With all of the various incidents of late concerning supply chain disruption and risk, it is somewhat important for risk-related professionals to consider the hidden timeline of risk. What I mean by this is that a risk situation may have already occurred before mitigation teams actually get involved. To provide some concrete examples, I did some research into the recent peanut butter and peanut products recalls that involved hundreds of different food-related supply chains.
First, take a look at the following timeline graph provided by the U.S. Centers for Disease Control (CDC).
You will note that the actual occurrences of reported sicknesses actually occurred as far back as October of 2008. It wasn’t until early January of 2009 that various state and federal government officials were able to triangulate the 430 reported sicknesses and 5 deaths to peanut products being produced by the Peanut Corporation of America (PCA) facility in Georgia. On January 10, the first product recalls began, followed by numerous cascading recalls as the PCA products were traced among various other food-related supply chains.
The takeaway is that risk management groups need to consider the entire timeline of risk exposure. There was at least three to four months, if not longer, exposure of potentially contaminated product in various supply chains, before formal product recall actions were initiated. It wasn’t until late April or early May until the number of cases of sickness began to decline, as products were removed from various supply chains. The total timeline of this incident thus equates to roughly nine months, if not longer.
Are there ways to gain more visibility and intelligence during the hidden periods? Probably so. But the real question lies with who, how and at what cost.
Should regulatory agencies be relied on for early-warning visibility? Can advanced technology in information retrieval and analytics play a more meaningful role? Is there a justifiable ROI for early-warning tools?
These are all open questions that risk professionally should have on their radar screens, I’d be interested in seeing some commentary on this topic.
Share your observations or views in the Comments section of this posting.
Bob,
I wrote, but never published, a report on the Peanut Butter and Paste Products Supply Chain Responsiveness. I have included the text of that document here since you have already called attention to the issue. I wrote this in February of ’09 and offer its content to you and your blog.
Peanut Butter and Paste Products Supply Chain Responsiveness
The listing of recalls being posted at the FDA website on a daily basis is finally starting to subside. The increase started on January 18th; 8 days after the Salmonella Typhimurium outbreak from products produced by the Peanut Corporation of America (PCA) was reported on January 10th. We now have a measure of the responsiveness of the peanut butter and paste product supply chain (PBPPSC).
Sometime before Jan. 10th, a long-term health care facility in Minnesota detected salmonella in an open container of peanut butter. The first announcement of potential trouble came from the distributor/private labeler of that peanut butter. On the 13th, PCA themselves issued a voluntary recall and expanded it again on the 16th. During the next two weeks there was a marked increase in the number of recalls posted.
There are some “first responders” who apparently either pay the greatest attention to market news or have the greatest control over the production of their products. Kellogg’s was first on the 14th of January, and again on the 16th, with a recall notice that explained “Consumer health and safety is our top priority,” said David Mackay, president and CEO, Kellogg Company. “We are taking these voluntary actions out of an abundance of caution.”
There was a steady rise in first responders reporting in the first two weeks; getting to about 10 – 14 recall notices per day. After this initial two week reporting period, the volume tripled to over 30 recalls per day. This volume continued for the next two weeks before subsiding. Some companies are still reporting as of the writing of this blog: 2/24/09.
While it is interesting to see the ripple effect of one companies impact on the broader PBPPSC, I’m left wondering if those ripples move quickly enough. Statistically the nation consumed anywhere from 3.8% to 8.3% of its annual PBPPSC consumption with possible exposure to food contaminated with Salmonella which can result in abdominal cramping, diarrhea, and fever. In limited cases it can also be “…. so severe that the patient needs to be hospitalized. In rare circumstances, infection with Salmonella can result in the organism getting into the bloodstream and producing more severe illnesses.”
Some key questions arise that I welcome discussion around.
• Why and how are some companies more responsive?
• What causes a delay in notification and action by the majority of companies over two weeks out from the initial post?
• What, if any, granularity do the companies have to where the product actually shipped?
• Does being able to pinpoint your inventory throughout its lifecycle (mfg. to delivery) make you more responsive?
If you know of any other Supply Chains that you’d like reviewed in this manner, perhaps we can compare and contrast the responsiveness of that supply chain to the PBPPSC.