The head of the U.S. Federal Drug Administration (FDA), Margaret Hamburg, noted on her recently completed first trip to China that the country’s oversight of food and drug exports is improving.  As Supply Chain Matters readers well know, there have been many past incidents of substandard, tainted or contaminated products originating from China, and the FDA Commissioner’s statements are certainly a welcome sign. The FDA has established resident offices in three of China’s major cities including Beijing, Guangzhou and Shanghai, and is collaborating with Chinese regulatory agencies on joint training and inspection activities.

This year alone, the agency expects more than 20 million imports of regulated products to enter into the U.S.but less than one percent are typically inspected. What Supply Chain Matters finds as most astute are statements from Commissioner Hamburg reinforcing that the FDA will never have the physical and financial resources to inspect all foreign manufacturers, and that cooperation with industry and other foreign governments to develop common standards, improve accountability and identify areas of the most vulnerability should be targeted.

According to a blog posting of the Wall Street Journal, The Commissioner also acknowledged that regulators need to gain deeper access to the lower tiers of Chinese food and drug supply chains, including providers of active ingredients used in end-item pharmaceuticals. “China is a major producer of active pharmaceutical ingredients and we have had some very focused discussions on that very component of the supply chain.”

The most important message and take-away in our view, is that the pharmaceutical and food industry has to step-up and take more visible oversight and audit responsibility for monitoring all levels of China’s supply chain related to food and drugs. Consumers have strong views regarding the overall safety of these products that are exported from China. Interesting enough, Chinese consumers themselves now favor non-Chinese brands of milk, infant formula and dairy products due to these same perceptions. The Chinese milk industry, with the assistance of foreign private capital venture firms, is attempting to change these perceptions through ensuring increased integrity of the dairy supply chain.

There is much at stake from the perspective of both Chinese exports and China’s domestic markets for food and drugs.  Industry and government collaboration in insuring integrity and safety of China’s entire supply chain should remain a high priority.

Bob Ferrari

It has been over a year since the late 2008 major product recall incident involving peanut butter and peanut products being produced by the now defunct Peanut Corporation of America.  That incident had multiple cascading effects among quite a number of food-related supply chains.

An article appearing in the Atlanta Journal Constitution indicates that little has changed since this incident.  The article notes that prior to the incident, the state of Georgia had not mandated that food producers test their products.  The State has since passed legislation that calls for regular food testing, and requires Georgia food producers to test their products on a regular basis.  However, Georgia legislators, just before passage, amended the bill in two significant areas.  First, companies could bypass self-testing by submitting a “food safety” plan to the state.  What that plan involves appears to be rather unclear, according to the AJC article. The bill also exempts plants whose end product remains a raw agricultural product.  This includes peanuts, and growers in Georgia represent about 46 percent of the U.S. supply.

On the U.S. federal level, the Food Safety Modernization ACT of 2009 remains stalled in the Senate, after the House of Representatives passed its version of the bill.  This bill had widespread industry endorsement, and a coalition of 18 industry and other groups has written a letter this month to Senate leaders imploring passage of the bill.

To date, no criminal charges have been filed regarding events from the previous incident, and the article notes that the Georgia Bureau of Investigation has decided to defer to federal authorities for prosecution.

The media makes note that the current mood among consumers and voters across the U.S. is one of building cynicism in the ability of government to solve problems on a timely basis, and on industry to be able to produce safe products.  I suspect these same concerns are evident in other countries as well.  With noted brand names such As Toyota and others constantly in the news, it is no wonder. 

We should all expect and demand that our food supply has adequate safeguards.  This type of news doesn’t help in building confidence. Industry needs to take a leadership position in insuring product and food supply chain integrity, since reports such as these only add more fire to consumer concerns.

Bob Ferrari

Supply Chain Matters has provided previous postings outlining the events related to the suspected E-coli breakout involving Nestle’s Toll House cookie dough.  Just about two months since the incident began, Nestle USA has now announced resumed distribution of the product to stores this week. 

To insure identity of the new vs. any older product, consumer packaging will include a blue  ”New Batch” label and all shipping cases will be marked in blue vs. the previous black color.  A re-emphasized warning statement on the label will further state: “Do not consume raw cookie dough.” Nestle indicated that these new changes came as a result of consultation with the U.S. Food and Drug Administration (FDA) .

I hope to eventually share some important takeaways regarding this incident of supply chain risk, and I have an outstanding request with Nestle USA to interview a responsible spokesperson. On the surface, some learning is already evident and deeper understanding may yet follow. 

First, let’s quickly summarize events to date. Once the FDA alerted the company to this suspected outbreak and potential link to the company’s Toll House product, Nestle recalled the product with a wide swath of press and media news reports.  Initially, Nestle denied FDA requests for plant inspections, but to Nestle’s credit, quickly re-evaluated that decision.  The FDA confirmed the presence of E-coli in one specific sample of packaged product within Nestle’s Danville Virginia plant two days later.  Later testing determined that it was a different strain of E-coli.  Nestle later  indicated that more than 1000 tests were performed on environmental and other samples within the production facility and its equipment with no E.Coli found.  The investigation was then shifted further upstream in the supply chain to flour suppliers with no other announced findings.

We know that Nestle’s overall response to this incident was swift, no doubt involving a cross-functional response and risk mitigation team. Consumer and distribution channel awareness to the potential contamination was also comprehensive and swift, getting the word out as quickly as possible. However, without a conclusive finding of where contaminated product might have existed, consumers may be left to decide for themselves.  I pointed out in my original posting that the current reach of social media and the Internet has already associated the words of E.Coli and Nestle Toll House together in numerous entries. The question remains if this will have any long-term impact. Should Nestle have taken extra time for further inspection or traceability? That remains to be seen.

Any of us with children know and appreciate the fact that eating raw cookie dough is not a healthy practice.  But kids are kids, including adult kids, and eating cookie dough can sometimes be irresistible.  Now there is a clear warning not to do so.

The next chapter will be whether consumers are satisfied with the quality checks performed, and will continue to enjoy their Toll House cookies.

Bob Ferrari

Today’s Wall Street Journal (subscription required) included an article, Nestle Unit Restarts Cookie-Dough Facility, which provides some mixed messages.  Supply Chain Matters has provided previous commentary regarding the events and supply chain implications associated with the recent recall of Nestle Toll House Cookie Dough and other products because of suspected E.Coli contamination.

 The latest chapter outlined in the Journal article indicates that the U.S. Food and Drug Administration (FDA) is wrapping-up its investigation of the incident, and further indicating that the E.Coli sample found in a packaged product sample within the Nestle Danville Virginia production plant “didn’t match the DNA fingerprint of the strain that has caused at least 72 illnesses in 30 states.”  David Acheson, an FDA associate commissioner, indicates in the article that the FDA is not likely to figure out how the dough became contaminated, and has authorized continued production of product at the Danville plant. A Nestle spokesperson is also quoted as indicating that more than 1000 tests were performed on environmental and other samples within the production facility and its equipment with no E.Coli found.  Dr. Acheson is later quoted as indicating that FDA investigators suspect that wheat flour as a “plausible” source of the contamination, since it is the only dough ingredient that could be contaminated by animals such as deer. These same investigators however have not been able to verify E.Coli at the flour mill that Nestle utilized.

Let’s recap the Nestle situation and what have we learned from yet another incident of contamination within food supply chains.  Three weeks after the initial announcement of the voluntary recall by Nestle on June 19, regulators and Nestle have determined that the actual source of the contamination cannot be verified. While flour is suspected as a source, a decision was rightfully made to move on with production.  Wisely, Nestle has decided that it will label all new production with the term “New Batch” and include the usual warning for consumers to not consume cookie raw and uncooked dough. But as I pointed out in my original posting, the current reach of social media and the Internet has already associated the words of E.Coli and Nestle Toll House together in numerous content entries.

Similar to what occurred in the salmonella contamination found in peanut butter and paste, and traced to Peanut Corporation of America, a raw ingredient to multiple other food products permeated itself throughout these supply chains, leading to eventual product recalls in the hundreds.  In this latest incident, if wheat flour is indeed suspected, how many other product supply chains are now vulnerable? 

This week, the White House food panel established in March declared that the federal government is shifting its focus of food regulation to preventing outbreaks before they occur.  The latest demonstration with the Nestle Tool House cookie dough incident doesn’t seem to reflect that the FDA has gotten the message as yet.  If flour contamination is suspected, what other measures are be taken by the government.  As for the industry itself, what added measures are individual foods companies initiating to be more diligent in inspecting raw ingredients, particularly wheat flour.

Regarding Nestle, they will have to do better than just re-packaging of the product.  There needs to be a very comprehensive and visible inspection process surrounding all future production, packaging and distribution. This is a challenge to not toss over the wall to marketing.  The brand has suffered a setback, and in my view, marketing alone will not mitigate this problem.

As consumers, how confident are you in the overall quality of food products?

As supply chain professionals within the food industry, do you feel that management is actively supporting increased inspection and quality initiatives?  Does management also actively support supply chain risk mitigation team efforts?

What have we learned from this latest incident- that much more work remains on all fronts. In the meantime, please urge your families and friends not to consume any uncooked, raw dough products.

Bob Ferrari

Once again, I’m penning a posting related to product contamination and recall, and again it involves the cascading supply chain effects of an incident of suspected forms of E.Coli contamination which can cause serious food borne illness.

The latest incident involves a voluntary recall of 420,000 pounds of beef products produced by JBS Swift Beef Company of Greeley Colorado.  According to a U.S. Department of Agriculture press release this recall was expanded because the Centers for Disease Control and Prevention (CDC) has an ongoing investigation into 24 illnesses in nine U.S. states. The beef products were produced back in April, and JBS Swift conducted the recall out of an abundance of caution.  As can sometimes happen with recalls involving food products, certain production also makes it way into other supply networks, namely private label branded products.  In this specific case, the CDC has acknowledged that meat may have been re-processed into ground beef and other products, making it difficult to trace actual identity markings for consumers. To no surprise, Smith’s Food and Drug Stores, a division of Kroger has also issued a similar recall warning involving its store brand and store-packaged beef products, including that processed into ground beef and other products.  If you plan on a barbeque this Fourth of July holiday, make sure you check the various web sites that identify the impacted products.

I’ve noticed from my various food industry news feeds that the industry has been reacting to a significant shift among retailers and wholesalers in offering more private branded products.  This shift has been a response to consumer trends in purchasing more affordable or value-based products.  I’m beginning to suspect that these same retailers may not quite understand the ramifications of supply chain disruption that can be brought on by a significant product recall. But alas, this may be the subject of a future post.

In the other ongoing incident, on June 19, Supply Chain Matters posted its first commentary on the voluntary recall involving Nestle Toll House cookie dough  which was also a suspected E.Coli contamination. To update readers on that incident, the CDC now reports that 72 people in 30 U.S. states have been associated with this outbreak. Of this number, 34 people have been hospitalized, and 10 have been diagnosed with a form of kidney disease. The U.S. Federal Drug Administration (FDA)  has now confirmed that it has found E.Coli 0157:H7 in an unopened sample of pre-packaged dough within Nestlé’s Danville Virginia plant.  .  Nestle USA has also acknowledged this finding and continues to cooperate with FDA officials to identify the root cause of this contamination.  In my view, Nestle was very wise to take the initiative to voluntarily recall these products.  In its press release, Nestle smartly outlines the timeline of its response, and attempts to insure its customers that other Toll House branded products are not involved. 

The latest article from the local Danville News indicates that the FDA had found no traces of the bacterium after  conducting exhaustive inspections of both the cookie dough production equipment and the workers.  The FDA also took samples of all the component ingredients and they have come back negative.  The investigation has apparently shifted upstream in the supply chain with a joint inspection of the flour supplier underway.

This cookie dough incident has been a concern to industry followers since E.Coli is usually traced to animal bacterium in cattle, and seems highly unusual in flour and dough products

Besides the obvious concerns we all have regarding the overall safety of our food products, these constantly occurring incidents present some interesting questions.  Which brand suffers the most, and which party bears the most responsibility when a disruption brought on by food contamination cascades itself through various supply chains? Whose reputation suffers the most?

 Share your thoughts.

 Bob Ferrari