Another Friday, another week gone bye, and another series of alerts relative to product contamination and breakdowns in production and distribution quality standards.

This week’s headlines include the FDA confirming that multiple sources of listeria were found in a Texas food produce and food processing plant, and that Costco has recalled a specific brand of gouda cheese suspected of being contaminated with E. Coli bacteria. The Texas incident involving SanGar Fresh Produce dates back to January, and has been linked to four suspected deaths.  The Costco incident involves cheese produced by Bravo Farms, distributed within five U.S. states, and is preliminarily linked to an outbreak of E. coli infections within these same states.

When will it end, or will it end?  What toll will these events take on financial costs, consumer perceptions and brand equity?

Do not dismiss this as just one more blogger on a mission to create web eyeballs.  Supply Chain Matters has provided ample evidence of a discernable trend of breakdowns in quality and supply chain risk management.  Just click on Supply Chain Disruption or Supply Chain Risk Management in our Categories section on the right panel, and review for yourself.

The issues involved are many and varied.  Cost containment has taken a toll on oversight, adequate people, supplier monitoring and adherence to regulatory controls. Companies discover too-late that supply chain risk exists in many areas, and no one function has the empowerment to address systemic issues of quality and adequate controls.   Manufacturers such as  Johnson & Johnson have incurred millions of dollars in costs to respond to process breakdowns and consumer concerns. Government has attempted to step-up monitoring and enforcement, but some corporations claim government is over regulating, or that bigger government is not the answer.

This author has penned many observations and recommendations regarding this growing problem, and perhaps it will lead to a book on this topic.  In the meantime, firms need to wake-up and heighten awareness to quality, supply chain risk identification and mitigation. If government monitoring is not the answer, than determine what is, and get it done.

Bob Ferrari

On the Procurement Leaders Blog, David Rae penned a recent commentary directed at Chief Procurement Officers (CPO’s) on how to possibly use scare tactics to drive CEO engagement. David referenced a previous Procurement Leaders article penned by Steve Hall outlining efforts of the CPO at Anglo American in positioning the procurement function as a positive enabler of business change.  I re-read Hall’s commentary and I must confess that I perceived a far different take-away.

I must respectfully disagree with David’s advice.

I believe that the intent of David’s posting was to echo how CPO’s and other procurement teams can effect more positive business change, gaining the trust of CEO’s and other senior management. David advocates “some good, old-fashioned scare tactics to grab the attention of CEO’s.” , and that is where I come to a far different perspective.

There is a lot of credible evidence that success in supply chain management is attributed to understanding how each of the capabilities of supply chain processes and supporting teams can effect or accelerate customer and overall business objectives.  Supply chain leaders are those that provide a holistic and cross-organizational alignment to performance metrics, processes and systems that align supply chain capabilities with these same customer and overall business needs.  Rather than gaining the influence of the CEO, it is rather procurement’s leadership and contribution to supply risk management, access to global markets, or needs for meaningful cost reduction that make a difference.

CPO’s should really take the time to ponder why Sales and Operations Planning (S&OP) processes, which involve cross-functional teams and senior management are becoming more widely adopted.  They do so because the process provides a cross-organizational and balanced view of the various tradeoffs and alternatives required to meet business needs. Steve Hall’s original commentary clearly points this out in outlining the Anglo American case study.  Procurement was viewed as the “catalyst of change” in an industry where procurement has significant influence on business financial performance.  In other industries, other supply chain capabilities have broader influence.  The take-away, at least for this observer, is that teams come together on an integrated plan, someone takes the lead, and all execute in an integrated fashion.

If CPO’s want to gain CEO recognition for contribution of procurement, than determine the best means to integrate with broader supply chain teams, or take the initiative to be that catalyst of cross-functional leadership.  To use an effective sports analogy, this is not about an individual skilled sport such as sprint running, but rather a team sport like soccer or football.  Everyone plays a role, and the coach values all players.

Procurement is better viewed as team exercise, without the need for scare tactics.

Bob Ferrari