Unraveling the Food Supply Chain: Strategic Insights from China and the 2007 Recalls

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INTRODUCTION

After a 5-month investigation, on March 15, 2007, the U.S. Food & Drug Administration (FDA) announced that "contaminants (were found) in vegetable proteins imported into the United States from China and were used as ingredients in pet food" (USFDA 2007). Over the subsequent months, hundreds of pet food brands were recalled. These events were followed by an avalanche of reports in the popular press about problems with other Chinese-made products (Byron 2007; Story 2007; Welch, Woellert and Carey 2007). In fact, of the 152 consumer products recalled by the United States Product Safety Commission since January 2007, 104 were made in China. Chinese manufacturers have been associated with twice as many recalls in the United States in 2007 as organizations of any other country, including the U.S. (Farah 2007). Of the product categories experiencing significant recalls, food may hit closest to home for the greatest number of consumers. FDA reports of carcinogens, pesticides, bacteria, drugs and heavy metals in imported foods have served as a wake-up call to the American populace about the quality risks of global sourcing, especially from China.

These recent incidents have raised public awareness of the ubiquity of Chinese products in the global food supply and have caused concern about the business and supply management practices that have allowed tainted food to get so close to end customers. Consumer advocate groups and, more recently, food makers themselves are increasingly demanding regulations for food safety (Zhang 2007). Suppliers, manufacturers, distributors, wholesalers and retailers are piling on inspections. We believe these tactics alone will be neither sustainable nor effective in the long run. Instead, we turn to the familiar and fundamental principle of designing quality into processes, which requires a deep understanding of the root causes for process failures (Giffi, Roth and Seal 1990).

In this paper, we offer a framework for supply chain quality management that will provide a strategic focus to the tremendous energies that are now being brought to bear on this major problem. While our framework is applicable to any supply chain, it crisply acknowledges that best practices for managing global end-to-end supply processes for "hard" products have subtle but important differences from those for perishable consumables like food. Our framework proposes the "six Ts" of supply chain quality management: (1) traceability, (2) transparency, (3) testability, (4) time, (5) trust and (6) training. Traceability is the ability to track a product's flow or attributes throughout the production process and supply chain (Golan, Krissoff, Kuchler, Calvin, Nelson and Price 2004). Transparency is the lack of secrecy, or the systematic provision of product and processing information under informal and formal agreements (CDA 1992). Testability refers to the ability to detect an attribute of a product. Time refers to the duration of specific processes. Trust is the expectation that parties will make a good-faith effort to behave in accordance with any commitments, be honest in negotiations and not take advantage of the other even when an opportunity to do so is available (Hosmer 1995). Training is the systematic process of developing knowledge, skills and attitudes regarding international standards of quality, food safety and best practices. These six Ts are critical factors associated with product (food) quality (see Figure 1).

Our six Ts blueprint for quality improvement can be interpreted in terms of the familiar Define-Measure-Analyze-Improve-Control (DMAIC) approach of Six Sigma. For an organization trying to improve the quality of the products it sources and delivers through a global supply chain, the six Ts serve as both necessary inputs and desired outputs in each DMAIC phase. In the Define phase, the project team must be formed, the project deliverables defined and the team trained. …