The Incredible, Inedible Egg

Following this summer's largest egg recall in U.S. history, many consumers are wondering how an egg company didn't know that millions of its eggs were infected with salmonella. That is the underlying question at the heart of a scandal that led to thousands of people getting sick and increased calls for greater regulation of the food industry. But is additional regulation the only answer?

As someone who analyzes business performance for a living, I am always cautious about applying another layer of management on top of any organization—be it a government agency or private business. Putting more cooks in the kitchen or having more tasters at the table doesn't necessarily lead to a better product. It leads to more cooks and more tasters.

Maintaining standards for quality, whether it is food safety or a manufacturer meeting a customer metric, requires focusing on how you do the work—what we call process. For instance, one of the companies involved in the salmonella outbreak, Wright County Egg, blames the salmonella infection on the feed it received from a supplier, Central Bi-Products, which disputes the allegation. The FDA is still investigating, but we have to wonder: If Wright County is correct, how did the pathogens escape its notice in the first place? You can blame your supplier, but at the end of the day, you're the one using the feed.

An Eye on the Supply Chain

Clearly, Wright County's own lack of knowledge of the quality of feed points to a breakdown in the supply chain. For instance, did the company impose any explicit requirements on the supplier? What were the testing standards to ensure the incoming feed was safe?

This failure in the supply chain illustrates a problem affecting many businesses outside the food industry as well. Businesses neglect their supply chain for a variety of reasons: cost, complacency, relying on past practices, and sometimes focusing on the wrong metrics. Instead of treating the supply chain as an integrated process in their overall production line, they fall back on faulty performance metrics that might please the managers and bean counters but don't lead to a better or more consistent product.

I worked at a company that used to require suppliers to send in Certificates of Compliance (CoC) to authenticate the quality of the shipment we were receiving. But we became suspicious that mistakes in the supply chain were the cause for an increasing number of customer complaints and defects with our product, which was for vacuum pumps. The purchasing department assured us it went to great lengths to communicate our requirements to the supplier. Unfortunately, no one informed the supplier about how we were using their product, which would have helped them understand the application. After we approached the supplier with our concerns, they made a small change to their process to meet our requirements better. The result was a better product and fewer defects and customer complaints.

Inspection Sampling

What we learned is that flaws in the supply chain aren't always the fault of the supplier. Rather, they can be the result of poorly communicating to the supplier your particular needs. We also learned that until you're comfortable with the consistency of your supplier's product and its ability to meet standards, you need to inspect the product vigorously.

So we began using a 100 percent inspection sampling plan at the start of any engagement. Once the supplier had shipped us a specified number of shipments with no issues, we reduced the frequency of inspections. This process was repeated until we had achieved a very high confidence level and could accept their CoC.

It takes time to work with and develop the relationship with a supplier. Suppliers need to be treated as an extension of your organization, complete with an understanding of how their products will be handled and used once they pass through your—and the customer's—doors.

Process Control, Not Regulation

This is a level of protection that doesn't necessarily require the heavy hand of government. Whenever a scandal like the egg recall hits the news, the first instinct is often to add another layer of regulation oversight. But in this era of tight budgets, neither the government nor business can afford to add a new layer of regulatory burden that might just as easily be solved by a change in process.

If history is any guide, there will be a great deal of finger-pointing as the egg recall investigation proceeds. But new regulations cannot easily repair the damage done to public confidence; not only in Wright County, but also in an entire industry. It's a good lesson for the business community as a whole. A little introspection into how we ensure the integrity of our brand through process control is a type of inexpensive insurance.

When we wait until after a major problem occurs, all the King's men in the crisis management department are unlikely to be able to put the Humpty Dumpty of consumer confidence back together again.