There have been growing concerns about the eroding safety of our food supplies and Supply Chain Matters has had far too many postings noting incidents of contamination affecting the safety of food-related supply chains.  I suppose that the latest incident involving the recall of hundreds of millions of eggs in the U.S. should not be a surprise, but the scope and circumstances are again rather troubling.  In this new era of social media explosion, these types of incidents can bring tremendous amounts of negative perception and damage to brands. They also cause too many disruptions for supply professionals.

On August 13, Wright County Farms of Galt, Iowa, an entity associated with DeCoster Farms, voluntarily recalled 228 million “shell eggs” because of the potential for Salmonella Enteritidis contamination. These eggs were distributed to food wholesalers, distribution centers, supermarkets and foodservice companies across eight U.S. states, involving eggs shipped from May 16, 2010.  Thirteen different brand names were involved in this recall, and because whole eggs are the basis for an ingredient in other food products, there are probably unspecified aspects as to the total scope of this recall, and the potential for human illness.  The U.S. Food and Drug Administration (FDA) issued a recent news release outlining the details of this recall.

As I pen this commentary, the recall has now expanded to 380 million eggs involving seventeen U.S. states. All five farms owned by Wright County Farms are under suspicion as sources.  An article on Reuters notes that the amount of eggs recalled are equivalent to nearly all the eggs consumed by all Americans in two days, which is rather a significant exposure. Nearly 2000 cases of salmonella were officially reported to U.S. government agencies from May thru July, a period where 700 cases would have been considered the norm. The U.S. FDA has fifteen investigators currently working on tracking the sources or potential causes of the infection. This recall has significant supply chain implications because uncooked eggs can end up salad dressing, meringue pie or other food or restaurant items.

As was noted in recent recalls such as pistachios, potentially contaminated product has been in the supply chain, undetected until now, for at least three months.  One also has to wonder why an egg enterprise with such a wide distribution of product and private brand volume had this type of occurrence.  The FDA notes that new egg safety standards took effect on July 9 which requires producers to safeguard feed and water supplies and test poultry houses for salmonella, In the case of Wright Farms, one has to speculate if these regulations came too late.

Bob Ferrari

After six rather long days, European air travel has begun a process toward catching up but as noted on our original commentary, the effects of the shutdown are making themselves present across many European focused supply chains. The products most affected are time and value sensitive and include agricultural and food products, high technology and telecommunications components, computer chips, medical supplies and apparel.

At the beginning of 2010, I noted in a blog commentary posted on the Kinaxis Supply Chain Expert Community, observations that inventory levels across the EU were razor thin amid doubts among European business executives regarding the robustness of any business recovery in 2010. That situation has now manifested itself in business media headlines describing the current effect of this flight shutdown.  This morning’s Financial Times article, Pressure grows on supply chains, (free sign-up preview account may be required) noted that some European automobile assembly lines may suspend production due to a lack of key electronic components.  BMW and Nissan indicate that they plan to suspend some European production this week because of disruption of electronic components. Flower producers in Kenya, who ship 82% of flower harvests into the EU countries, are sustaining losses of $2 million per day because they cannot get their products shipped. The Times notes that other industries are stockpiling goods in Dubai where the large air freight terminal is adjacent to one of the world’s largest container terminals. Logistics professionals selected Dubai because of the flexibility to fly goods to cleared European cities, as well as trucking or ocean transport options, depending on expected transit times.  The biggest concern remains real-time visibility as to the status of shipments, and air carriers are already modifying expectations regarding transit times.

It will no doubt take weeks for the entire European air transport sector to gain some sense of normalcy. European logistics professionals will practice their skills in working among various alternative transport networks.

Meanwhile let us all hope that Katla, the other Icelandic volcano does not decide to blow.  That could well be an even more disruptive supply chain incident.

Bob Ferrari

One of the most far reaching supply chain disruption events this year may well be underway concerning the effects of the shutdown of all air traffic in certain parts of the continent of Europe.  Large parts of air space around northern Europe are expected to remain closed to air traffic as a result of a moving cloud of volcanic ash that originated from a volcano in Iceland. Thousands of commercial air travelers are currently stranded and ground transportation networks such as bus and rail are currently overwhelmed. About 17,000 flights are impacted for Friday and Germany’s Frankfurt and the UK Heathrow airports, Europe’s busiest have suspended operations for all but emergency flights.

This morning’s Financial Times depicts the situation “as one of the most extensive bans on commercial flights since world war two.” The traveling cloud of ash and debris is expected to migrate to the upper portions of northern Europe this weekend and forecasters are finding it rather difficult to predict when any sense of air traffic normalcy can resume.

On its web site, UPS has acknowledged a disruption to its air traffic and is reminding customers that service guarantees do not apply when transportation networks are disrupted. DHL and FedEx on the other hand seem to remain silent but are certainly impacted.

The obvious impacts for global supply chains dependent on exported shipments will lie in the duration and scope of this disruption.  Since most air shipments tend to be time critical, my sense is that if the situation does not improve by Sunday, firms will experience some economic impacts as air transport carriers try to adjust to the effects of this disruption.  Obviously, this situation bears close watching by procurement planning, logistics and distribution teams.

Bob Ferrari

Yesterday I penned commentary noting the widespread implications of the ongoing hydrolyzed vegetable protein HVP recall that is permeating food related supply chains.  Not only do supply chain and brand managers have to deal with the upstream effects of HVP, but the ongoing recall involving the use of cracked pepper also took on a broader perspective this week. Talk about a double-whammy! How much turbulence can a supply chain sustain?

Updates published by the U.S. Food and Drug Administration (FDA) and Food Safety News now indicate that two suppliers of cracked pepper products are now suspected sources of contaminated product. The FDA has been conducting an ongoing investigation involving the supply chain for the imported black and red pepper supplied to deli foods maker Danielle Inc., and expanded the source of contaminated product to other suppliers. Danielle has already voluntarily recalled 1.4 million pounds of its ready-to-eat products because of suspected contamination with the Montevideo strain of salmonella. The Centers for Disease Control (CDC) indicates that 252 people in 44 states have been sickened to date. The two suspected suppliers have been supplying black pepper in large bulk quantities to other food manufacturers, as well as to distributors who package pepper products for consumer use.

Food producers who utilized these designated suppliers of dry pepper must now determine whether their end products must be voluntarily recalled. To make matters even more interesting, those producers who happen to have had products that contained recalled HVP, must additionally consider this recall involving dry pepper, which may lead to a broadened scope of recalled products.  Again, not exactly good for relieving consumer fears about the safety of processed food products.. For its part, the FDA wants to take a closer look at the handling of spices from farm to table, in essence, the entire food supply chain.

These ongoing incidents involving basic spices and commodities in foods should be an alarming wake-up call to both food producers and other manufacturers regarding the scope and exposure to supply risk. Risk is not one dimensional.  It involves supplier viability, supplier quality, value-chain processes and the brand itself. 

Once again, our community mantra continues: Does your company or organization have a cross-functional supply chain risk management process in place? You had better get one in-place, and soon.

 Bob Ferrari

At the beginning of March, the U.S. Food and Drug Administration (FDA) announced that a form of salmonella had been found in hydrolyzed vegetable protein (HVP) which was being supplied by Basic Food Flavors of Las Vegas. No reported illnesses or deaths have been traced to the subject HVP thus far, but the FDA and individual food companies need to insure end-products that include this recalled HVP incorporate production processes that involve a certain process of cooking to kill the bacteria.  Otherwise, according to the FDA, the end-products should be recalled.

An initial New York Times article reported that thousands of processed foods, from soups to hot dogs, contain the HVP that is suspected of being contaminated with salmonella.  Our initial Supply Chain Matters commentary on this ongoing incident noted how potentially widespread the effects of this recall may be across food related supply chains. We also again stressed the critical importance that supply chain traceability and risk mitigation have become required process capabilities, and how important technology helps in supporting such capabilities.

The first major food manufacturer to quickly respond to this incident was Procter and Gamble, that manufactures and distributes Pringles brand potato chips. P&G voluntarily recalled two specific flavors of Pringles which were affected by the HVP recall.

As I pen this posting, there are currently 159 different products listed on the FDA web site as under voluntary recall, and the list is growing every day.  The categories are broad, ranging from bullion and gravy mixes, to sauces, soups, ready-to-eat and processed food products.  Thus far, product brands include well-known names, such as Dean’s, Durkee, French’s, Herbox, McCormack, Pringles and others.  Private label brands are not immune, including CVS, Kroeger, Publix and Trader Joe’s.  Institutional brands sold to restaurants and food service customers are also included.  In other words, when the dust does settle, this will be a far-reaching disruption involving multitudes of different product supply-chains, because the source ingredient is included in so many different products.

Consumer product companies now have to deal with even more negative perceptions by consumers on the overall safety of the food supply chain.  Just queerying any search engine on the topic of HVP recall will bring together a collage of visual images of food brands that are part of this recall.  This of course is not the way companies want their brands represented, and to make matters even more interesting, information is now being disseminated regarding what HVP really is.  A posting on the Good for You blog on MedBroadcast notes that HVP is the disguised version of monosodium glutamate (MSG), to which many people are extremely sensitive.  The composition of MSG in HVP is such that the existence of MSG does not have to be noted on the product label.

As with previous incidents, this large-scale recall involving HVP will continue to unfold in the coming weeks and months. Brands and supply chains will again be tested.  Supplies will be purged and brands will have to reinvigorated with higher profile marketing.  If there is one key takeaway, there should be no excuse for any consumer products oriented company not to have an active supply chain risk awareness and mitigation plan in place.

Bob Ferrari