Horses for Courses?

Jim Fleming of The Electro Automation Group asks if the 2013 horse meat scandal has  implications that run beyond the food industry.

Is general industry immune from a similar problem?

Horses are for courses. That much we should all agree on, but events in 2013 showed that sometimes we think we are getting one thing, when in reality we are getting something entirely different.

Can we always blame this on someone else, or do we play our part as a semi-willing victim?

Most of us had assumed that when we buy something called a beef burger, or when we purchase a beef lasagne, then what we will get is beef. Not so, as has been shown recently with the substitution of cheaper horse meat instead of higher priced (and higher quality) beef. While the press have concentrated on this scandal within our food chain, does the problem go deeper in society, and does it affect other layers of business? I think it does, and if I am open, I think that perhaps we have only ourselves to blame. The recession itself may technically be over, but some of its effects last longer.

In recent years there has been an increasing drive to lower costs, and with the added pressures of
the recession, the temptation was to reduce costs even further and keep going. It should be obvious that there is only so far we can go with a downward spiral, but alas, this particular bit of logic seems to have largely eluded us, as we continue to push for lower and lower costs, whatever the consequences.

How does that affect general business, and in particular the automation industry? It’s really quite
simple. When food manufacturers were pushed beyond their limits they reached their lowest cost and then moved outside what was specified. The same thing is starting to happen now in the automation industry, only this time it will not attract so much press attention. If a facilities manager buys equipment that doesn’t perform according to the salesman’s promises, no one cares (except of course the person who has to buy another system!). As the prices are driven lower, some suppliers are reaching crisis point, and it is inevitable that exaggerated performance claims may be made to gain much needed orders.

Food buyers are now being asked why they didn’t question the exceptionally low prices they were
able to force a supplier to achieve, instead of patting themselves on the back for the great job they were doing. It seems logical now that everything is in the open and people are starting to ask “surely they suspected something?” The same buyers who were held in high esteem for increasing their company profits by skilfully driving down purchasing costs are now worried about their jobs. The company that profited with short term gains will quickly look for scapegoats to dismiss. Buyers didn’t read the warning signs which were clearly visible, or perhaps even ignored them as they themselves fought to drive down costs. It may soon be the turn of automation equipment buyers, general buyers, quantity surveyors, estimators and contractors that will be in the same position as the food buyers. If one supplier is 15% cheaper than the others, do you really think you are getting the same quality? Really?

We regularly see newly installed systems that do not have the required safety. Cheaper? Yes. Value for money? No. Legal? No. Are we now seeing commercial examples of asking for beef and getting horse? I think so, but until buyers start to question what they are getting, this will continue. It’s not enough to have a verbal assurance from a salesman whose wage depends on getting that order. We have known for years that some contracts are taken at cost or even lower, with the contractor hoping to make money on variations and extras. That is one thing, and is perhaps best described as taking a considered commercial gamble, but when the quest for lower prices leads to the installation of poor quality, inferior or dangerous systems, isn’t it about time that we started to take notice of what is happening? It isn’t enough for a buyer to try to pass the buck and say that if there is a problem then it’s his suppliers that are at risk. It’s not and the buyer must beware. If we all (as buyers) take an active part in this continual degradation of standards then we are as culpable as those food buyers we are now criticising.

One simple improvement would perhaps change things. Currently it is commonplace to discover an order has been lost solely on price, without further discussion or the opportunity to point out comparisons. If the final bidders in any equipment tender were each asked to put in writing the following then perhaps this would allow a clearer picture when making the final choice.

With reference to your quotation XXX in respect of YYY please confirm in writing that your quotation meets or exceeds all current standards and safety recommendations advised by the HSE as of today’s date. We must advise that a safety inspection will be carried out on completion and any omissions will be the responsibility of the supplier. No additional sums will be paid to correct such omissions and it will be a condition of order that the supplier will be responsible for all risks. We also ask you to confirm that your installation will be CE marked where applicable and that you maintain a full technical file including a site specific risk assessment.

It is in everyone’s interests to compare like for like. A low cost system that lasts 6 years is much dearer than a more expensive system that lasts 10 years.

Q. Why do we get horse instead of beef? A. When we ask for beef but don’t question when it’s sold to us at the price of horse.

Isn’t it time we asked questions? If we don’t, do we deserve any better than we get?