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MISSION:INTANGIBLE, the blog of the Intangible Asset Finance Society, offers critical comments on intangible asset, corporate reputation, and finance; supplemented by quantitative reputation metrics. Intangible assets include business processes, patents, trademarks; reputations for ethics and integrity; quality, safety, sustainability, security, and resilience; and comprise 70% of the average company's value. MISSION:INTANGIBLE is a registered trademark of the Intangible Asset Finance Society.

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Ikea: Not horsing around

C. HUYGENS - Wednesday, February 27, 2013
Swedish meatballs are funny. Just ask the Muppets. But there is nothing funny when Ikea has to pull Swedish meatballs from the shelves because they, too, have been contaminated by horse meat. Once again, it's the supply chain, stupid!

Now comes further news from Expert Recall that the US Food and Drug Administration documented 552 food product recalls in the fourth quarter of 2012, setting a new record high in at least nine quarters. It's not just food. Recalls of 85 consumer products were announced at the request of the CPSC in the fourth quarter of 2012, representing a six-quarter high. Last, 45% of the of pharmaceutical companies documented in the fourth quarter faced more than one event—the largest percentage of companies with repeat violations in at least ten quarters.

The global supply chain is in desperate need of better oversight and operational control. Yes, supply chains were once a great source of value creation. But the push for cost savings has created a whole new set of risks. Many of these issues were discussed most recently at the February Mission Intangible Monthly Briefing where the Society's program featured Daniel Diermeier, IBM Professor of Regulation and Competitive Practice and Director, Ford Motor Company Center for Global Citizenship, Kellogg School of Management, Northwestern University and author of Reputation Rules: Strategies for Building Your Company's Most Valuable Asset; and Scott Childers, Director of Integrated Trade Management at The Walt Disney Company, and a member of the Society's Reputation Leadership Council.

But awareness of the problem is not new, and with this 16th blog note on supply chain issues, Huygens once again calls attention to the fact that a firm's reputation is no better than what is ultimately made possible by the weakest member of the supply chain. It doesn't matter if the supply chain member is  the supplier of meat for (beef) meatballs, the active molecule for preparations of Sodium Heparin, or the maker of fencing materials for NASCAR-sanctioned speed raceways. The retailer at the end of the chain is where all supply chain risk concentrates.

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