCP is vulnerable to an ‘overwhelming traumatic incident’, e.g. a pandemic or mortar strike on the block taking out all occupants. The loss of people is the main vulnerability”.

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“SARS was dealt with at the time. Plans were in place for those who were travelling around the world. All risks associated with working in places like Nigeria and Angola are monitored. Once we hit a level of risk we pull people out. We lost a contract, but pulled out. For us we have to be in those kind of places but we instruct staff”.

Facing a Pandemic: Views from the Hotels and Retail Front Line

One of the hotel owners had discussed the matter of a pandemic with friends, and speculated on the possibility of military and Government assistance. Two of the smaller businesses had not previously given much though to how they might fare in a pandemic. They were the only businesses in this study not to have done so.

“No thought given to a major disease outbreak, it’s not in any of the working documents. Not exposed to that level of threat or virus here in the hotel, though don’t know what the guests are carrying. More likely to be capital-based problem like radioactive tea, it could have happened anywhere”.

“Small businesses are collectively huge employers…Staff and the public would both be hit. Depends how far… I might be able to run it on my own. We employ 20 people either full or part-time, only 4 of them are working mums”.

“For a pandemic we’d probably close the door and make a decision to run the hotel on a shoe string staff. The likelihood is remote. Lots of businesses have debts and we’d have to run on a skeleton staff – mothball the place until it passed over. There is insurance for business interruption, we have insurance if it’s covered. Government may have to pick up the tab on support like they did after some IRA terrorist bombings”.

“There’s someone I know in the TA who says if there was a flu pandemic the area would be quarantines with troops patrolling the area”.

The larger grab and go retailers and restaurant chains differed greatly in their level of preparation. The newly introduced franchised chains were at one extreme, with the long-established high street retailers at the other. They were all working on the assumption that the pandemic would emerge from Avian Influenza, and were monitoring World Health Organisation guidelines. Three had asked their key logistics suppliers – and sometimes others suppliers - about their pandemic plans.

“We have discussed the pandemic as a team, we started talking as bird flu started moving. We need to build a library of alternative products. We have not worked out pandemic plans for the company, we are too stretched with everyday operations, but we have teams overseas and in the US…[A competitor] has done some of this, identified critical staff. I did a mini plan there for succession planning. When someone got put in jail for 4 months it kicked in”.

“The company does plan for pandemics. It now models on the % of staff that would disappear back to Europe, if they flew back to Poland or Spain to look after sick relatives. About 50% of shop staff are migrant workers. There is a plan prioritising retail sites to keep the network operating. It would prioritise by catchment area, with

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key shops identified in the middle of each catchment. Have modelled how long the company’s operations would stay up. I have been to Government seminars on pandemic planning and have a traffic light system monitoring the progress of Avian Influenza (AI). The company has looked at pandemics and AI and feels it has applicable lessons for other scenarios. The company had issues with BSE and Foot and Mouth”.

“Understand that HR has a box of anti-virals for ‘priority personnel’. The plan is based around communication for Avian Influenza….We won’t tell people to stay at home. Will follow official advice and action the authorities’ advice”

“Can’t say if there is a formal policy but have a defined team for Avian Influenza, but we are aware that there is a possibility of mutation to a pandemic. Have representatives of Supply Chain, HR, Corporate Affairs, Customer Services and Communications, Hygiene and Safety, Marketing and Training on the team. Also have a central network drive with work done on AI. Have identified who all the core suppliers are as part of that plan. There are templates for core suppliers asking for AI/human pandemic ‘what are your plans?’. It is a tiered plan depending on where outbreak is and if its impacting. It used WHO guidelines. Level 3 equals human pandemic”

“Each business unit has it own pandemic plan for logistics and the providers have a pandemic plan. They follow the alert levels, the plan is dependent on that. Work with [3 logistics companies] about the action they would take at each alert. If we can’t operate a depot because too many staff are off, we will serve from another depot or use direct to store delivery. We are aware of things we can do, but there are no hard and fast rules”.

“Have also pushed [2 logistics companies] into looking at how lorry drivers and food suppliers would manage. Suppliers have been asked to put plans in and share them with [company]. It is now a requirement of all major suppliers”.

Pandemic Planning for Vulnerable Populations

The prisons and detention centres were clearly vulnerable populations that would be unable to look for food elsewhere. One of the contract caterers did express concerns about provision for the prisons. However, another private sector prison/detention centre operator explained that it had elaborate pandemic planning in place, covering the provision of medical as well as food service operations.

“Contract in to prisons and detention centres. Believe that food may be a problem, but will get food in to avoid riots”.

The City Council, MoD and NHS Trust had civil contingencies responsibilities, as well as food service delivery concerns. The managers responsible for the food service provision had their own all purpose contingency plans, which could be activated.

“It’s about public protection – advise people to stay at home if critically ill…Would take advice. With the floods the kids tended to be off school for a couple of days. With meningitis kids are kept off school”.

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Suppliers and contract caterers reported that the MoD was doing pandemic planning for the food chains, and the contractors supplying troops deployed on overseas operations were obliged to produce business continuity plans. However, the pandemic plans had not filtered all the way down to staff at contract management or facilities management level. One ex-serviceman explained his concerns about the wider implications for civil contingencies of contracting out catering operations.

“Maintaining flexible working – the call out in the BCP is to bring only essential workers on to a site, or transfer to a nearby site. We would look at the situation on a case-by-case basis… Not aware of specific pandemic preparation in place to maintain supplies of ration packs”.

“For a pandemic – it’s pretty much a black line. Could bring staff in from other warehouses - MoD is a priority contract - or from [contract consortium], or if we lost the distribution site we could move to a different depot. If we lost warehouses to a pandemic we could go to a limited product range”.

“Know no policy for infectious disease. Within the UK 90% of all military bases are civilian. It’s cheaper to pay civilians to do ancillary jobs than soldiers. Even where it is military caterers, there are civilians doing the prep and cleaning – washing up etc. Chefs cook, civvies do everything else. Even where it is a contract with military chefs/catering staff, if they go for ops, they have to be replaced. The military are understaffed following big cuts…In the army there have been successive waves of redundancies (e.g. lance corporals). Because it was a good deal too many went. They took the pension and came back as civvies…If there was an ambulance or fire strike there are not enough military staff to back-fill. There are no military hospitals now, it’s all NHS”.

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Preparations in Prison

Robust plans are in place for the pandemic - how to treat those that are infected as well as feeding and good infection control procedures, e.g. 20 minute reminders to clean the work surfaces. The company plans as a group for food and operations (all operations), and has a local plan by site. We have a manual for each site for events, e.g. pandemic or fuel protest with key tasks and cross training. Have identified really critical people. Duty managers know what they can deliver, e.g. education, workshop but not gym.

Catering managers have 4 week ‘contingency menus’. Some sites have bought in dried food to support that menu (Menu B) which they are rotating with the normal menu. The proposal is to use fresh whenever they can get it. The contingency menu includes vegetarian and Hal-al. Have the same system at the Immigration Removal centre. The local contingency menus are site specific to cover the needs of the inmates, i.e. gender and national differences. Menus reflect that.

Unfortunately there are a number of deaths in custody every year. There is a high suicide incidence so we expect deaths in custody, but lots of lives are saved. The prisoners have unmet medical needs. People arrive with lots of undiagnosed illnesses. They are not healthy, so are high risk for contracting disease and for secondary infections. They have weak immune systems and multi-level problems.

We have to care for diagnosed pandemic flu cases and maintain security. The first case would be in a room on his or her own. If the health care unit has a 4 bed ward they could put them in there, but we don’t want to stop general healthcare. Would move them into the segregation wing until all the rooms were occupied and then another area would be identified. Would cohort people and restrict movement, but still deliver activities to avoid boredom and the prisoners becoming unsettled. We would avoid disrupting visiting if possible.

I have reminded staff that managing a pandemic is another way to look at what they do as part of their everyday work…We don’t have an option to walk away, so you have to think creatively and resolve it.

Pandemic planning for the NHS was well advanced. Considerable efforts had been made to integrate pandemic planning all the way back up the NHS food supply chain. The hospital trust manager explained how it would impact on its ability to deliver care.

“Pandemic is the next biggest worry. It would (1) disrupt transport, (2) disrupt the supply chain, (3) and I don’t know the impact on staff levels – working on 40% at week 7 but could be higher. We would be seriously inconvenienced. No one knows which areas would be affected. The trust has reviewed requirements for staff protection and has purchased FFP3 mask, it is stock piling 7.5K masks (reusable). Hold around 10% of clinical supplies stock. It is in the blood stocks plan to balance stocks nationally and there are a number of key drugs which would be priority

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The Hospital Caterer: First in the Queue?

“Looked at pandemics for Birmingham. In terms of the hospital population they have a bigger problem then I have in catering. Ward staff would be exposed. Kitchen staff don’t go to the wards. Porters take the food from the kitchens to the wards - Not my problem!...It would affect us if national transport and ambulances were affected so patients can’t get in… If it was a national problem we are going to have priority, e.g. if 3663 have only one driver not 10, guess where he’s coming. If it hit bread and milk we would have priority because we have no choice, patients are here as opposed to in the supermarkets. We expect government intervention. Like in the fuel protest we were identified as a priority. As a hands-on caterer, I would ring my dairy and if they had 50% production, you’d ring the dairy and say supply us not Sainsburys. I’d use emotional blackmail, e.g. we have a children’s hospital here!”

Was involved in the West Midlands Health Authority pandemic planning - because we has the biggest fridges. Had one ‘dirty veg’ fridge near the back door that could be used for storage of 2 pallets of vaccine. They needed extra vaccine storage capacity. The bodies could go in containers in trunkers.”

demand. For the pandemic it would be Tamiflu. There might not be enough and there is a real danger of public disorder to get at stocks. Primary Care Trusts control the Tamiflu, not the hospitals”.

Five other organisations, including two catering contractors and the two largest wholesale distributors, had taken part in pandemic planning exercises for the NHS supply chains This included the 2007 pandemic planning exercise, Winter Willow. The exercise had highlighted a number of weaknesses in their planning, though they thought some pertinent questions had been overlooked.

“We were Winter Willow participants and we watch Defra. For Winter Willow we expected requests for use of cold stores, but they never came”.

“The company was involved with Winter Willow. That flagged the criticality of communications and how the scenario was likely to pan out. It highlighted a number of gaps”.

“The NHS is very bad at short hop crisis planning. Very good at managing short surges, very good at mobilising infrastructure. The biggest weakness would be the ability of the NHS to sustain effort over a long period…We go for regular meetings and tests, rather than an elaborate manual. Have done Winter Willow scenario and followed with an internal exercise, which went from level 1-4 in 8 hours. We are doing another one to test HR and trading. A pharmaceutical client sat in on the pandemic exercises…Winter Willow revealed issues with cash collections, medical staff feeding on demand and its implications”.

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The off-shore industry caterers flagged up a lack of any such coordination for pandemic planning as a major problem in their sector. The managers reported collaboration on emergency response exercises with customers, police and coastguards, but not for a pandemic scenario.

“We are asking questions about big events, not just local events. A concern is what if the big oil majors don’t have a structured plan? We will be jumping through hoops and be all over the place. Oil does tend to shoot from the hip - Texas oil mentality stuff for example!”.

For all those operating in closed or secure environments there were worries about how they would maintain staffing levels and fulfil contractual obligations. A big question was at what point they would be allowed to default on customer service agreements.

“We have around 60,000 employees in the UK. We are of the view that if we can plan for the pandemic we are well placed to plan for anything….We have some clients, e.g. hospitals, care homes, defence etc, it would be difficult for them to function if they were not fed. Not thought this through, but might have to get into client allocation, not worked out the detail yet…In an extreme crisis some markets would be totally dependent on us for food and fluids, e.g. off-shore”.

“We have a BC matrix at each site to dovetail with existing site plans. We have also asked each site to investigate legal contractual requirements and the financial implications of service not delivered (Key Performance Indicators not being met, etc) and associated penalties, e.g. at PFI sites we might get 5 points for a late lunch…The question is how do we minimise the business risk, i.e. which KPIs it is cheapest to fail on? These are not necessarily the ones that the customers would want us to fulfil….At what point are KPIs waved to focus on really important essential work? At what point does it become a relief effort? The business priority is to minimise risk to shareholders”.

“Expect pandemic will mean reduction in service, but only after the onset. Can’t pre-plan….Cannot negotiate changes to service delivery in the event of an incident until the incident. Catering managers do not have cash or credit cards to purchase emergency food supplies. Do have a force majeure clause – but not sure how it will be interpreted. We can demonstrate that we have done all that is possible”.

“Customer Service Agreements are to be revoked in a pandemic. WHO levels 2-3 are viewed as critical indicators – i.e. jumped the species barrier and human-to-human transmission. Have told all major customers – the language we used was a key consideration”.

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The Plea for Joined-up Thinking Off-shore

Pandemic is on the radar but it’s alright me checking off my part of the business, I need to know what the big oil companies are doing, and what demands are Grampian going to make from us or advise us to do? That is what has put me off going to do something, I can assess risk to employees but it’s an unknown.

I have talked to Bristows and Scotia, if there is an outbreak they are not going to fly. The loss of their staff for whatever reason affects air traffic – hundreds of flights. There are 80-90 flights from Aberdeen every day and a huge number of people off-shore. The company has around 1500 employees, 750 off-shore at anytime. It is one of four catering companies. Staff stay for two, three or four weeks, depending on rotations.

There are lots of supply boats with food, water and fuel leaving Aberdeen every day. Information is not very forthcoming – don’t know if they have plans in place or are waiting to see what happens. I know how bad it could be.

Know I could get potatoes, milk and bread off-shore, but need the supply chain and transport to be well enough to carry that out. If I’m out of the picture who organises it? I talk to suppliers – get varying degrees of ‘yes we have thought about it…’ but nothing is really happening.

Have lots of guidelines for everything, but not a push to enforce. Lots of ‘wool’ around the guidelines, e.g. why a member of staff – a caterer – should not be sharing with someone else and that gets into a contingency. Where is enforcement going to come from? E.g. some clients can commandeer boats with captains so their platforms are OK, but there are lots of newer smaller producers out there. Will someone make a decision to shut off-shore down for 6 months? The rigs have to be kept going – there are implications for us and Norway. 80% of what is produced comes into the UK.

The bulk of the business is people, although we handle vast amounts of food. If people aren’t there to cook and clean it becomes irrelevant. If 50% of staff are knocked out then clients have problems maintaining operations…Needs to be a bit more discussion. Not frightening people, but how do they cascade information to assist with a joined-up approach. Pandemic planning needs to be done with the big oil companies. Can understand why they haven’t done it. How do we get a joined-up approach?

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Pandemic Planning by the Contract Caterers and Wholesale Distributors

The contract caterers’ planning was spurred on by their key customers. One admitted it had only just began to work through the issues (Spring 2008), the rest claimed they had planning in place. Like the large retailers, most had based plans on the assumption that H5N1 rather than a new variant H1N1 would be the likely starting point and were following the WHO guidelines.

“The Group reacted to H5N1 bird flu and asked us to put measures in place. The lead countries within the Group - UK, France and the USA – were asked to put something together. That was purchasing led, but it became apparent that was only one facet of it all. These are two separate sets of measures, one for H5N1 and one for a human pandemic. The company decided to take the plunge and work on the pandemic scenario. It had an IT centre plan, but not for the loss of half the staff, and it had a crisis management plan in place (PR people led). We went to the insurers for BCP experts who came and presented to the Group and introduced us to PAS56, now BS25999. We are looking at BS 25999 as a likely methodology…Within one segment there was a misunderstanding about H5N1 and pandemic – they were telling us about Turkey and chickens”.

“Been like this for at least the last 2 years. There has been a generic plan updated regularly, it’s the nature of the business. The flu pandemic is classic, we are following the WHO monitoring. Some clients ask for detailed plans with certain % absenteeism…Plans need go/no go decision points and the source of whatever solution, e.g for supply chain the Supply Chain General Manager would advise when it is a pandemic. For IT no one would be implementing anything, but it would be working. Some clients will be sensible, some will turn into manic raving dogs, but it needs someone in each organisation to make informed decisions”.

“The staff are very familiar with current health thinking on a pandemic. It is starting to get into the jargon and checklists. The company employs 330,000 worldwide, with 48,000 UK staff, it has massive HR implications. The pandemic has captured imaginations”.

“Flu pandemic is a key issue, am on the 6th iteration of Avian Influenza, H5N1 and pandemic plan. I am told it’s a ‘when, not if’…Been doing workshops with HPA to learn about it. It is safe to eat chicken, even if it is infected. Have fact sheets to publish on the intranet. Employees and clients are asking what we’d do. Have followed the WHO’s phases from outbreak to recovery. Different types of clients are asking, so we have put together a trimmed down version for clients, e.g. for Defra and the City”.

“If there is an outbreak at a client’s site we would be guided by the client, but if the client is behaving irresponsibly local management have authority to intervene (untested). There are 3 scenarios. It is the responsibility of the executives to say when we move from one to the other”.

The question of prophylactics arose on several occasions. Two of the contract caterers and one of the wholesalers had taken advice but decided against buying in stocks of masks or vaccines. Ending unnecessary travel, prioritising activities and

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promoting good hygiene were seen as better options. However, one wholesaler had asked suppliers about the possibility of increasing stock holdings of foodstuffs as a more comprehensive audit of pandemic planning contingencies.

“Not stockpiling masks, Tamiflu etc. Have spoken to some healthcare reps who want to do Tamiflu jabs, but the vaccines may not be the right ones. Tamiflu might make you feel better, but might not help”.

“Some clients are stock piling Tamiflu and alcoholic gels and face masks. Do you need to do this? The moment the public finds out, that will dictate what happens. People will use internal logic about travelling into work on trains. Many well stay at home so you won’t need the gel etc for people who are not there”.

“If there was an event/outbreak we would activate the plan; restrict travel, protect employees and promote the etiquette around ‘coughs and sneezes spread diseases’. Even at the finance centre we’d prioritise key activities, cancel marketing and training, market research etc – concentrate on mission critical activities”.

“Have looked at reporting, hygiene, prophylactics, alternative product formulation, site cleaning etc, protective clothing, advice centre with a single message, succession planning…also the effect on inbound supplies. Some suppliers were surprised to be asked for a statement and contingency planning (e.g. do we build stocks?). We are sharing best practice with our overseas business partners…No insurer covers epidemics in business interruption insurance”.

Managers from catering, wholesale and food processing companies, who had responded to client pressure to provide pandemic plans, nevertheless pointed out that there were limits to the amount of time and resources that could be devoted to this problem.

“Government is asking Sodexho and Compass about BCP, who are asking us about it. The key thing is knowing who to speak to, not necessarily having closely knitted (variable) plans…There are varying views on how vital pandemic planning is. More likely to have IT or fire than pandemic, but it will happen sometime. The last one was 38 or so years ago. Pandemic would have the biggest impact, but it is about people falling ill. Fire is more likely. Pandemic is not the thing we are spending most time on. It’s not a major priority, but we want to give our customers confidence that we are aware of the issue…”.

“This kind of planning gets the time that can be afforded. In the current climate it won’t get a dedicated resource, it will be additional to managers’ day-to-day responsibility. If we know more or it was closer it might be different. If the Head Office gets taken out no one would miss us – sufficient contingencies in place to cope. We could raise bills, pay suppliers and staff. We’ve already done a lot that we take for granted. We can move people and IT around to contingency sites”.

“The site needs a lot of work…In previous jobs only once has BCM been up to scratch and up to date. That was because everything else on the site – lean production, accidents, near misses etc – was all right and everything was stable and in order. Here the site is running at a loss and severe cost pressures have to be dealt with”.

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Most of the managers expected schools would be closed and that demand for food service would drop everywhere as the outbreak peaked, off-setting some of the problems of staff shortages. The exceptions were hospital feeding and meals on wheels, where demand was expected to increase. There was a belief too that some hospitals would be set aside as pandemic centres, whilst others would concentrate on other urgent medical needs.

“Nightmare scenario is 30-50% ill, not coming in or looking after dependents. It is likely that the client base will be down by the same number. If there is a pandemic, expect education to be shut down, but would need to serve prisons, hospitals and the police and other essential services/industries”.

“We have said to clients that we need to sit down with you and plan, e.g. for a pandemic. They might not want full feeding as usual…We are being pressed for much more sophisticated details than a plan for the Head Office and IT recovery”.

“There are two vital things for BCP. They are supply side and the impact on staff e.g. pandemic model for up to 50% absenteeism. It came out in Winter Willow – close schools and it knocks out staff at home with child care, and education is a big part of our business”.

“The big companies had plans. The big customers were asking us to provide plans. These were based on the assumption that demand would drop. Expect the low-value cost sector business to stay up, but work canteens and fast food could be affected”.

The financial implications of a pandemic were a reoccurring undercurrent in discussions with the contract caterers. For those not constrained by CRB checking, the loss of the migrant workers was expected to seriously disrupt operations.

“Day one impact will be limited, could cope with some guidance on alternative scenarios. The customers would drive the reaction. After a week you start to move to impact on the company – it starts to hit functions and contingency plans must be in place. If that is not done within a week there are bigger problems, units won’t be able to supply. If plans are not engaged after a month the business starts to fail, you lose sight of what is happening to the business and the knock on to loss of contracts – we have no shareholders - and financial meltdown”.

“Our people are our assets. Have some investment in client premises, but clients provide almost everything. The facilities management division charge a day rate, how many people on site equals the total day rate”.

“We employ lots of East Europeans that would want to go home. It’s indicative of the catering industry – each ethnic group is superseded by other ethnic groups. In Ireland there was a campaign “Bring Paddy back”. East Europeans are taking over in catering (the unskilled labour). There is one and a half hour induction training and staff can be ready”.

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Demands and Difficult Decisions

In a widespread pandemic, for example, we are assuming schools and public events areas are closed. Other functioning staff would still need to be CRB checked.

Expecting meals-on-wheels will experience increased pressure on local services – 50-60% demand volume increase, equals problems with drivers who are likely to be working mums. We are likely to need a relaxation in the delivery windows. No additional vehicles are available. It may panic some elderly patients if their routine is disrupted, but might allow us to optimise assets. The drivers would need masks and inoculations. My expectation is that those staff would get them. The expectation is that council workers would be designated critical ‘key’ workers.

Designated Pandemic Centres will need staff feeding and only treat pandemic patients. Heart hospitals will be heart emergencies only, other hospitals will stop elective surgery and A&E. There will be no drop-in centres for flu. The volume of food business will increase for staff but drop for patients.

We run a London hospital which would be a pandemic centre and one of the City financial services buildings nearby with one lorry. Which gets the service? Banking might be more critical to the country because of the need to keep the banking system up …and make more money.

The Food Processors and Importers

The food suppliers looked to range simplification as their first option in a pandemic, as an industry spokesperson explained. All of the food processing companies had pandemic plans of one form or another, but felt that these alone would not overcome wider problems of labour shortages and possible restrictions on movements.

“50,000 people are employed by our members, would have to scale back production and focus on core lines. It’s so labour intensive – and that assumes people are able to produce and send the raw materials for you, which would also be affected in the case of a pandemic or fuel restriction”.

“We have a range of simplification policies to prioritise pack sizes and range at this time of year (summer), it is a well-rehearsed tactic, but you could sell even nettles in a bag at this time of year. We are constantly warned about a pandemic. There’s not a lot more we can do to plan for that, it would be the same as losing all agency workers. A number of outside agencies keep emailing and offering consultancy for pandemic planning”.

“There is a basic plan that I am aware of. We are in the process of developing and implementing a more sophisticated disaster recovery plan in the UK…If it’s a big event competitors would suffer the same problems as us, e.g. in a massive epidemic in the South of England there would likely be restrictions on the movements of produce and port controls, plus general national restrictions. We’d all suffer badly. UK

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Government would be concentrating on shipping essential items in times of crisis, not tropical fruit. Has our customer driven market in the UK been prepared for an emergency? Have the MoD and Government got plans? Do they know what they would ship? – don’t think they do. I am really concerned if there was a serious global crisis we could kiss imported produce goodbye. Company has thought of this, but the problem is not theirs directly to address. What are the core nutritional and dietary requirements and directions for business to run with?”.

One importing and producing company confirmed that it’s pandemic planning covered only the part of the business involved in supplying military contracts. Maintaining the institutional memory was identified as a key issue for this business.

“No specific pandemic planning for most of the business. Have through [MoD Contract], not in the rest of the general business. Again it is about distribution of where to buy and supply. The management team is here. If it’s near here we close and go to an alternative site. If it’s a distribution site we go to alternative sights. If the whole of the UK is affected, we have various European sites and would interact with individuals. Have lots of offices in the Middle and Far East. Only one has been through SARS. That year we cancelled a conference and closely monitored local offices”.

“Can’t send everyone home to work, they don’t have access to computers. Key staff are an important issue. Knowledge is in one or two people. It is captured in the institutional memory; we have very long serving staff, i.e. at least 15 years. We have not recruited for 11 years in my area. Staff are not allowed to travel together on one plane”.

Only one of the suppliers reported direct involvement in the structured planning exercises, arranged by other parts of its Group for the NHS and other clients. Its ‘hefty’ policy was updated in June 2007.

It confirmed that the NHS purchasing organisation and larger hospital trusts, such as Leeds (the largest in Europe), have had detailed discussions. Most had either agreed or been led to temporary menus, and confirmed that they will accept the delivery of a set menu. The view is that the patients would be glad to have whatever was available. The assumption was that there would be limited staff, so the ready meals would be supplied as single portion meals on a tray instead of multi-portion

“In Feb/March last year (2007) we tested the system twice with a food service company in relation to the pandemic. There were exercises over an 8 hour period to simulate days and weeks of the pandemic. The first one picked up flaws but the 2nd time we had a realistic response in place. The management team were taken through the response…The first pandemic test flagged up that we couldn’t get ammonia gas. Have a tank now with 3000 litres of ammonia which could be tapped into if needed in minutes, otherwise it would have taken days to get hold of that volume.”

“Most contingency planning is on pandemics, not considered loss of access to the site. Could get round that, could unload in any covered area back-to-back… I had some involvement in that, answered questions, e.g. how would you respond if you lost 30% of the workforce. Transport contingency would be agencies initially, then 3rd party contractors after that. How we’d manage if they lost 50% of theirs, I don’t

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know….We’d be driven by local authority instructions. We rely on hospitals to quarantine and not let us in”.

Unanswered questions

The really big questions around pandemic planning remained unanswered, particularly for those supporting some of the most vulnerable populations. Top of the list were the HR issues. Could employers lawfully place employees in high risk areas? Could they prevent them from travelling home? Or even compel student medical staff to remain at work?

“There are specific issues that apply to university/training hospitals. Planning in this area is not as joined up as it could be, and there needs to be a link at Government level between education and health. They tend to treat all education establishments, including medical schools, as education establishments and ignore their potentially critical function in supporting a hospital. Closure of medical schools would create a double whammy in that it takes extra hands out of the system. There is no legal way to make them stay”.

“Some of the oil companies are considering leaving healthy staff out on the rigs, but I’m not convinced that workers will agree to stay if families are ill”.

“We always have a pool of people and can mobilise people quickly. You have to be good at it and adapt. Can usually pull on 30% of workforce who are at home at any time. One of the dilemmas for the oil companies is do we leave people out there, or bring them back, or shut down UK oil production? We can’t hold people hostage”.

“There are moral issues and disciplinary concerns. Can you send healthy staff to work at specified pandemic sites? Are you allowed to compel staff to go? If you go and don’t protest, what is the legal implication? If you refuse, what is the labour law situation? What is the policy for staff returning to work and the risk of infection?”.

“Can’t force staff to come in if family are ill, or won’t travel on trains or through restricted areas. There could be food shortages and problems with restrictions”.

“If my unit is closed because of the flu and I’m healthy, our employees can go somewhere else. Employees are employed to work at a site. If access is denied we would try to deploy them elsewhere. If we couldn’t and they were well, we’d tend to retain them by paying a retainer or something. With most employee contracts, the people are employed to provide service to a given client. We try not to lay-off if possible…If you or your family are ill, we’d say don’t come in to work, but do we pay them? The NHS is giving advice on certification for sick pay. In the plan we would revise/review policies as and when. We would look to Government for recommendations. Would rely on Government to provide emergency sick pay for those not entitled to much”.

Rightly or wrongly, there was an underlying assumption amongst the biggest contract caterers and wholesale distributors that Government would intervene and direct the food service companies if the situation became really dire. But no one knew when that point would come.

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“If it’s widespread, e.g. energy, fuel, pandemic etc, then it is more complex because you don’t know what you don’t know. For a pandemic, everyone assumes Government will intervene but no one knows when. Have had conversations with people – supply chain partners and people within the organisation - who say ‘if it gets that bad there will be some government intervention’…I don’t know where government steps in and if movement is restricted”.

“If it was a critical service customer – critical equals public service – they would be top of the list, Government would tell us to do it!... expect the schools to be closed and our employees would be out of a job. Would try to adapt, but can’t guarantee that everyone would be paid…. The pandemic plan has moved on, since we met we have included a list (of Government priority services) that we will focus on first. It’s where we currently operate a catering/facilities management service”.

“Pandemic decisions are likely to be affected by Government steers about what we can and can’t do. Other scenarios are viewed as under our control. It’s not the same with pandemic, e.g. maybe food distribution industry might be directed to supply into specified (e.g. Tesco) depots or the army might commandeer trucks to deliver to infected areas”.

“Department of Health’s flu pandemic plan issued in November [2007] gives some details of what to expect – but the food industry need more direct/detailed advice from Government agencies – supplying ‘this is what we want industry to have done’ direction, i.e. a benchmark of expectations. We expect Government to take a lead in the event of a pandemic and it is important to benchmark where we are against their expectations”.

“There is an expectation that if the Army doesn’t step in, that the Government will call the big companies together”.

“Government needs to say we what we expect the food industry to do so we can prepare…Seen an insider’s plan for hospitals, know what is expected of them. We don’t know what is expected of us…If there is civil unrest and people are breaking into warehouses and there is looting of food premises and warehouses, what is Government’s position on that scenario and its communication strategy to key players in the industry…Government tell us what your critical requirements are for 2 or 3 pandemic scenarios so we can plan!…Can’t rely on agency drivers. Will drivers’ hours legislation be loosened? Big customers will have to work via key account managers. We may not be able to receive from suppliers in order for us to supply Government collection points or priority users”.

“If people are in a restricted area, it is important to maintain supplies to locals. What about people stranded in hotels?”.

Doing the Right Thing

There was an appetite amongst managers from all parts of the sector to learn more about what they could do in a real national emergency situation. The biggest retailer and wholesaler felt that industry cooperation was the way forwards. Managers from the City Council and one of the hotels and one of the food producing companies thought that public information, war-time nutritional advice and rationing could be the

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answer. There was genuine concern that in a time of rising food prices Government should not overlook the difficulties already faced by some less prosperous families.

“Whilst food retailers fight like cat and dog, their capability to cooperate in an emergency is very great, it is an argument for a fairly consolidated retail base in the UK. 3 to 6 of the right people in one room can have a big impact. Not just the BRC, but the companies. It is a big plus for the UK. The US doesn’t have this”.

“On a local level we talk to local services and have the usual relationships, but in most cases we can look after ourselves. In a major incident the company could work with its competitors, but there is no experience of this in the industry –we are bitter enemies! The Company is a member of FWD and IGD, but the Food Service sector hasn’t got an industry association with emergency cooperation protocols worked out”.

“People should be given information on what they can do with a minimum amount of food. Austerity advice on how long cereals etc would sustain a family – basic nutritional/cooking advice. Should look at what happened in the war for rationing”.

“I applaud Government for thinking about this. You would expect that Government would have an arrangement with big food retailers to divert food into the area, e.g. some kind of rationing by person, not according to the business, similar to the Second World War .There is a world food shortage – if we all ate 20% less in the UK we’d be OK. We used to go to buy groceries once a week. Now we all eat too much”.

“There are families out there who rely on the 2 chickens for a fiver special offer”.

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Section 5. Findings – Withstanding an EmergencyBuffer Stocks, Surges and Waste DisposalThis section looks at stockholdings and inventory management. It answers questions such as how long the companies could maintain operations if the movement of goods was stopped; whether the companies would experience surges in demand; how long it would likely take for them to replenish after a surge or disruption; and whether waste disposal would pose a problem.

The Hoteliers, Retailers, Restaurant ChainsIf the movement of goods was stopped for whatever reason, the hoteliers, retailers and restaurant chains all expected to be seriously disrupted within two days. The smaller businesses preferred to use fresh ingredients and would be quickly hit because of the perishability of the produce.

“Stockholding is very limited. Maximum is two days working before things stop. We rely on daily delivery. We use mostly fresh produce and have nowhere to store in the shop. Fresh would run out first”.

“Stockholding is usually 5-6 days, but it’s a good mix of perishable at 2-3 days, others would last for months, but we don’t hold big stocks”.

“Have 6 days food supply in the hotel and longer for wine, spirits and soft drinks. 24 hours fresh produce and have moved more towards fresh in the last few years”.

The grab and go retail chains selling fresh chilled produce operated stockless quick response supply chains, so had no contingency stocks in reserve. The franchised restaurant chains received their principal ingredients in frozen form, and could hold out for slightly longer, though most outlets would feel the effects within 48 hours. They or their suppliers also held stocks elsewhere in the distribution systems.

“My remit covers 6000 lines and up to 20,000 raw materials and around 350 suppliers. Lots of the food is fresh made daily”.

“The operation is stockless, it’s a two cycle flow operation. Early morning comes in between 6.00-10.00 pm (evening), the depots pick between 8.00pm and 3.00 am and then goes onto vehicles to the stores for delivery from 9.00 am onwards. The last vehicles start bringing in afternoon deliveries. The bulk of the product is in the morning, it’s short life (chill and short life ambient, e.g. Chelsea buns), in the afternoon it’s long life (e.g. ambient and bacon, sliced ham etc.)”.

“Stock levels is 7-14 days for some lines. At the store level it is about 5 days, for some small stores it is only 24 hours. We have had closures because distribution failed. The core items, protein and bread are frozen”.

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“Restaurants do not have big storage facilities. On frozen could last 2-3 days on average. Average is 3.2 deliveries per week, but varies between sites…The distribution centre stocks depend on the product. Buns at DC equals half a day to one day max. Frozen is around 2-3 days depending on the product. Fries are fast-moving, so less, more for vegetable patties. Suppliers have stocks – usually 2-3 weeks for most items, for buns its up to 48 hours and have a 2nd call site for the UK in Europe…European category managers have detailed capacity and stockholding data to indicate where contingency stocks can be found within suppliers’ networks and total capacity utilisation across the supplier networks. Different countries have different formulation, but have plans saying which can supply stock of the correct formulation”.

Customer demand fluctuates with the weather, with demand surges likely to be driven either by promotions or occasionally TV shows. The only panic buying reported was by one of the food service businesses themselves, not their customers.

“Yes we have surges, it depends what is on the telly. Delia’s cheating TV has just caused one. It was over Season Pioneers spices. We were listed as a supplier but discontinued it pre-Delia because no-one bought any…If there was a standstill, as soon as everything was back up, I’d be quickly back up. One of the benefits of using small local suppliers is they’d be desperate to get rid of stuff so I’d be back up and running quickly”.

“We would go to the cash & carry and/or the local Asda or Tesco. If there was a sudden or serious threat to food supplies staff would be dispatched to the cash & carry immediately – at the very suggestion. We’d feel guilty because we’d be panic buying, but if it was legal to do that we would. But if we had a big stock of food and people were going hungry around us we would approach the council to let them know we had it and would release it”.

“I’ve no experience of panic buying, but there is more interest in healthy, low-fat and vegetarian foods, gradually changing tastes”.

“We don’t have panic buying, have spikes with promotions…Like any other business we have blips in supply, e.g. very successful promotions. The rest of the business see only the increased demand, not the increased effort needed to maintain them, e.g. 8 or 9 years ago with the first BOGOF offer. Managers were driving around DCs collecting extra supplies. They have thermal transfer bags to move chilled produce between restaurants”.

“We have no panic buying because we are a ‘top-up shop’. Customers would panic buy in the direction of ‘bulk shops’ (e.g. Tesco and Sainsburys). We have a massive peak at Christmas – the biggest Christmas surge in the industry. Then suppliers build to stock, the only exception is customer ordering. We hold turkeys over an 18 day period”.

Two of the bigger retailers were in the process of expanding their store networks, both were upgrading their inventory management and distribution systems to improve the Just-in-Time efficiency of the expanding networks.

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“The systems in store are not EPOS, but we are addressing that. Some Development Agents already have software in place, but we are still rolling out on-line ordering, that is all changing”.

“There are always changes underway for commercial reasons. Up to now all product has gone through RDCs and been cross-docked and out. The criteria for which stores were served from where was purely regional. We are now distinguishing between the main store network and small units (e.g. in service stations). We are going to have dedicated DCs for them. Existing food halls have about half a shelf with around £30 worth of product with each tray. The forecourt stores have much smaller requirements. Distribution units are much smaller. You can have a one-size-fits-all or a mix or provide dedicated units. Forecourt stores can take smaller deliveries from a smaller vehicle fleet”.

None of the retailers thought waste disposal would be a problem if the supply chains stopped, but the small sandwich bar owner explained his likely approach.

“If waste disposal collectors stopped, I’d use one of our vehicles to take the waste to the disposal site. We would have to have just one of the vehicles doing that for food hygiene reasons – or run around the corner putting bags in every ones’ bins – No! I wouldn’t, but know people who do”.

The Public Sector and Closed EnvironmentsThe hospital managers’ priority was stockholdings for medical activities. Its catering operations were pre-planned. The catering manger estimated that patient feeding could be maintained for up to 4-5 days. Because of near full-occupancy, demand for patient feeding was very stable. Surges tend to occur only in the wake of major incidents.

“Carry about 10 days stock across the board e.g. at the pharmacy. Stock holding is between the logistics supplier and the trusts. There is a big debate about who pays for the stock holding. The Trust holds 25%, the other 75% is held at the logistics supplier’s depots, where it is palletised ready for delivery. We can cope with surge distribution at the Trusts. Decisions have not been made on funding for this requirement – there is a general feeling that if the Department for Health wants trusts to do this - they should fund it. For this trust the cost is approximately £2m”.

“For a major emergency in Birmingham we had a couple of tests, e.g. 4 coach loads brought in covered in tomato sauce to test procedures. The hospital made its own sandwiches for 700 per day and could supply visitors and the press. A&E tend to be fed, but we could step up production the following day to catch up. Catering had a role”.

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The Undeclared Emergency

On 2nd July 2006 the trust self declared a major incident. It was the British 10k race on the hottest day of the year; the Trust hadn’t been briefed by the organisers in advance. First thing was 15 people were brought in by ambulance and a 30 year old died. St John’s ambulance warned of 200-300 casualties and the trust therefore declared a major incident and effectively tested the system.

“In a major accident, e.g. a London bombing, the top acute hospitals all deal with major emergencies – treat at A&E and then disperse to other hospitals…Catering provide more or less static requirements for patient feeding, but surge for press, visitors and A&E provision. Big influx is when 2 or 3 people all turn up for each casualty, searching for them. That is dealt with sandwiches for A&E staff and visitors. Recovery time depends, but can do this fairly quickly for patient feeding. Use extra staff to cover the surge and work overtime…All food waste is mashed up and goes down the drain. No food waste can go into landfill. That only leaves packing”.

The other organization that had recent experience of dealing with a major sudden onset event was the City Council. The manager was not familiar with stock-holding policies, but had very definite views on the matter of waste disposal.

“Don’t know if we have local ambient store rooms. We need to establish if in the event of a big disruption we could try local for local, if available… After feeding 5,000 you have to get rid of the waste to avoid rats. It is as much a part of the food chain as the rest. Refuse collection was a problem in the floods. Had to be careful at the Emergency Centre and bag up clinical as well as other waste”.

Contingencies for waste disposal had been considered by the managers for the companies running the custodial centres and the facilities management for off-shore rigs.

“Have contracts for waste disposal. Have looked at this, but we have plenty of space on site to do temporary storage, as long as we have containers available - e.g. for medical waste”.

“A decision would have to be made about what was bagged and brought back to the UK. Would arrange a temporary allowance for dumping at sea”.

Both of these closed environments held weeks of foods stocks on site and had no plans to change their stock holding policies. Transport and replenishment lead-times were obviously a factor off-shore.

“Can feed for 2 weeks at full capacity. Normal stock-holding is 4 weeks – some have increased to 6 weeks with additional dried food provision. Some have containers on site, the dried food is checked regularly. There is no panic buying just the odd run on Mars Bars in the canteen. Prisoners buy lots of sweets, ordered from the canteen. Sweet and tobacco supplies are very important”.

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“We hold around 30 days supply off-shore (ball park) for normal service – but could go longer. Been there before, e.g. situation of fog/bad weather for 3 weeks at a time. Use lots of frozen meat, poultry etc, and get fruit and veg on a weekly basis. Carry 1-2 weeks stock out there. Not heavily reliant on fresh dairy, have UHT milk stocks. There are no surges or panic buying. They can only get what we give them! Just cater for market leading stock in areas like sweets. Have huge supply of bottled water off shore. But it is not needed. Didn’t used to have it. The rigs can make their own water, would expect that but not certain. Have been asked to cut back on laundry occasionally, but that is exceptional….Most contracts are 30 days minimum stocks from experience of logistics. 95% of stock is moved by sea. Only fly in exceptional circumstances. There is some guidance about mixing freight and passengers on helicopters. The lead time is dependent on location in the North Sea. Should be able to replenish in 5 working days, but would have to free up space on a boat. Food containers do get bumped for drilling bits/spares sometimes”.

The military had the most varied arrangements and stock holding policies. UK messes are run by different contractors with different purchasing and stock holding policies. A new ‘pay as you dine’ system is being rolled out which could change stockholding and supply policies.

“Don’t know what the contingencies are here. Could probably maintain operations of some sort for around a week.. Shelf life of stock varies, e.g. sugar goes on forever, for perishables staff are trained in stock rotation. Ambient has long shelf-life. Frozen is fine subject to power. For this mess approximately 30% of food stuff is fresh or chilled. It is ordered from the main store daily, main store receives ambient and a bit of fresh veg etc, and the other 2 days is frozen. All meat for this contract is frozen (unless for a special function). At the other mess it is 75% fresh meat and deliveries are every day. Most categories are delivered daily, it’s Just-in-Time supply. We have no panic buying surges. The other mess lost stock in July (2007), but were restocked within 2 days. The daily delivery came in. There were problems with entry points/routes because of the flood. It had a knock-on effect here. We supplied the other mess with what we could. We had more supplies coming in on Tuesdays, but our lead times were longer. It would have been a bigger problem at another time of year”.

Over at the purchasing arm for the Armed Forces, contract managers explained the MoD’s stockholding policy. For deployed operations it was measured in weeks, for the rest of the army it was around 4-5 days. They used contractors for waste disposal but investing in new methods for waste disposal (bio-diesel).

“All the protein element (meat and most fish) comes in frozen and the UK general market is for chilled, this might be a complication for alternative sites. Around half of the beef is UK produced, the rest is from South America and Australasia. The contract delivers on Monday, Wednesday and Friday for fresh and ambient. Thursday and Tuesday for frozen. There would not be much fresh left after 3 days…The same food goes to operations as to the UK, but the ops range is more limited. There are around 1200 lines in the core range for the UK. There is a monthly UK price list, everything is UK quality compliant. Iraq gets fresh produce and water supplies (6 litres per man per day) from Kuwait. The Falklands and Herrick get fresh from the UK by air and sea. The actual distribution other than in the UK is done by the ops side”.

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Pay-As-You-Dine

Expect this contract to go to company supplied food with pay-as-you-dine, it is likely to be more of a Just-in-Time model. Companies don’t want to hold stock. Stock is money. The suppliers won’t be able to go Just-in-Time because the Defence Equipment and Support Agency is likely to keep existing suppliers afloat. All bases are planning to go PAYD. PAYD is a long-term initiative (20-30 years) giving people the choice of what they spend on food and where they buy it. PAYD is sometimes too costly or complicated for some soldiers. It’s a fools paradise – there is an assumption that people are more intelligent than they used to be but it’s not necessarily so.

Military ration packs were the fall-back feeding option for deployed personnel. The food was a mixture of familiar branded products and specially prepared ready meals bought in from suppliers in the UK and overseas.

“The packing of the 10 day Rat Packs is via a contract run by Portsmouth Naval Base, using civil servants, but this is under review at the moment. The military require special packaging for rations because of their long life shelf life requirements and extreme climates. They have had problems in the past, e.g. cheese spread that reacts with the tubes. If there is a surge in requirement for ops ration packs, it is built into the contract. Before and after the contract change over we did check that additional food could be supplied”.

The Wholesale DistributorsThe two big wholesale distributors held two weeks stock of ambient and frozen in their supply chains, with suppliers obliged to hold additional stock. Surges in demand were seasonal or occasionally related to a problem with supply. One company was rationalising its range after a merger.

“Minimum stock is 14 days, but typically 19 days within the whole network, beyond that is supplier dependent and a question of how quickly they could supply. Would substitute brands in an emergency, e.g. other pickles for Branston. Shelf life of stock is long for ambient and frozen, for short-life chilled it is up to 12 days, but short life chilled is a very small proportion, around 3%. We do have some fresh fruit and veg”.

“Two weeks stock in the supply chain. Suppliers are expected to hold 2 weeks of ambient and frozen”.

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The Supply Chain For Deployed Operations

There are 1500 products specific to the MoD within the UK. In operations areas it’s 400 products, for the Falklands it’s 700….We hold 21 days supply in the UK depots, with the exception of fresh and chilled. We have priority customer agreements.

Our most important function is supporting operations – ships (Fleet), Op Herrick (Afghanistan) and Op Telic (Iraq). We have a total of 18 weeks stock in the supply chain or in theatre. We aim for 99% service level in theatre and in the UK.

Operations are supplied via Karachi – Khyber Pass to Kabul. It is all done by contractor logistics. Local contractors are used from Kabul to Helmand. We supply the operations bases.

In Iraq we supply to Kuwait and have depots in Kuwait holding two months stock. A supplier is responsible for packing and manufacturing the 10 man Ration Pack, 24 hr Rat Packs are managed by the MoD, but they are looking to outsource. Also hold water. Have sheds in Kabul full of water.

Most food for operations is sourced in the UK, but not water and fresh veg, it’s from Kuwait. We never have one supplier. For Afghanistan the bulk of the water is in Pakistan, but water plants are being built in Afghanistan and we can also bring water in from Dubai.

Were approached when we had the floods, to provide 1million litres, but don’t hold big stocks in the UK.

In Iraq the MoD provide security and the MoD fly in for Afghanistan. Detailed BCM is needed for that, e.g. different routes to fly in for Kuwait and different land routes for the UK. We send out 30 containers (40 foot) per 6 weeks for Afghanistan and Iraq combined, and 30 per 6 weeks for the Falklands, 10-15 trucks per week for Germany.

There are some countries we can’t go through, e.g. Iran, or that there are problems with, e.g. Kazakhstan. For Afghanistan there are more problems with Pakistan. We need private security in Afghanistan. We’ve lost 25-30 people there and some drivers (mostly from rocket propelled grenades). Distribution in Afghanistan is jingly trucks with 20-40 foot containers to our main location.

“Two companies have merged but shouldn’t change much. The big problem is the slow moving lines. Have 11-12000 SKUs in the company and need to go to 9000 to manage stock better. There are lots of low volume lines”.

“Do experience surges in demand, e.g. in a hot summer we can run out of bottled water and carbonated drinks. Recovery times depend on what it was, for water and carbonates it is seasonal, or if there was a strike, or if it was not a normal thing such as a problem with pigs”.

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One company explained its arrangements for waste disposal, which was an important environmental and BCM concern.

“Have a waste disposal contractor and have asked them for avian flu contingencies. The waste disposal industry had not thought of this. Have some sites that can compact packaging and waste and dry non-food waste, which is often compactable. Food waste needs closed skips and to be removed. Liquids are covered by separate legislation – very tight, we have experts on this. It’s a big environmental issue, would compromise us in a matter of days. We try to minimise waste –we don’t have much spoilage. It’s all logged”.

The Contract CaterersThe contact caterers’ stockholding was determined by their customer base. Those that served fresh food for corporate clients had very low stock levels, for off-shore locations holding were always higher. Menus could be adjusted to include more ambient product, but even then the offers would deteriorate rapidly. On site storage was another potentially limiting factor.

“It depends on the product. In principle it’s one day at full activity because we are a fresh food company. Can do some activity over 3-4 days – can change menus, e.g. pasta dishes. Within a week we’d be into shutdowns, but if we didn’t have any customers coming in we wouldn’t. The customers would be at home”.

“Most sites have stock holding of food and can adjust menus to accommodate. It will be the core staples that would be noticeable first, e.g. milk, or chilled meat products. For off-shore there is a 21 day minimum contracted stock holding target. We are contracted by the client to hold that amount of stock. On shore is likely to be shorter stock periods. At lots of sites the customers wouldn’t notice anything for up to 2 weeks… Probably just needs more thought and coordination and creativity… For us, if suppliers would freeze 1000 of purgals (big boxes) of milk that would be good, but we are not a big enough volume customer. Bread is fresh, but we can bake at site, e.g. like Delice de France. Distribution all done direct by suppliers. The sites order direct to suppliers and invoice direct to site, so the responsibility for the transport is with the suppliers”.

“There is no uniform stock holding policy. We are much less disciplined in that area than the supermarkets. Fresh fruit and veg would run out first. Fresh water is the single most important thing by a mile. In the US we have stocks of bottled water around the country”.

“Varies from segment to segment, but stock usually 8-10 days, but can ramp up if a pandemic was on the way. Can go to reduced menu range and move away from fresh to ambient and frozen”.

“It varies between sites, e.g. Shetlands holds larger stock then London because of 12 hr boat journey. Stock holding is locally determined and balanced with food miles reduction strategy. Balance between Just-in-Time and food miles and local conditions, e.g. a hospital near Heathrow might be prone to lock-down”.

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“Survival would be days not weeks. We would feel the impact immediately. A unit has 1-2 weeks stocks, but no bread or milk. The 1-2 weeks stock is average stock holding, meaning full offer would deteriorate in less than one week, could still maintain life with dried soup etc. We would end up with a very disenfranchised and unhappy customer base, which means managerial and commercial damage. One week of no movement leaves us in a bad place”.

“Mainly issues with perishables. From the distributors all short shelf life product is Just-in-Time, e.g. meat is ordered by restaurants, orders are consolidated from units and offset to the butcher; but we have frozen stocks we could substitute. There is also substitute provision with our distributors and we hold some stock in the units. We would struggle with milk and bread, but could get frozen from the wholesaler. Everyone else would be doing the same thing”.

“We don’t move food between sites. We get a delivery and convert ingredients. If we are aware we can start to stock up from the distribution centre. If we know and have storage facilities on site (some give us a broom cupboard, some are quite generous) we can stock up on ambient, storage permitting…The business target is to hold up to 10 days stock. More and we ask questions. Food has limited shelf life so there is a requirement for regular deliveries. Expect fresh/perishable to go first. Storage would be an issue”.

The caterers experienced seasonal surges but were not subjected to panic buying themselves. They did feel the effect of demand fluctuations affecting lines also stocked by the supermarkets, and experienced their own internal panics during contract changeovers. Logistics lead times was a key consideration for overall supply chain recovery times.

“Surges: No – we get the reverse – panic avoidance. Hugh Fernley Whittington does a programme on chickens and people stop eating chicken. You get shifts in behaviour according to media behaviour”.

“The very nature of catering and service is to deal with the unexpected – e.g. a banquet for 400 people, but a few others may turn up and need to be fed. We always do it. If it’s a good caterer the public don’t know it happened… If a supplier delivers short, the units find alternatives, change the menu or go to Sainsburys or supply from another site”.

“No. nothing special, we are in control of the menus…We would be for items that are sold in the supermarkets too, because they might be affected and the lead times increased, e.g. food for resale”.

“Not to same extent as retailers. Have 8-9 businesses in the UK. Prisons have very flat demand. Schools close in the summer. In total it is very flat. Overall it is slower in the summer because people are on holiday, more in winter because most people are at work”.

“Not really, but do have surges, e.g. water in summer. Usually forward buy to increase stockholdings. Have surges when the schools go back. If we win a contract for a LEA up to 500 schools are involved and have to mobilise all on one day without any history. Requires a lot of planning. Surges don’t hit product/stock availability,

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Contract Changeovers from a Unit Manager’s Perspective

The contracts providers changed from the old company - mostly British workers – who had had the contract since privatisation of the NAFFI. The new contractors employed a high number of East European workers – but they couldn’t read the packaging and pick lists, so were sending anything, e.g. any fish but not cod as specified. The contractors were losing money with returns and it resulted in very bad service here. Imagine that we could get the poorest quality meat. There was quality control here, but not at the supply end. This has improved, but nearly lost a good member of staff over it. The contractor wasn’t even delivering on time, lots of deliveries were coming in after staff hours and at weekends. They were more teething troubles. Contract changes should be smooth but they are not. Big contractors just see £ signs, but they are not looking at the operational details. If food delivery was late they would phone suppliers to say “where is it?” The Mess staff would be given inaccurate information on when deliveries left depot. Sometimes they had to change menus.

it’s logistics provision. This time of year [November] there is a surge on turkey for Christmas. We are also impacted by manufacturers’ promotions. If we change a supplier it makes the unit managers nervous, so they stockpile and then there is a ‘dip’. We tell them not to, but they do it. They are the guys who experience the problems!”

“Typically we recover very quickly, e.g. a major distributor had IT problems. It was consolidating the demand (for Just-in-Time products) to a lower number. It took a couple of days to recognise it. Physical recovery time was very short. Reputation takes longer…. Our business is big and complex, resolving problems in the supply chain is inevitable, despite this we enjoy service levels that are typically 99% or higher. There are long lead-time products, e.g. from the Far East, where it is more likely to be a case of invoking contingencies. There is a risk in the business – demand planning is based on historical data. It tends to be historical calculations, but there is not a real appreciation of the impact of longer lead times. When it goes wrong, it has the potential to go wrong big time”.

None of the caterers were planning any definite changes in their stock holding policies. Those that were a fresh food business would prefer to hold lower stocks but clients could be an obstacle to stock reduction measures.

“No plans to increase stock holding. Know it is possible issue. We are asking ourselves do we change stockholdings? Which lines in an emergency? For how long? Whether it is short-term or prolonged? Do we stock client specific? Don’t know how much warning we would have… this has been addressed by the Executive and they have decided not to stockpile. It increases costs and expenditure. No one in the chain at this time is looking to absorb these costs”.

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“No changes planned. Don’t hold excessive stocks. We are driven by our clients. Tend to hold little bit extra stock to give security to our clients because it drives our business”.

“None known and we want minimum stocks, but that means more deliveries. It’s a trade-off”.

There were no specific contingency plans in place for waste disposal, which was usually in the hands of the clients. Managers from two of the companies explained how it had become part of their organisation’s environmental agendas. For one involved in facilities management at a hospital, it involved track and trace capability for body parts.

“Waste disposal is a bigger issue. If not properly disposed of it would attract vermin. It is usually provided through clients, but we are piloting a new waste disposal system to produce electricity via a contractor and will recommend it to clients. Both of the company vans are being converted to run on recycled catering fat”.

“We have contracts, e.g. for the military generally speaking we are responsible for waste. We reduce refuse and recycle and follow that agenda. Have a series of programmes around that. If we are not reusing the materials we have various composting systems in place and we are doing the usual with glass, cardboard etc…Don’t have specific contingency for waste. In a true disaster we’d be met with the challenges you’d expect”.

“Waste disposal might be a problem to us if it is contaminated, there is a possibility of Government action because it is regulated. With the waste disposal we can trace a severed limb and get it back!”

“Waste disposal is not a huge issue. Hospitals guys are quite keen. Waste is often plugged into clients’ waste arrangements”.

The Food Processors and ImportersStock holding at the food suppliers were determined by the same three factors as elsewhere in the chain: the nature of the products – fresh, chilled or frozen – by the customers’ requirements and logistics lead time. The chilled food producers were running almost stockless supply chains with the exception of some imported fruit, but most stocks were likely to be on the water rather than in storage on land.

“There is often no stock for chilled, it’s not like frozen. Everything is about Just-in-Time. You focus on what you can deliver if something goes wrong”.

“This community has just one road in and one out. Even a road accident can cause a disruption…We are carrying one and half days’ raw materials and one day finished, plus some roll-over stock to get started next day. Have a skewed delivery – sell lots at weekends and little mid-week. Carry the stock to even out production capacity. Pre-use time is the day of harvest, from harvest to arrival has to be within 24 hours. Once packed it is up to 9 days but most is 6-7 days refrigerated…We buy larger quantities of packaging to get cheaper price. Typically one month’s packing – films/pre-printed bags - less for corrugated boxes. Can stock 6-8 weeks of a retailer’s packaging to

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optimise the price from the printer v risk of supermarkets changing their packaging requirement. The biggest risk to the business is the supermarkets going off you – we are all walking on egg shells”.

“We hold bananas – about one week stock. Melon and pineapple, 2 weeks. Bananas are ripened on a 5/6 day cycle then into the food chain. Prepared is converted within a very few days. Not a good idea to hold stock at sites – however can be a big problem if there are no ships coming in. Had to ship via the Channel Tunnel from the Low Countries in the past but ran out very quickly. The Continent would also hold very little stock, therefore they could be in the same position as us. Can ship by road for Europe if there isn’t an issue on the continent, but it is very expensive”.

The two companies involved in the production, trading and import of meat and preparation of ready meals were predominantly frozen foods businesses with around 3 weeks stock – more for the MoD. Transport considerations came into play again.

“Depends on the customer. MoD requires lots of stock, but some products are bought on the spot market”.

“General business holds 2-3 weeks mixed and frozen stock. Military in the UK (frozen and ambient) is a minimum of 9 weeks. For international military operations – we could switch vessel destinations. Could switch stock between Europe and the UK and different places”.

“Hold at least 2 weeks stock for inbound and have this week’s bought in products. They don’t get reprocessed. Fresh veg is daily delivery – but could cope by offering other products. If we couldn’t move out of here frozen could be produced and the freezer filled. For chilled it has to go out. How long we could maintain operations depends on the time of day as to how disrupted we would be. Worse time is 10 o’clock at night, so best case scenario is less than 36 hours. Worst case scenario is 12 hours max”.

“We work on 3 weeks frozen. Chilled is made to order. Stock of frozen varies depending on high usage – higher volume usage = lower stocks. It assumes that stock is easy to get hold of. Chilled runs our first, but can switch to frozen”.

“If we couldn’t transport in or out of the factory site, everything would stop at once. Chilled food shelf life is 5 days. Frozen is 18 months. Have 3 weeks frozen finished product. If we couldn’t get off the site chilled would stop at once. Frozen, we could top up the stocks. Have several access routes from the town – 2 roads north and south. There are lots of roads out of the town. If we couldn’t get out of the road here, it would be no good but if it was our other depot we could do back-to-back transfers”.

The matter of panic buying or surges yielded completely different responses from managers within the same businesses. On closer examination there was a logic to the contradictory responses. The same businesses experienced Christmas or promotional surges for private sector clients. The public sector clients surged only in response to war, major emergencies or contract changeovers. The fresh produce supplier also reported incidences of ‘panic avoidance’ too.

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“No, demand is flat as a pancake, except for School holidays, but Schools are only 20% of the business, it’s completely different to salad and ready meals.

“Not really. Selling to the Health Service is good because it is like a 365 day a year hotel, not seasonal like schools or day centres one day per week”.

“Yes, promotions for one wholesale customer especially before Christmas, they serve pubs. It knocked us off our feet last year. The increased demand wasn’t anticipated and we weren’t advised, and when it happened it was very frightening…er rather alarming! That was mixed with other factors – Christmas and staffing levels. It did take a couple of months to recover… It’s not emergency planning – just Christmas. Have plans for that and any specials, e.g. the Commonwealth Games and for London underground after the 7/7 bombings”.

“Previously worked at a cake factory, staff numbers doubled for Christmas”.

“Christmas! Otherwise not, we are too far from the retailer”.

“Yes, for military Ops. Most of the food service industry is managed surges – e.g. when the schools are back and at contract changes and handovers”.

“The product has a short shelf life and we don’t store much so we are relatively immune. We are more prone to panic-no- buying in this market! A chlorine scare or other food scare can mean demand drops by 30%. It comes back but takes 2-3 years”.

Recovery times would likely depended on whether the disruption was due to surge or loss of a facility. Only one example of a post-disruption recovery time was given – the loss of a warehouse supplying the MoD.

“When the warehouse burned down, had a phone call on the Saturday evening and activated individuals. Were given some access to the site to assess the damage. After 8 hrs we assumed all stock was a write-off. We were back up by the following Monday and were delivering. Sunday was a day’s grace. We are lucky that we have a network of businesses that support each other. …The military have priority for all group stock for war. Also have an agreement with us, the contractor and the MoD for a managed product range. 99% were complete by Monday after burn down. The plan has 3 layers: Steady state (full menu); Ops range (reduced range enabling variety) and emergency range (just about getting basic proteins, easy to use)”.

There were no elective stock holding policy changes planned amongst the food processors. Two had already implemented supply chain or product range rationalisations. One company was about to put in new warehouse management system, but that was all. Two were preparing for the effects of customer or market driven changes.

“No planned changes. We have done all the changes that are likely. Gone from an all leaf business and to half leaf and half fruit. May have to decide whether we go for ripening and that would mean containers for fruit if the business grows, but that is a business decision, not about contingency”.

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“None visible – not many options for storage and shelf life in produce and chilled foods”.

“For the MoD we have a rolling audit and will change inventory holdings if a reduction is needed. ‘Pay-as-you-dine’ is affecting demand for contractors and volume. Will allow inventory reduction for a while, then will be left with what will be lower volume. It will drop this year (2008) and then climb”.

“We have just rationalised the range to get efficiencies”.

“No planned changes to stock holding policies – unless it is for beef. If I can get hold of it I’d buy it. We are asking suppliers to hold stocks to avoid money tied up for us. Would talk through stockholding options with the finance director…The big impact will come when suppliers have to replenish their stocks”.

“Looking to introduce a warehouse management system to give us better utilisation of space, and allow us to produce more of the right products. Also looking at paperless picking – will improve inventory management accuracy”.

Only the managers from the ready meals factory site felt that their operation could be disrupted if waste disposal collections stopped. Beyond that every one was recycling more and more of their waste products. Two of the business considering recycling chip fat for bio-fuels, or methane fuel from organic waste.

“Waste disposal is not an issue. We don’t generate food waste. Packing operations are recycled – we’d have a problem if we lost the recycling plant”.

“No problems would be likely with waste disposal. It’s mostly waste water, which goes into reservoirs for recycling and leaf waste is composted…Cardboard is recycled. A very small amount of plastic goes into landfill, that could be stored short-term”.

“Waste disposal might be an interesting dilemma. Could hold it for 2-3 days on site, 4-8 days we would have to consider whether to have a big waste pile. Longer than 8 days we couldn’t”.

“Waste is compacted and emptied 2-3 times per week, so would depend on when the issue came to light”.

“Have one waste disposal contractor that does land fill and an effluent plant. Not recycling chip fat, but thinking about it because the price of rape seed oil had doubled over the last few years. Card is recycled. We are looking at cans here, it would be cost-neutral to send them off site (collected for free)…A previous employer’s site was vegetarian. The food was recycled for pigs”.

“Waste disposal is contracted and licensed/controlled. It is seen as hazardous so has to be managed in a certain way. If the contractor fell over we have to ship to landfill…We are already involved with Defra in composting”.

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Cash Flow at the Catering Company

Loss of IT infrastructure or even a long-term postal strike would jeopardise cash flow and quickly impact both client relations and supplier relations. If you can’t pay suppliers it’s a huge impact – relationships suffer quickly and it affects goodwill.

All orders are placed and invoices go direct to the contract sites. They are entered onto spread sheets at site and posted to Head Office where they are collated for supplier payment. There is a huge amount of money paid to suppliers weekly. Approximately £6 million per week is paid to suppliers, so if we don’t invoice clients the cash flow dries up quickly. We receive £1.5 to £2 million from clients daily. We have a £10 million (monthly) payroll and £15 million overdraft. Other contractors may be slightly more advanced on the IT payments, but we are putting in broadband to the sites at the moment. Have 30 day payment terms with clients and debts over 60 days are flagged to the International HQ. Debtor days are key performance indicators.

Clients are mostly big customers, but they don’t always come through on time. That is immediately escalated up the business hierarchy. Tends to be where there is an invoice in dispute which puts stops on the invoice.

Some contracts are profit and loss, some fixed management agreements where the client picks up all the cost and we just manage. Most clients are pushing for ‘nil subsidy contracts’, so we run like a high street business. That brings greater risk for this company.

The Cash Flow QuestionThe rest of this section has looked at the questions of stock levels, how long an organisation could maintain operation if movement stopped, and recovery times from disruptions. However the cash flow implications of a disruption to service could be considerable. Food service is a low margin business.

“Cash flow - if we aren’t banking we can’t pay costs. We try to operate with clients on a working capital neutral basis. We have suffered from profitability issues from 2001. Some of the smaller suppliers would go under if they were de-listed by us, but we operate in different sectors. We lose clients, but no single client would brake us”. Everyone always needs food. We wouldn’t just walk away from contracts without a fundamental breach. If it’s non-payment then we stop supply”.

“This joint venture doesn’t make a profit, just has costs paid. The subcontractors make the profit and give value for money. We ensure probity in buying and make money on logistics support, not the product. There are different contract terms for ops and for the UK/German bases”.

“The MoD always pays its contractors on time. Cash flow is an issue in the food service sector”. “Suppliers have supported us in the past, e.g. letting us have more time with cash problems”.

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Section 6. ConclusionsThis section examines the findings of this study and compares them against its aims, and offers some conclusions. This research aimed to build on work involving the grocery retail supply chains undertaken in 2005/2006 for Resilience in the Food Chain; some comparisons between that study and the findings from the food services companies here are therefore inevitable.

The Extent and Quality of Business Continuity in PlanningThe underlying approaches and priorities for BCM reflected the immediate concerns and business needs of the food service organisations. Some have long standing, elaborate, minutely documented and regularly updated plans, others are continuity planning novices. Only the smallest business had never before encountered the term business continuity management, but they were nevertheless applying a common sense approach to contingency planning. None of the companies put forward dedicated business continuity managers. Even so, general expectations of what is basic good practice had moved on in the last two years, and continuity management provision was on the whole fit for purpose. The important thing to understand is that for theses companies the purpose of producing BCPs is not to prevent national emergencies. It may not even be a simple desire to safeguard the organisation’s own food service operations in all manner of circumstances.

In the private sector, size, ownership structures, regulatory requirements, experience of disruptions, the nature of the customer base, location and position in the supply chain, all influenced the maturity and sophistication of business continuity planning in the food service sector.

Size, Complexity and Business Models

The first thing to take into account in assessing the quality and extent of BCM is the size and complexity of the businesses. The proprietors of the independent hotels and sandwich bar cared very much about their reputations and, importantly, their standing in their local communities. They complied with legislation and did whatever contingency planning they considered to be appropriate to protect their businesses and livelihoods. Beyond that they tended to use the goodwill between local traders, or turned to local business networks for mutual support. If compliance with formal accreditation schemes could help the prospects of their business or enhance their reputations, forward-looking entrepreneurs considered adopting them too.

The larger national and multi-national companies liked to be seen as ‘good corporate citizens’ but their trading activities and continuity planning was not rooted in the communities in the same way. For them, business continuity priorities were largely a function of business models and ownership structures. In contrast to Resilience in the Food Chain, the majority of organisations involved in this study were not stock exchange listed companies. Some were public service organisations. In the private sector all but four were under some form of private ownership.

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Their business models determined what was mission critical. Amongst the larger food service operators there are some similarities and some important differences. The biggest High Street food service operators and the grocery multiples share one thing in common – they are all essentially trading companies – but the business models are very different. The retailers trade through a permanent asset-base of stores and employees, which sell direct to the consumer. The branded restaurant and grab and go outlets also sell direct to the public. However, the companies behind some of the best known branded chains are first and foremost marketing and finance businesses. They are selling, supporting, and controlling franchises. The outlets themselves are run by entrepreneurs working under very strict franchiser-controlled governance structures.

Consequently, the retailers’ BCPs cover Head Office functions, supply (with their logistics providers) and contingency planning across the retail asset base. In contrast the franchised chains were more likely just to have BCM for Head Office functions, and to require approved service and key food suppliers to have contingencies in place to guarantee in-bound supply. The franchises were more inclined to leave other aspects of contingency planning at the outlets to their franchisees. However, there were also indications that franchisees who controlled multiple outlets would manage their own estates, or that entrepreneurs tended to self-organise into informal support networks.

The large contract catering companies are also business-to-business traders, operating business models which minimise the fixed asset-base and the permanent employee headcount. They operate outsourced catering services and are essentially people businesses, but it could be argued that their core competence is managing contracts. They hire or acquire catering staff to service specific contracts, manage the inbound flows of catering supplies and the outbound flows of money from the sites. Their clients own or run the sites where they operate, so they have tended to rely on the clients’ BCM. The big caterers had come to BCM for other aspects of their operations relatively recently, more recently than the large supermarkets and big name branded food manufacturers.

One contract catering group had a separate dedicated manufacturing business with its own transport capabilities. The factory site had its own BCPs. None of the other contract caterers were vertically integrated businesses. Some were involved in facilities management – including PFI contracts – though these tended to be separate subsidiary businesses.

The special contract and trading divisions of the food production and importing companies are also fixed asset-light in the UK, so their plans focused on the Head Office functions. The other wholesale distribution and food processing companies had BCPs, which dealt with operational concerns of the factory and distribution centres, as well as IT and payment systems. They owned or leased many of the assets on which their mission critical activities depend.

Regulatory Compliance as a Driver of BCM

Beyond the immediate requirements of their business models, the thresholds for BCM provision were determined first and foremost by the requirements for regulatory compliance. Amongst the food service operators, the two stock exchange quoted companies with internationally recognised brands had the most sophisticated and

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longest established BCM arrangements, covering sites, Head Office Activities, crisis management, food recall and more. For them business continuity was an integral part of corporate governance. Operational risk management demanded steps be taken and be seen to be taken to protect the wellbeing of their customers and employees, their brands and to avoid disruptions to operations. The biggest food retailer had in-store cafés in its department stores, as well as a growing grab and go business. It had very well developed and very sophisticated continuity planning, triggered initially by the threat of terrorism in earlier decades. Both of the big branded stock exchange listed companies took a very active interest in their suppliers’ operations and had asked/told key suppliers to make contingency plans.

The smaller or newer retail/restaurant chains were privately owned. They tended to have much smaller corporate management structures, and in the absence of stock exchange regulatory requirements tended to have more ad-hoc approaches to continuity management. These organisations were still vulnerable to reputational damage to the brand, and still subject to the strictures of the EU’s General Food Law, so had put in traceability, recall and crisis management procedures.

Two of the big catering companies were also stock exchange listed. They too were complying with corporate governance requirements, but their brands were not known to the general public, so were less vulnerable to brand-related damage. They had compliance-driven risk management and recall procedures. The other contract caterers were privately owned and had low brand recognition outside the confines of their industries and client bases. They had tended to have lower compliance thresholds, and therefore very little BCM provision over and above the basic IT disaster recovery, and compliance with food traceability and Health & Safety requirements (though even these could sometimes be shaky).

The public sector organisations were compelled to make business continuity plans under the Civil Contingencies Act. Their plans are also focused on maintaining mission critical activities, i.e. core public service and emergency planning responsibilities. But their core activities were education, health or defence etc, not food service provision. Food service provision is a support function, so tended to be given relatively little attention in BCPs. It could slip further over the horizon when it was outsourced to private contractors. Cost sector catering is very low margin, so the caterers tend to optimise catering operations to serve normal everyday ‘business as usual’ conditions, with bought-in sandwiches as the default contingency. This means that even if catering is not in the private sector, the back-up emergency provision almost certainly is. It may be contractually twice removed from the public service organisations and the obligations of the Civil Contingencies Act. That emergency provision should be able to surge to meet any failure in the public service organisations’ everyday catering operations, and the additional burden placed on it as its emergency planning operations swing into action. The ability of the sandwich markers and other food production companies to surge is labour dependent. For localised emergencies, such as the 2005 London bombings, a food suppliers’ factory worked all night, but for the really big emergencies the ultimate default became the large supermarket chains. One conclusion of this report is, therefore, that in a widespread national emergency the national retail grocery chains and retail wholesalers are likely to be the contingency of last resort for the food service operations.

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Customer Pressure

The whole BCM situation had recently changed for all the contract caterers and their facilities management businesses. These changes have been driven by their clients’ increased awareness of Avian Influenza (AI) and the need for pandemic planning. In the cost sector Government was driving change. In the profit sector it was the City and Blue Chip corporations that were asking awkward questions.

The facilities management companies and contractors employed by central Government agencies – particularly those involved in PFI contracts for vulnerable populations or in support of military operations – were under pressure to demonstrate comprehensive BCM provision as a contract qualifier. For organisations that had already developed these capabilities, BCM was a potential differentiator in consortium bidding situations. Closer examination tended to reveal, amongst other things, informal mutual support agreements amongst contract consortium members, but also between hospitals, prisons, and even Allied Forces in military campaigns.

Public sector contract requirements and the pressure from the financial services community have had a dual impact, which has been very effective in propagating BCM through the supply chains, with wholesale distributors and food processors reporting customers, consultants, or insurers asking questions about BCM in general, and AI or pandemic planning in particular.

Actual Disruptions, Near Misses and Known Weaknesses in BCMMinor disruptions are a regular occurrence for food services businesses, but it is well known that many small businesses fail in the two years after the loss of single site premises through fire or flood. It is therefore worth bearing in mind that the small businesses involved in this study have never had to deal with a massive disruption to their activities.

Localised disruptions

Most of the managers who participated in this research worked for companies that operated multiple sites. The bigger businesses had experienced and survived fires and floods affecting kitchens, stores, factories and distribution centres.

The distribution centres were most often regarded as the critical and most vulnerable nodes in the logistics networks, but managers explained how their companies quickly overcame the loss of a DC after fires or floods with the help of their logistics service providers. Switching activities to other locations at short notice is the mainstay of logistics contingency planning, and the examples given provided proof of the resilience of the larger companies’ distribution networks to single site disruptions. Nevertheless, the fact that three out of four of the retail/grab and go chains were affected by the Buncefield fire does underline a vulnerability first identified in Resilience in the Food Chain - the clustering of distribution centres. In each case the managers praised the efforts of their staff and/or logistics contractors, who had activated plans to overcome the loss of the affected DCs with little or no disruption to their customers’ operations.

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Interestingly, managers who ran small businesses, worked for public service organisations, contract caterers, or fast food chains all thought that this willingness to ‘do whatever it takes’ was a reflection of the unique qualities of their own organisation. Crises can bring out the best in people, but there were examples of things that could have been done differently to make life easier in a crisis, or that could and should be considered for the future.

These included the old problems of lap-tops intended to facilitate home working being left behind in burned or flooded offices. There were assumptions too, that in widespread power outages offices without UPS could revert to fax or telephone if IT systems failed. Most of the people who suggested this overlooked the fact that fax and office telephone systems are usually dependent of the lost electricity supply. Others suggested that in a widespread power failure Head Office functions could be managed by staff working from home, implicitly assuming that the power failure was localised not widespread. The same compartmentalised logic was reflected in the suggestion that on-site caterers could simply use gas to cook if the electricity supplies failed. This was only an option were there were no fail safe mechanisms installed to switched off the gas supplies when electricity was lost.

The British Standard for BCM, BS25999 is not widely used in the food service sector and it is not appropriate for all businesses, but it does provide a framework for those who want to think through BCM arrangements in more detail.

Sudden On-set Emergencies and Systemic Disruptions

The flooding of 2007 is just the sort of emergency that the Civil Contingencies Act was intended to overcome. The examples given here illustrated that maintaining food service to vulnerable populations in an emergency is more complicated than making sure that normal food services are relocated. The needs of the population were quite different. The flooding did show how the private sector retail and food suppliers – with and without Government coordination – stepped in to support the utilities and the affected communities.

The mobilisation of the same level of support across a whole community in a more widespread or prolonged crisis might not be so easy to achieve, though the managers welcomed dialogue with Government on the matter and felt there should be more. People are keen to ‘do the right thing’, but some serving the cost sector felt that more direction was needed from Government about what would be expected from them. Some of the smaller businesses’ managers also wanted to know what they could do to help, and whether their resources could be better utilised to support the authorities and their local communities in an emergency.

The responses to scenarios involving widespread infrastructure failures underlined the limitations of continuity planning. The fundamental problem here is that BCM is exactly what it says. It is continuity management for a business. It is not continuity management for failures beyond the organisation. In a widespread failure of the National Grid, for example, the contracted out caterers would look to their clients for a solution. The chilled food supply would stop immediately, hitting the more up-market food service outlets first and hardest, with a knock on effect through the distribution centres and the whole chill chain. Importantly, at least one of the wholesale distributors reported that it would render their fuel pumps inoperable.

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There was a firm belief amongst some of the managers from larger retailers, branded restaurant chains, and contract catering companies, that contingency planning for a fuel shortage was unnecessary because suppliers and ultimately Government would guarantee fuel for their supply chains. It was a view shared by managers from at least one of the wholesale distribution companies. The organisations that were holding higher fuel stocks were not the food service operators, but organisations higher up the supply chains. They were doing so for other business reasons, not as contingency planning. Maintaining the priority user scheme for fuel is therefore critical to the food service industry.

In some cases there was an expectation that even if the suppliers kept running, catering staff would have problems getting into work. However this was not the case where industry and public services were embedded in the communities, because staff often walked to work.

Pandemic PlanningThe spectre of a pandemic was unquestionably forcing food service operators to engage with customers on the issue of BCM. The near universal awareness that a pandemic is potentially the greatest single threat to the food industry supply chains, is one of the most noticeable differences to the attitudes expressed two years ago in Resilience in the Food Chain. Range reductions are being planned and in a few instances, there is some succession planning. However, there are a number of potential weaknesses that have emerged explicitly or implicitly during the course of this study.

First is the problem that whilst all of the larger businesses were aware of H5N1 and the possibility of it mutating into a human pandemic, everyone is reassuring their customers that they are monitoring the situation and some are making definite plans – but most are really not sure what they will do. They appear to be hoping that they can side step the problem through existing ‘switching’ or displacement planning. Failing that, the hope is that market-based contingencies will see them through. Again the big food service operators are looking to Government for clearer instructions, though more recently there have been suggestions that plans include a firm prioritisation of Government business. The legal questions over force majeure clauses and human resource issues appear to remain.

The reliance on labour market-based staffing contingencies is of course itself the biggest potential weakness for ‘people businesses’ in a pandemic. There are clearly limiting factors. The food industry is already suffering from labour shortages, both skilled and unskilled. Whilst demand for food services may drop as predicted, crops will still have to be harvested and food will still have to be processed and transported. Food safety regulations will have to be upheld and the likelihood is that the Polish workers will still be going home. Moreover, when it comes to finding workers for secure environments and vulnerable populations, CRB and security checks will still slow the process down.

During a pandemic demand for profit sector catering is expected to decrease, while demand in sections of the low margin cost sector is expected to remain constant or

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increase. In the profit sector, support and administrative roles would still be required to maintain the businesses. The low-head count corporate structures of the trading companies behind some of the biggest food service operations appeared to be particularly vulnerable to a pandemic. They had more mission critical responsibilities concentrated in fewer hands, and were less likely then the big quoted businesses to have succession planning in place. However, they could transfer oversight of the UK business and some Head Office functions between overseas offices, providing some element of contingency for the loss of top management teams.

More worrying was the question of the surge administrative capacity of some of the critical public service organisations. If these organisations would struggle to find the resources to make up a backlog of work after an IT failure, it must raise serious questions about their ability to maintain everyday administration functions (including payment of suppliers) on reduced staff, let alone the additional administrative load of managing in a pandemic. On an operational level, the reliance on additional labour to cope with surges in demand for hospital catering services and meals on wheels was another area where contingencies needed to be thought through, if the authorities have not already done so.

Exercises for the Health Services and their supply chains have clearly been valuable to those who took part, in that they have highlighted flaws in organisations’ planning assumptions. Other critical sectors have had no such organised direction. Managers in the off-shore and distribution industries expressed a need for industry wide planning and exercises. If resources were available, these could be arranged under the auspice of an industry association, or for the off-shore sector by the regional emergency planners.

Minimising risk A consideration of generic options for improvement, that could be used to minimise unacceptable levels of risk, should raise the question ‘What kind of risk?’. Risk in supply chains tends to be a trade off between a number of competing demands, and can be viewed differently depending on the unit of analysis.

The avoidance of a significant disruption to the food service sector brings the discussion back to the structure of the industry as a whole. At the industry level, the operations end of the food service sector is inherently resilient. On the business-to-consumer side of the profit sector, the mix of thousands of small businesses and a number of big global chains provide diversity, flexibility and resilience.

At the individual business level, the high street chains are either mature retail businesses or tightly coupled supply chain networks supporting franchised chains. The outsourced business models of the branded franchises are designed to leverage the brand, reduce costs and maximising sales from a ‘low-risk’ minimised fixed asset base. If the franchises or any of the other small food service businesses fail (as they often do), others spring up in their place. Food service is an industry where the barriers to entry are low.

The highly competitive contact catering businesses are also designed to be flexible and responsive enough to exploit new opportunities and accommodate fluctuations in demand. The contracting business model is again specifically designed to minimise

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financial risk for the operating companies. In the business climate of the last 20 years organisations of this kind have benefitted from downward pressure on food prices. In some cases they have assumed more of the financial risk, as their clients have moved away from subsidised feeding arrangements.

Contractors fail when they are trapped in loss-making contracts or experience cash flow problems. The smaller contracting business are likely to be dependent on a few contracts, if one of those turns sour it may render the company insolvent. The larger contractors are more likely to walk away from loss making contracts (as was seen two or three years ago with school meals). The impact on clients is immediate. Under normal circumstances another contractor (and their logistics supplier) quickly steps in to pick up the contract, though the findings of this study showed that the new contractor’s logistics operation may initially struggle to absorb additional volumes.

Any major disruption to payment or delivery systems could in theory jeopardise the contract caterers. The flu pandemic is potentially a worst case scenario. Their profit sector business would decline while demand from their low margin public sector customers would likely increase. It would increase most at the locations where the supply of extra staff is likely to be most problematic. It is also likely that the delivery of food stuffs would be affected and possibly even the collection of cash, making it very difficult to maintain service delivery on contracts and cash flow. The contracts themselves can have punitive penalty clauses built in if sales levels fall below agreed thresholds.

Working through the full implications of likely cash flow, payment and other contractual arrangements, is therefore something that clients and their contractors may be well advised to do. Alternatively, other contingencies may be required for vulnerable groups, particularly at times when food prices are rising and banks may be less willing to extend credit terms. The large food service companies, that have not already agreed contingency menus and emergency protocols, may wish to consider doing so.

The problem of loss-making supply contracts extends across the food service industry supply base, but the sudden failure of one of the two big wholesale distributors would be most likely to seriously disrupt the UK food service industry as a whole.

Global v Local and the Transport Questions The final question addressed here is the extent to which the food service sector supply chains are becoming increasingly international, and whether over-reliance on food imports could make the sector susceptible to disruption if transport/logistics and other dependencies were to be disrupted.

This research confirmed the truly global nature of the food service sector supply chains. Global supply chains enable the upmarket contract caterers and purveyors of chilled grab and go food to offer interesting and exotic ranges. Cut tropical fruits – a growing sector in the prepared food industry – are obviously from overseas. For the profit and cost sector the supply chains bring in copious quantities of imported beef, poultry, and many other commodity foodstuffs. These volumes could not be supplied (particularly at short notice) from existing UK sources. For the whole food industry, the ability to source foodstuffs from around the world is the principal contingency

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used to overcome supply chains disruptions associated with livestock diseases and localised crop failures.

The UK is a net food importer, disruptions to international transport (including shipping, ports, airlines and the Channel Tunnel) would certainly affect inbound supplies. Even without disruptions to the transport system, the food service managers reported shortages of many commodity foodstuffs in 2007/8. Disruptions to transport would affect imports of soft leaf and other produce immediately, and fresh fruit within a week to ten days. Most imported meat arrives frozen. Buffer stocks of frozen foods tend to be higher, with wholesalers and processors holding around three weeks of stock for finished products at normal consumption rates. At the food service outlets, stock holdings are usually less than 2 days, though some operators (for the public sector) thought they could hold out for 4-5 days. Stocks for prisons, off-shore and deployed military operations are usually significantly higher. Some managers speculated that frozen stocks could be increased with notice, but that cold storage capacity was limited, and rising energy prices affected the viability of the cold storage industry.

The smaller organisations using local-for-local suppliers would in theory be better placed for meat, dairy and vegetables then their larger rivals. At least two of the managers from different facilities management companies (both responsible for vulnerable populations in closed environments) were resisting the pressure from their parent companies to abandon supply agreements with locally-based businesses. They were willing to use the Groups’ centralised purchasing and distribution system as a contingency, but believed that in a crisis they would be better served by locally-based suppliers with whom they had long established working relationships.

However, if international trade was disrupted, even customers who rely on local-for-local sourcing as the mainstay of their supply arrangements could expect prices to rise sharply as others attempted to fall back on the local supply networks. Even the largest operators buy a proportion of their total requirements from local supplier networks – usually at customers’ requests. Those companies would almost certainly attempt to leverage greater volumes from that part of their supply base.

There would of course still be the issue of imported packaging materials and ambient foodstuffs, such as coffee, sugar and rice. For these products, caterers’ suppliers are in competition with the buying power of the big supermarket chains. In practice, many outlets’ managers would fall back on the supermarkets and cash and carries if and when their own stocks started to run low.

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Appendix A.

Business Continuity Management in the Food Service Sector - Interview SchedulePart 1. Interviewee Profile & Business Continuity Management within the Organisation1. In your present role are you involved in Business Continuity Planning (BCP)/Business Continuity Management (BCM).

2. Drivers – if the organisation is doing BCM, what are the drivers and has the rationale/remit changed?

How long has the organisation been actively engaged in BCM?

Is the planning around in-house vital operating assets? or about maintaining ‘mission critical activities’?

How often does it update B/C plans/procedures?

Are they tested?

3. To what extent are specialists (other than Business Continuity Managers) formally involved in matters of BCP/BCM?

E.g. supply chain - purchasing, logistics, operations, customer service - or quality and security specialists.

4. What BCM/risk management processes/approaches/tools are in use to identify and assess hazards/threats/risks?

Part 2. Disruptions, Near Misses and Known Weaknesses5. What do you think could seriously derail the food supply/delivery systems to your organisation and/or derail your own business unit’s general operations with a knock on effect to the provision of foods?

Actual disruptions?

Near misses?

Known weaknesses?

Does the organisation record incidents and near misses or formally capture and disseminate ‘lessons learned?’

7. Are you aware of other specific events or circumstances that the organisation is aware of and does plan and make provision for? – if so what?

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8. What are the limitations of BCP/M (inadvertent/ policy) – any specific situations that the organisation recognises but chooses not to make provision for?

Part 3. Widespread Systemic Disruptions 9. What would company policy be if an outbreak of a potentially life threatening contagious disease human (e.g. SARS or Pandemic Flu) or animal (e.g. Avian Influenza or Foot and Mouth) was identified at a location close to a company site, or one where employees would normally travel in the course of their everyday duties?

10. What would the organisation’s position be in the event of a wide-spread power outage?

11. If necessary could the business revert to and run on paper-based systems?

12. What would the company do in the event of a fuel shortage (petrol/diesel)?

Part 4. Stock Holdings and Inventory Management 13. How long could the organisation maintain its food service operations if movement of goods between sites was stopped or seriously impaired?

Stock holdings of essential items for essential core activities/operations?

Inventory holding/stock levels/of food and drink at service sites or distribution centres?

Shelf life of stocks?

What would run out first?

Would storage of goods or waste disposal problems halt/disrupt operations?

14. Are there changes planned within the organisation that are likely to affect levels of inventory holdings/policies?

15. Does the company have experience of surges in demand for food stuffs/panic buying patterns?

16. What would the post-disruption recovery time/replenishment lead-time be?

Under normal circumstances and after demand surge/panic buying?

Part 5. Beyond your organisation?17. Does the organisation require suppliers (some or all) to engage in business continuity management or planning for supply chain disruptions?

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Does the company require evidence of continuity provision/planning by suppliers?

Does the company attempt to secure priority contracts/priority customer status from its suppliers?

18. Would the loss of any class of supplier(s) or the failure of their operations halt yours? If so which ones?

19. Would the organisation be in a position to provide support to one (or more) major suppliers or customers if they experienced a serious operational failure/disruption – have you done so in the past? Could you again?

20. Does the organisation have any direct links with local/national emergency planners or other relevant agencies?

Part 6. Other21. Is there anything else that you feel is important that has not been covered in this interview?

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Appendix B.

Review of Literature & Other Research The research is to undertake a selective review of the relevant literature and related research programmes, building on that carried out for Resilience in the Food Chain.

This selective review of literature and research picks out overlapping themes of food supply chain security – sustainability, food safety and contamination with malicious intent – and summarises a number of illustrative documents and themed research programmes. Whilst it builds on the review presented in Resilience in the Food Chain, this research has purposefully avoided revisiting many of the key sources outlined therein. Instead it expands the scope of the earlier review, drawing on on-line data sources, as well as searching for other new research programmes in related fields of Food Supply Chain Security.

The term ‘food security’ is used in the English speaking academic and practitioner literature in at least two quite different ways. The first is from a global and increasingly geopolitical perspective. The second is at the micro level, where the concerns focus around the treat of malicious contamination. As such it links more closely with notions of risk in food industry, where safety is a perennial preoccupation and contamination of any kind is an ever present hazard and an immediate concern.

In between these two security extremes sits the everyday realities of getting the food ‘from field to fork’, or ‘plough to plate’. Farm shops are a growing phenomenon in the UK, and vegetable plots are certainly enjoying a comeback in the gardens of Great Britain. Nevertheless the majority of the food consumed by the population still passes through long and complex supply chains, involving many people, in many organisations, in many countries. It is ensuring the resilience of these supply chains, particularly those supporting the food service sector that is the focus of this report.

In line with the system-based approach to be used in this study, the term supply chain is used to refer to “the network of organisations that are involved, through upstream and downstream relationships, in the different processes and activities that produce value in the form of products and services in the hands of the ultimate customer” (Christopher, 2005). Resilience is the preferred term used to describe the positioning of this study. It is used here, and in previously completed studies by Cranfield University, in accordance with its common English usage, the “ability of a system to return to is original [or desired] state after being disturbed” (Collins English Dictionary, 2000).

Sustainability and Food Security contextFor the most part ‘food security’ is about achieving and maintaining reliable, sustainable supplies of food to national or global populations. In this context it has been linked to humanitarian concerns in less developed countries or conflict zones (e.g. Ashley and Jayousi, 2006), and/or global markets and national contingency planning policy (e.g. Bruins and Bu, 2006); or climate change. Here in the UK, and in the US, there are concerns that over-reliance on food imports could make national

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food supplies vulnerable to disruption of transport and other logistics dependencies. Such disruptions would affect grocery retail and food service provision in the UK, the supply chains of which are increasingly international (Defra, 2006a; NFU, 2007a; Walker, 2007)

In more recent times, the link drawn between climate change and direct threats to national security has become increasingly overt. The issue of climate change is now recognised as a potential threat to global food supplies, and as likely a trigger for conflicts over water rights and mass migration (RUSI 2008). Even senior figures from the US military and the United States intelligence agencies have become convinced of the connection between climate change and instability, or climate change and terrorism (CNA 2007). Global warming would provide some economic benefits to the US through increased domestic crop yields, but its Intelligence Agencies warn that key infrastructure installations would be at increased risk, and the geopolitical implications for international trade and market access - together with increased risk of political instability in less developed states - could more than negate the short-term wins for US agriculture (GCC NIA, June 2008).

Moreover the exceptional weather events in the Gulf of Mexico during the summer of 2005, including the devastating Hurricane Katrina, have illustrated that even the wealthiest country in the world can be temporarily overwhelmed.

The term ‘food security’ has also used in relation to food safety, in the US this has been with an emphasis on malicious contamination, though the term ‘food defence’ is gradually supplanting it in both the US and UK. The recently introduced Publicly Available Specification 96 , (PAS 96) providing guidance on deterrence, detection and defeat of malicious attacks on the food and drinks industry and its supply chains adopts the food defence terminology.

Nevertheless, both uses of the term food security (i.e. sustainability and defence) are reflected in Government policies here and overseas. These policies in turn shape academic research agendas and often provide the backdrop for articles published in practitioner magazines. Academic research is largely shaped by funding opportunities, whereas practitioner publications (usually by consultants) tend to follows regulatory themes.

Sustainability and UK Policy PerspectivesThis section of the review provides a summary of recent background policy debates within UK Government, notably within Defra. The positioning of these documents gives an indication of the wider context for this research project and a number or others discussed later in this paper.

Food Security and the UK: An Evidence and Analysis Paper

This paper (Defra, 2006b) considers food security in the light of economic policy and an increasingly global free trade environment. The paper accepts that the language of ‘security’ presents a barrier to understanding. It provides an array of definitions reflecting themes of food availability, consumer access to affordable, nutritious and safe food, the resilience of the system to significant disruptions and public confidence in the food systems.

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Food Security and the UK was responding to a debate surrounding a noticeable decline in the UK self-sufficiency ratio of domestic production to consumption in recent years. The decline reflects the waning of World War-induced concerns about self sufficiency, prevalent in the mid 20th century, in favour of the economic benefits of globalisation. Expectations that agriculture in the UK and Europe could decline in response to reform of the Common Agricultural Policy (CAP) and further liberalisation of world trade in agricultural produce have fuelled the discussion. The reduction in self-sufficiency is coupled with rising concerns over the impact of climate change and uncertainties over energy supply and geopolitical tensions (including international terrorism).

The paper itself takes an unapologetically free market stance throughout. It states that many of the risks associated with food supply can be dealt with by markets. Furthermore, that market based solutions may be enhanced by the removal of any “disproportionate barriers that prevent markets from supplying the resources and infrastructure to make food supply robust”. It accepts that cost-benefits and diminishing returns have to be recognised, but states that:

“Food security is essentially about identifying, assessing and managing risks associated with food supply. A completely risk-free supply chain is an unrealistic objective”.

Importantly for this study it also recognises that:

“Systemic risks to food supply may not be adequately managed by markets, either for domestic or overseas produce; these need to be correctly identified and appropriately targeted”.

It concludes that current UK levels of self-sufficiency are actually “pretty normal by historical standards”. The paper argues that were food self-sufficiency ever to fall radically (in nutritional not economic value terms), then it would not be a question of including fixed minimum targets for self-sufficiency. Instead the authors advocate asking questions such as:

What risks are not being factored in by commercial operators?

How reliable are our main supplies?

How secure are out ports and shipping routes?

How robust is the self-sufficiency of the wider EU?

Food Security and the UK echoes the findings of Resilience in the Food Chain (Peck, 2006), when it observes that the UK’s retailer-driven food supply chains have generally succeeded in delivering what some would consider to be the objective of food security i.e. “physical and economic access to sufficient, safe and nutritious food”. Nevertheless it accepts that these same supply systems have their vulnerabilities and that there may be a degree of trade-off between resilience and efficiency. Business continuity management is as an increasingly important commercial issue, but that there is scope for improvement is also noted. Likewise, the need for Government to work closely with industry on contingency planning, not least

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to overcome any infrastructure, information and co-ordination failures is recognised. Finally, the issue of food security’s dependency on energy supplies is also stressed, with some common themes identified between food and energy security. Food Security and the UK acknowledges the links between the wider range of sustainability policy issues - such as environmental protection, local food, health and nutrition objectives - but suggests that the linkages are “weak” and should be addressed separately.

However the over-arching conclusion of this paper is that a discourse on food security centred around the UK self-sufficiency ratio is misplaced, and that the ratio should be seen as an indicator of competitiveness, rather than vulnerability. From a policy development perspective, the paper’s authors stress that food security cannot be a single policy issue, but should build on ‘cross-cutting’ policies, including:

“Promoting the development of business and contingency planning, together with relevant industry players; improving coordination and information flows across industry; contingency governance arrangements; and early warnings preparedness for the private sector”.

Promoting Sustainability within the UK

Public Sector Food Procurement Initiative (PSFI)

The PSFPI is a UK Government initiative launched by Food Minister, Lord Whitty, in August 2003. Co-ordinated by Defra, its purpose is to promote and support the Sustainable Farming and Food Strategy (SFFS) and Food Industry Sustainability Strategy (FISS). Launched in December 2002, the SFFS set out how Government, industry and consumers could work together to secure a sustainable future for England’s farming and food industries. The initiative highlighted the fact that primary producers needed to offer scale and continuity of supply to their customers, gain efficiencies through economies of scale and become more business-like if they were to remain competitive. The SFFS linked into a raft of other Defra-supported food chain initiatives including the English Farming and Food Partnerships, the Food Chain Centre, Food for Britain and the FISS. The FISS (Defra, 2006a) was devised to help the food industry contribute to the country’s sustainability goals. It encourages all sectors of the food chain, including food service, to adopt best practice to improve their environmental sustainability. Whilst principally aimed at the food industry, the strategy has relevance to others with related interests including: reduction of energy consumption, food transport, water usage, waste management, corporate social responsibility, ethical trading and regulation.

The PSFPI’s top five priorities were to:

Raise production and process standards.

Increase tenders from small and local producers.

Increase consumption of healthy and nutritious food.

Reduce adverse environmental impacts of production and supply.

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Increase the capacity of small and local suppliers to meet demand.

Importantly for this study, the PSFPI also encouraged public sector bodies in England to facilitate an increase in:

Seasonal food consumption.

The proportion of Organic and Fair Trade produce in caterers’ offers to customers.

Sustainable farming methods and promotion of farm assurance schemes.

Regional or local-for-local supply chains (reducing food miles).

Input from the food industry came from ‘Plough to Plate’ a cross-industry group, formed in January 2006, whose initial report was published in June the following year (Business in the Community, 2007).

In line with the concerns of SFFS, PSFPI recognised that small producers and suppliers must be able to overcome the problems associated with capacity to navigate their way through public sector contact tendering processes. Implicitly it aimed to assist them by reversing trends towards consolidation in purchasing and supply. From the public sector purchaser’s perspective this involves sacrificing some of the transaction cost advantages they might hope to gain through the economies of scale associated with central purchasing. Encouraged behaviours included:

Collaboration amongst small suppliers to enable them to respond to surges in demand.

More effective promotion of contracts to all suppliers.

Specification of fresh and seasonal produce.

Breaking down contracts especially where purchasing is decentralised.

Consideration of measure such as healthier eating, food hygiene, culturally diverse diets, waste minimisation, reduced deliveries, environmental issues and staff welfare and training.

At the same time large suppliers are required to resist the temptation to squeeze smaller suppliers or opt for the delivery of a vertically integrated solution. To this end the PSFI explicitly encouraged first tier suppliers to:

Treat suppliers in a fair trade and ethical manner.

Include smaller suppliers as second and third tier suppliers.

The PSFPI could therefore be construed as being concerned with the wellbeing of English farming communities and agriculture as an industry (BBC, 2003) and be seen as a link to the wider debate surrounding sustainability and security of supply. However for the purpose of this study it is worth noting that only a small proportion of the food supplied to public sector institutions originates in the UK (NFU, 2006a),

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and that some authoritative sources calculate that the public sector accounts for only 7% of the UK catering market by value (Rimmington, Carlton-Smith and Hawkins, 2006).

Moreover, organisations must still operate within public sector procurement guidelines, and continue to comply with EU procurement requirements and the UK legal requirements that enforce them. Public sector procurement guidelines uphold the principle that purchases must represent best value for money. Best value is not necessarily lowest price, but should be the optimum combination taking into consideration, quality and all costs including running and disposal. EU procurement directives are designed to encourage competition and free trade amongst member states, by ensuring that public sector procurement is fair and transparent. Thus local-for-local supply chains cannot be supported at the expense of free trade or competitive free market principles.

Defra completed an evaluation of the PSFPI in March 2008. The evaluation led to a number of recommendations on how delivery of the PSFPI could be improved and is currently working on taking these recommendations forward. These can be summarised under the following headings:

Agreed the need for Government intervention Simplify objectives and align with current Government food policy objectives Offer clear leadership Measure performance Provide support and training Review procurement and distribution infrastructure.

Research into Food Security and Defence in the UK

Research into BCM in the food sector supply chains

Leaving aside the vast amount of agriculture and environmentally friendly transport-related research currently underway in the UK, relevant research into food supply chain security with a BCM bias can be hard to find. This is particularly so when it comes to publications with an emphasis on organisational and/or supply chain resilience. Research into BCM in the food service sector is particularly thin. The under-resourcing of business continuity in retail, food and beverage organisations was a problem flagged up by an earlier study of 1000 risk managers in the food industry (Moor, 2005), and by Resilience in the Food Chain (Peck, 2006). However, this latest review revealed a recently published study on crisis readiness perceptions of hotel managers in the UK (Rousaki and Alcott, 2006). The study involved a survey (questionnaire) sent to hospitality managers in the UK, asking them about their firms’ perception of readiness for crises. A total of 93 responses were returned, the overall consensus was that they believed that there was a moderate likelihood of their organisations experiencing a crises but that their organisations were prepared. Prior experience of a crisis was associated with perceived readiness to deal with others.

The remaining UK-based research featured in this report reflects many of the sustainability themes previously mentioned in Defra’s own policy documents, and in-

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house papers relating to matters of food security, albeit with slight differences in emphasis.

Oxford Brookes University: Sustainable Food Procurement for Contract Caterers

This small-scale study was conducted by researchers at the Centre for Environmental Studies, in the Department for Hospitality, Leisure and Tourism Management at Oxford Brookes University. Sponsored by the Esmée Fairbairn Foundation, its aim was to support the UK PSFPI, by working with leading contract caterers to develop principles of sustainable food procurement and key performance indicators to measure progress in putting the principles into practice. The research began in 2004, when it brought together five major catering businesses, who in turn confirmed the need for research and explored how that might be taken forward. The research then drew on secondary sources to develop nine draft principles of sustainable food procurement. These were reviewed and refined by the companies. An expert panel was convened to reach a consensus and produce a final draft document. Only five of the original nine principles were adopted, four relating to the requirements for energy efficient transport, approved livestock production systems, minimising the use of additives, and internationally agreed ethical labour policies, fell by the wayside. Nevertheless, the research provides operating principles to inform procurement practice. Details of the research have been published in the academic literature (Rimmington, Carlton Smith and Hawkins, 2006) where the corporate social responsibility dimension has been emphasised. The researchers have also produced a user’s guide Sustainable Food Procurement for Contract Caterers (Oxford Brookes University, 2005) to assist implementation and monitoring of progress. Members of the same research team have contributed to work on a similar theme for the National Audit Office (NAO, 2005).

Chatham House: UK Food Supply in the 21st Century: The New Dynamic

Taking the long-term geopolitical perspective, a research project at Chatham House has been established to look into the sustainability of the UK’s food supplies. The study’s first briefing paper, published in January 2007, sets out it scope and objectives (Chatham House, 2007). The project draws together expertise in process engineering, logistics systems, operations management, food process innovation, food policy and international relations, from the Cardiff Business School, City University and Chatham House. The project focuses on the supply of two staple foodstuffs: milk and wheat, to the UK. The research looks forward to the year 2020, by developing and testing a range of scenarios. In the course of that work it aims to:

Identify the UK’s future sources of food.

Assess the geopolitical implications of change.

Consider the effects on home markets including domestic producers.

Chart the balance required between sustainable supply and the consumer requirement.

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Embracing themes such as the impact of: climate change (Stern Review, 2006); ‘Food Miles’ and the UK’s Carbon footprint (Herbert and Brown, 2006); the emerging economic powers - India and China - on markets and world trade (BBC News, 2007); future development of the CAP and Common Fisheries Policy; and a re-emergence of the national debate on land usage (Baker Review, 2006), the project team has worked for over a year on the development of four scenarios for further exploration. Three interim briefing papers have been released in the first half of 2008, charting progress to date. The first, UK Food Supply: Storm Clouds on the Horizon (Chatham House, 2008a) outlines the initial stage of the research based on questionnaires and interviews with approximately 20 senior managers. The researchers reported a consensus that recent rises in global prices for food commodities was not a short term blip, but indicative of “a different supply dynamic in prospect” (p.11). A rising global population, combined with rising food production, and rising wealth in rapidly developing parts has resulted in the first real increase in food prices after 30 years of downward pressure. The growing affluence in India and China is increasing demand for meat and dairy produce and the knock-on effect on cereals for animal feed. Meanwhile, with ‘peak oil’ possibly just around the corner, the rush for bio-fuel has resulted in a switch in land use from food production to bio-ethanol production. This comes at a time when prolonged drought in Australia has resulted in successive harvest failures; strategic stockpiles had been reduced to save costs and improve supply chain efficiency; transport prices are rising, as is interest in agricultural commodity markets.

An exploration of the dramatic reversal in commodity market prices (food and oil), is the core theme of a 2nd briefing paper released by the Chatham House Food Supply Project in April 2008. It examines in more detail the reasons behind an increase in world food commodity prices of 83% in less than 3 years. It reminds the reader, amongst other things, of the knock-on effect of rising energy prices on agricultural inputs and the fact that the global food system as we know it today is predicated on the availability of cheap, readily available energy. The price of energy – at its highest ever recorded levels impacts every step of the value chain from cultivation, through processing, refrigeration, shipping and distribution, not to mention the indirect inputs such as the rising price of fertilizer and pesticides. The paper concludes with the policy challenges opening up terms of feeding the world’s poorest people, set the domestic concerns of the wealthier nations, such as questions on environmental standards, obesity and health, animal welfare, competition policy between companies and countries and of course the security of globalised ‘just-in-time’ supply chains.

The third Chatham House paper, Thinking about the Future of Food, published in May 2008, crystallizes the four scenarios:

(1) ‘Just a Blip’: what if the present high price of food proves to be a brief spike with a return to cheap food at some point soon?

(2) ‘Food Inflation’: what if food prices remain high for a decade or more?

(3) ‘Into a New Era’: what if today’s food system has reached its limits and must change?

(4) ‘Food in Crisis’: what if a major world food crisis develops?

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The policy implications of these will be explored in greater depth in forthcoming research and related reports.

International Concerns: Contamination and the Fear of Malicious InterventionsA report produced by the World Health Organisation (WHO) back in 2002, made the point that, whether introduced to the food chain unintentionally or as a politically or other criminally motivated act, food borne diseases can be managed in the same way. The report suggested that prevention was best tackled by the collaborative efforts of government and industry, but that the primary opportunities for prevention were with industry. The same points are reiterated in a paper presented by the Australian Food and Grocery Council (Wells, 2003) who stressed that the safety and security of the food supply chain should be a priority in any comprehensive counter-terrorism strategy.

Contamination or disruption to critical components of the food supply system could:

Threaten public health through injury or death.

Undermine the viability of the food supply.

Damage public confidence in the safety of the food.

Contribute to social and political instability.

Wells goes on to emphasise the need to understand the characteristics of the modern food supply system, in order to understand the implications of a serious contamination incident. As well as acknowledging the potential for food borne diseases to enter the food chain as a result of poor hygiene, the paper presents examples from around the world where deliberate attempts appear to have been made to poison large numbers of people.

The Australian approach stresses both prevention and response. It embraces traceability systems and rapid recall capabilities that allow sources of contamination to be identified and quickly controlled. Prevention is through general good practice and the use of tools such as HACCP (Hazard Analysis Critical Control Point), a food safety program originally developed for astronauts. HACCP relies on documented and audited processes at every stage in the supply chain.

Protecting the Global Supply Chain

In the immediate aftermath of 9/11, the US authorities acted unilaterally with the imposition of new security measures on international trade. Initiatives were rushed in within months, amongst them were the Customs-Trade Partnership (C-TPAT, 2002), an approved shipper programme, and the Container Security Initiative (CSI, 2002), involving the declaration and pre-screening of inbound cargos to the US. The measures were resented by much of the rest of world at the time, not least because the cost of implementation and the associated disruption to trade was born by organisations in the country of origin. International organisations have since stepped in to shape future developments in the regulation of international food chain safety

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and security. The World Customs Organization (WCO), an independent intergovernmental body established in 1952, and the International Organization for Standardisation (ISO), a global private sector network founded in 1946, are now at the forefront of efforts to standardise security measures. In 2005 the WCO introduced the ‘SAFE Framework’, specifically designed to prevent terrorist interventions from jeopardising international trade (Suarez, 2006). SAFE effectively institutionalises the earlier US-led initiatives, seeking to replicate the customs-to-customs collaboration and networks of approved businesses – now labelled ‘Authorized Economic Operators’. The approach is in effect a replication of the Total Quality Management and process control logic, best known in automotive engineering and other process-driven manufacturing industry supply chains.

Suarez (2006) provides an accessible summary of related developments by the ISO. In the Autumn of 2005, it published two new standards which should ensure international trade in foodstuffs. The first, ISO 22000, “Food safety management systems: requirements for any organisation in the food chain” harmonised the requirements for a food safety management system to control food safety hazards. Developed in cooperation with the Codez Alimentarius Commission, a food standards body established jointly by the United Nation’s Food and Agriculture Organisation and WHO, ISO22000 is designed to assist with HACCP implementation by organisations in every step of the food chain and associated activities, including equipment manufacturers and even the producers of cleaning agents. The second relevant new standard is ISO 28000, “Specification for security management systems for the supply chain”. ISO 28000 addresses supply chain security across the full range of supply chain and logistics support activities, including, finance, manufacturing, information and facilities management for all those involved with the production and movement of goods. Drawn up in collaboration with the International Maritime Organization, International Association of Ports and Harbours and other long-established international maritime associations, it builds on ISO 27001, a standard for the information technology-security techniques for information security management systems. Following along behind is ISO 22005, “Traceability in the feed and food chain – general principles and guidance for systems design and development”, and ISO 28001 “Best practices for custody in supply chain security”. The latter will involve the development of ‘Smart boxes’: ISO containers with high security seals that detect and report any unauthorised opening or other attempts to contaminate or tamper with its contents.

Radio Frequency Identification (RFID) technology is key to many of the new security measures, with uses ranging from consignment tracking to tamper-evident seals, employee identification/ authorisation. RFID technology is even being used in devices that allow employees to call in support when an incident is detected or a person is spotted acting suspiciously. The devices can summons the police to aid or apprehend electronically identified victims and villains (Harrop, 2005).

Food Security, US-StyleWithin the US Government, its agencies and associated research, ‘food security’ has, until recently, revolved around contamination that can or does affect human health. Contamination can be unintentional or deliberate, threatened or actual and there is a

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recognition that food emergencies can occur anywhere along the ‘farm to fork’ supply chain, including, pre-harvest, through production, processing and distribution.

Internally, the US has lagged some way behind the EU and countries like Canada, Australia and New Zealand, in implementing food traceability legislation to facilitate rapid responses to lapses in food safety. In January 2005 the US Government Accountability Office identified 25 high-risk areas for the nation. In January three more were added. The third new addition was federal oversight of food safety, because of the risk it posed to the economy and to public health. The GAO had identified a fragmented system, overseen by 15 different agencies (including the FSIS and FDA) administering over 30 different laws on food safety. Despite this, food recalls are voluntary. The authorities have no powers to compel companies to recall unsafe products (except infant formula), no way of knowing if potentially dangerous food has been recalled and do not know how quickly contaminated food could be removed from sale. However press report in July 2008, suggest that US legislators may be considering the introduction of traceability regulations (Associated Press, 2008) after another wave of food poisoning from fresh produce affecting over 900 people in more than 40 states. US regulators have hitherto resisted calls for traceability, leading the way instead in championing the introduction of preventative measures across industry. In recent years these efforts have been directed overwhelmingly towards countering the terrorist threat.

In the immediate aftermath of 9/11, the National Infrastructure Protection Centre (NIPC), part of the FBI served as the federal government’s focal point for threat assessment, warning, investigation, and response for threats or attacks on the critical national infrastructure. A Presidential Directive (PDD)-63, had identified the food system as one of eight critical infrastructures in 1998. In February 2002 the NIPC established an outreach programme to work with the food industry under the auspices of the Food Industry Information and Analysis Centre (Food Industry, ISAC). Later falling under the auspices of the Department of Homeland Security, the ISAC’s objective is to enable the food industry to report, identify and reduce its vulnerabilities to malicious interventions, and to recover from such attacks as quickly as possible2 (Food Marketing Institute, 2003).

A brief trawl of the internet reveals a host of post-9/11 frameworks, check-lists and guides, produced by US federal agencies to encourage individual commercial organisations to secure their sections of the food chain from terrorist attack. This review scans a few of those available.

The US Food and Drug Administration (FDA) Centre for Food Safety and Applied Nutrition

The FDA produces a ‘Guidance for Industry’ document (FDA, 2003a) aimed at food producers, processors and transporters (companies that produce, process, store, repack, re-label, distribute or transport food or food ingredients). The guidance is for operators big and small, and claims relevance to “all sectors of the food system, including farms, aquaculture facilities, fishing vessels, producers, transportation

2 In the UK, the Centre for the Protection of the Critical National Infrastructure performs a similar role http://www.cpni.gov.uk/Products/productsServices.aspx

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operations, processing facilities, packing facilities and warehouses”. The positioning of the document is reflected in its introductory paragraph:

“This guidance represents the Agency’s current thinking on the kinds of measures that food establishments may take to minimize the risk that food under their control will be subject to tampering or other malicious, criminal, or terrorist actions. It does not create any rights for or on any person and does not operate to bind FDA or the public.”

The guidance encourages organisations to focus on those sections of the food system that are under their direct control, to review their existing procedures and controls in the light of possible malicious interventions, then make appropriate improvements.

Similar documents are available for importer and filers - establishments involved in food importing, storage warehouses and filers (FDA, 2003b); and for retail food stores and food service establishments – including bakeries, bars, bed-and-breakfasts, cafeterias, camp and day care providers, church kitchens, community fundraisers, convenience stores, restaurants, grocery stores and vending machine operators (FDA, 2003c). Together they strive to establish a preventative security culture, throughout every part of the food system. Each document covers five core elements: management, the human element (staff – including background security checks on all employees), the human element (public), facility, and operations (including in-bound transport and outgoing consignments). A separate document for the dairy farms and all others involved in the movement and processing of milk has also been produced (FDA, 2003d). Attractively presented summary versions of these publications have also been adopted and disseminated by individual states (e.g. Virginia Department of Agriculture and Consumer Services, 2003).

Industry Self-Assessment Checklist for Food Security

This self-assessment checklist is issued by the US Department of Agriculture’s Food Safety and Inspection Service (FSIS, 2005). Based on an earlier set of food security guidelines (FSIS 2002), it is one of several outreach efforts by the FSIS to assist industry in improving the security of its regulated food products. The checklist aims to provide a relative measure of overall security of operations and guide organisations in the development or revision of their food security strategies. The 153 question checklist is divided into nine sections, covering:

(1) Food Security Plan Management.

(2) Outside security.

(3) Inside security.

(4) Slaughter and processing.

(5) Storage.

(6) Shipping and receiving.

(7) Water and ice supply.

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(8) Mail handling.

(9) Personnel.

Food traceability issues are briefly mentioned but the overall emphasis of the document is on avoiding malicious interventions i.e. ‘tampering’. The FSIS has put forward additional measures to ensure the safety and security of meat, poultry and egg products under “certain elevated threat conditions specific to food and agriculture” (e.g. FSIS, 2005b & FSIS, 2007a).

Food Emergency Management in the USIn contrast to the preventative emphasis and the preoccupation with malicious interventions that pervades the advice to industry, more recent advice (post-Katrina) issued to the state and civic authorities in the US is about preparation for and reaction to ‘all hazards’. This includes all those events that industry and the Department of Homeland Security are unable or have failed to prevent. This is broadly in keeping with the ‘effects-based’ emphasis of emergency planning policy in the UK, set out in documents such as Dealing with Disasters (Cabinet Office, 2003).

In June 2006 the Journal of Environmental Health reported that the FDA, working in conjunction with the National Association of State Departments of Agriculture (NASDA), The USDA’s FSIS, and the Department of Homeland Security (DHS), had made available a model Food Emergency Response Plan Template. The objective was to provide a response plan, to enhance the protection of the nation’s agricultural industry and food security through prevention, detection, response and recovery.

The template includes documents developed in line with DHS national-planning scenarios, target capabilities and uniform task lists. It is to be used by states either as an addendum to existing ‘all-hazards’ state emergency response plans, or as a stand-alone plan for responses to food-related emergencies. At the higher level, the use of a common template should allow states to establish plans that are uniform in structure, content, scope and response operations across states. The plan is in four sections:

Concept of Operations - establishes the framework for actions that will take place during an incident response.

Activation Levels – provides decision makers with definitions of different degrees of emergency.

Principal Parties – identifies all agencies, organisations and individuals (the principal parties) needed to carry out the response.

Roles and Responsibilities – sets out roles and responsibilities for state, federal, tribal and local agencies in the private sector.

The plan was developed through a federal-state agreement in consultation with a consortium of stakeholders. It can be downloaded from the NASDA website at http://www2.nasda.org/NASDA

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Operation ‘Flu for Thought’

Prompted by concerns over for the H5N1 strain of Avian Influenza, and fears that it could mutate to become the source of a human flu pandemic, the FSIS organised a tabletop exercise, ‘Operation “Flu for Thought”’. The exercise involved 23 players from federal departments, agencies and states to test coordination plans. Undertaken on 7th March 2007, it focussed largely on technological solutions, such as enabling tele-working and the development of employee tracking and other automated technological support systems (FSIS, 2007b). Unlike ‘Exercise Winter Willow’ (Morgan-Lewis, 2007) and other recent table-top exercises organised by the UK Government, it did not involve representatives from industry or other key stakeholder groups.

Academic Research in North America on food chain security and defenceIn the years since 9/11 researchers have taken advantage of generous funding opportunities to investigate the risks, threats and cost-benefits of warding off the terrorist threat to food supplies. Work has been undertaken under the auspices of the US Department for Homeland Security-funded National Centre for Food Protection and Disease (NCFPD). US and Canadian research teams have investigated the cost-benefit implications of security measures to counter the terrorist threat at every stage from ‘farm to fork’. The strands of research are too numerous to cover individually in this review, but publications allied to these programmes are available from http://www.ncfpd.umn.edu/publications.cfm .

However, from a food supply chain perspective, they include studies by academics at North Dakota State University and the University of Saskatchewan, where researchers have examined grain handling in Canada and the US (Nganje, Wilson and Nolan, 2004). Nganje and his co-authors looked at opportunities for malicious contamination of the grain with biological or chemical agents, the application of ‘real options’ analytical frameworks to ascertain the financial implications of investment in risk management. At the University of Wisconsin-Madison, researchers have applied risk and decision analysis modelling techniques to food and animal health and security (Bier, 2005). However, for the purpose of this study it is the work of Michigan State University, Georgia Technical Institute and the University of Minnesota which is most immediately relevant.

Michigan State University

In January 2008, Michigan State University published the Participant Summary to its Department of Homeland Security-funded research project, Defending the Food Supply Chain. The study, conducted over 3 years, encompassed both qualitative and quantitative elements. The qualitative stage involved over 50 discussions with managers from 15 companies representing cooperatives, processing, manufacturing and wholesale companies. The quantitative element took the form of a survey of food defence and security practices, covering 10 discrete aspects of supply chain defence and security management: process strategy; process management; infrastructure management; communications management; management technology; process technology; metrics and measurement; relationship management; service provider

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management; and public interface management. The study aimed to assist firms in improving the ‘resiliency’ of their supply chains against a targeted terrorist attack.

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The report reflects a post 9/11 US perspective, which differs noticeably in tone and positioning to UK government-sponsored projects into food chain resilience. It makes no mention of human impact e.g. dead consumers or bystanders, or the wider societal effects of such an attack. Instead it focuses firmly on the business case, as indicated in the report’s introduction, which sets out an overtly commercial agenda when it lists the consequences:

(1) Delivery disruptions creating service failures and short-term revenue loss.

(2) Loss of brand equity if customers believe that the attack occurred due to a systematic failure in the firm’s security measures.

(3) Investor discontent with the resulting short-term revenue loss and subsequent disinvestment.

(4) Regulatory scrutiny if the firms losses impact on the firm’s ability to meet its financial predictions.

(5) Severe legal consequences and their associated costs.

(6) Indirect damage to commercial relations affecting supply chain partners and competitors.

Throughout, the MSU report adopts an asset-based stance, in which supply chain protection and security is defined in line with earlier work by Closs and McGarrell (2004), as “The application of policies, procedures, and technology to protect food supply chain assets (product, facilities, equipment, information and personnel) from theft, damage, or terrorism and to prevent the introduction of unauthorised contraband, people or weapons of mass destruction”. The MSU study advanced from the premise that deliberate attacks on the food supply chain are exponentially more damaging than inadvertent contamination events, though the report does not provide an explanation for its assumption.

The statistical analysis yielded findings, for example, that the more US employees the firm employed the more likely it was to be conducting security measures. They were also more likely to perceive direct benefits from the implementation of security measures within their own organisations and across the supply chain, though the benefits came at a cost. In contrast, it was the smaller firms operating local/regional domestic markets that were most likely to report benefits in terms of reduced shrinkage and loss. The report concluded that (1) the organisations studied were focusing more on internal security competencies than external ones; (2) that the payback from preventative security measures may not be realised in the short-term; (3) that relationship management, metrics and process strategy are differentiators between those companies that are realising benefits from supply chain defence and those that are not.

MSU’s Defending the Food Supply Chain study was part of a larger programme of research, with teams at the Georgia Technical Institute and the University of Minnesota.

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Georgia Institute of Technology

Georgia Tech hosted the US Institute of Food Technologists’ First Annual Food Protection & Defence Research Conference in November 2005. Its role in the food chain security and defence programme is to cover the logistics service providers, though it chooses to describe it as “the development of decision technology to improve decision-making for logistics and freight transportation processes”.

This began with a search for ways to provide security to food transport systems without compromising productivity. The Georgia Tech team interviewed a number of American trucking firms and railroads, as the basis for a wider survey in 2006. Their programmes takes forward three themes for further investigation: (1) the security concerns of US trucking companies and examples of best practice; (2) the quantification of the productivity impact on supply chain security initiatives; (3) methodologies for designing and controlling secure, cost effective and resilient supply chain systems, which will withstand terrorist attacks and any other sort of disruption. Their research position was shaped by an earlier survey of over 16,000 road transport companies by the American Transportation Research Institute (ATRI, 2005), which revealed that the number one security concern for haulage companies was “what are the security cost implications on my firm” (Erera, 2005, p.2), which ranked above the next two issues – cargo contamination and hijacking.

University of Minnesota

The University of Minnesota leads the NCFPD programme on food security and defence, picking up some of the areas most pertinent to this research programme -food service distributors and retailers.

In its quest to identify best practice, the University of Minnesota team interviewed managers from 18 companies involved in retail and food sector distribution about their security measures (Seltzer, 2005). In the US, roughly 50% of its trillion dollar annual food spend goes through the supermarkets, and 50% through the food service sector, though the volumes are much greater through the supermarkets’ supply chains (Walker, 2007; Seltzer, 2005).

The Minnesota study divided the food supply chains up into groups: wholesale and retail (grocery and food service) - the latter encompassed restaurants, hotels, schools and the distributors that supply them. The first interim report noted that there were marked differences in the stability to the grocery and food service company supply chains, as the food service companies valued flexibility of supply and were much more likely to chop and change their supply arrangements than the big supermarkets. There were also marked differences in terms of competency levels and contingencies between different groups, though some common areas of vulnerability were reported across the piece. The finding identified truck trailers (often left unsecured), dependence on the internet and the high turnover of employees as sources of vulnerability, as well as the ‘double edged sword’ of supply chain flexibility vs security controls. The second phase of the study involved a more widely distributed survey with a view to producing a benchmarking report, against which food companies can judge their level of preparedness for prevention, detection, response and recovery, together with a software-based diagnostic tool for companies to make

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recommendations on food security practices. Critically these will include the protection of employees and consumers (Kinsey et al, 2007).

The University of Minnesota researchers also appear to provide an explanation, to MSU’s assumption that terrorist attacks on the food chain would be more damaging than inadvertent contamination events. MSU’s assumptions are supported by two papers published by the University of Minnesota, which examined consumer attitudes to involuntary risk taking and the results of an on-line survey, conducted in 2005, about American public attitudes and concerns about terrorism (Dettmann and Stinton, 2006; Stinton et al, 2007). The Dettman and Stinton paper reports on the demographics of respondents who believed an agro terrorism attack was likely within the next four years; the level of concern respondents expressed over the security of the food chains from terrorist attack, and finally, how they felt money should be apportioned toward food defence. Interestingly, consumers believed that an attack to the food chain was slightly less likely than other forms of terrorist attack, though they believed that a greater portion of the nation’s anti-terrorism budget should be spent on securing the food chains from attack then any other type of terrorist event. In terms of who should be responsible for food chain defence, the majority of respondents placed government and food processors/manufacturers at the top of their lists, with farmers and consumers at the bottom.

The University of Minnesota is also responsible for FoodSHIELD, a web-based platform “that creates community, increases collaboration, and facilitates communication among thousands of public and private entities involved in protecting and defending the United States food supply”. It offers a central portal through which laboratories, state and federal agencies, academics and industry can work together to improve disaster planning, the effectiveness of food recall procedures, training and communication. For further details go to ‘http://www.foodshield.org’.

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