I’m sure the title of this post sounds outlandish to many of you. But, in the food industry, it appears to be commonplace. Or, maybe suppliers are being made the convenient scapegoat for greedy corporations that want to maximize profits at any cost. Let me tell you the story and you can decide.

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I was recently tipped off to a New York Times article (hat-tip to Dick Locke) that shares the story of a woman, Stephanie Smith, who has become paralyzed as a result of eating a hamburger tainted with E. coli. The tainted hamburger was traced back to food giant Cargill. And that’s when the supplier issues boiled to the surface.

According to the article, hamburgers commonly are made from meat provided by multiple suppliers. The hamburger eaten by Ms. Smith was comprised of meat ingredients from four different suppliers of Cargill.

So was the meat contaminated while at Cargill (a meat grinder) or at one of the suppliers’ (slaugherhouse) facilities? That’s where it becomes tough.

Apparently, the companies that grind the meat are not required to inspect the incoming meat for bacteria and instead require all inspection to be done by the suppliers prior to shipment. While the grinders certainly have the ability perform their own inspections, the article says that “many big slaughterhouses will sell only to grinders who agree not to test their shipments for E. coli” because they “fear that one grinder’s discovery of E. coli will set off a recall of ingredients they sold to others.”

So, it appears that most beef buyers are bullied into agreements to not test the supplied ingredients for fear of having their suppliers refuse to supply them. The article quotes large grinder American Foodservice’s Food Safety Officer, Timothy P. Biela, as saying that slaughterhouses “would not sell to us” until American Foodservice stopped testing trimmings.

So, do suppliers bully all buyers that way? No. The article cites one company, Costco, that insists on doing their own testing.

Costco does this testing despite pressure from the supply base. Craig Wilson, Costco’s food safety director, told the Times that a large supplier, Tyson, “will not supply us…They don’t want us to test.” Still Wilson says “It’s incumbent upon us [to inspect the ingredients].”

Now, despite the fact that the supply base seems to be behaving suspiciously here, I can’t help but wonder if this is another case of blame the supplier. After all, if all grinders took Costco’s stance, one would think that suppliers would relent.

But, would grinders be hurt by adopting such a policy? Naturally. To start inspecting ingredients that are currently not being inspected would require more resources. Thus, more cost. Thus, less profit.

Though opponents of testing by grinders prior to grinding contend that “the cost of testing could unfairly burden small processors” (read: prevent them from making as much money as they currently do), the article clearly indicates that it isn’t just the small grinders that are refusing to test. The article reports that Cargill’s annual revenue is $116.6 billion. Costco, which does test, is smaller with $72.5 billion.

That leaves us lots to ponder here:

  • Is it the greed of the suppliers/slaughterhouses that are leading to outbreaks such as the one that paralyzed Ms. Smith?
  • Is it the greed and spinelessness of the grinders?
  • Do the grinders know that they are at fault and simply blame the suppliers because that’s the easiest and most distracting thing to do?
  • Should the government mandate stricter testing (and send the price of ground beef up)?
  • Is this type of incident such a rare occurrence that no changes are really warranted?

The article concludes with a familiar refrain. An investigation by the United States Department of Agriculture found that Cargill was not adhering to its own supplier management practices but that, going forward, the company “agreed to increase its scrutiny of suppliers and their testing, including audits and periodic checks to determine the accuracy of their laboratories” but still won’t test supplier ingredients.

Gee…not being diligent enough in supplier oversight, witnessing your customers getting sick, and then committing to tighter supplier management practices. Sounds similar to the whole lead-paint-on-toys fiasco from a couple years back, eh?

To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
Struggling To Have A Rewarding Purchasing Career?
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http://www.NextLevelPurchasing.com

Charles Dominick, SPSM, SPSM2, SPSM3

Charles Dominick, SPSM, SPSM2, SPSM3 is an internationally-recognized business expert, legendary procurement thought leader, award-winning entrepreneur, and provocative blogger. Charles founded the Next Level Purchasing Association in 2000, oversaw its incredible growth, and successfully led the organization to its acquisition by the Certitrek Group in 2016. He continues to blog and provide advisory services for the NLPA on a part-time basis as he incubates his upcoming business innovations. Charles is also the co-author of the wildly popular, groundbreaking book, "The Procurement Game Plan: Winning Strategies & Techniques For Supply Management Professionals."

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