Tag: FDA

Guest Post: Food Safety and the E. coli Outbreak at McDonald’s

Temple U. Prof. Misty Blessley raises a timely topic that has broad interest for those of us who are fast-food consumers.

Your Heizer/Render/Munson textbook highlights several examples of McDonald’s operations and supply chain practices. In Chapter 6, poka-yoke methods like the aluminum scoop and fry container ensure portion accuracy. Chapter 11 highlights how the company mitigates supply risks by working with multiple vendors and establishing robust contracts. Chapter 9 discusses how McDonald’s balances production flow in its hamburger assembly lines.

However, the recent E. coli outbreak prompted McDonald’s to reevaluate parts of its supply chain to maintain food safety standards. At least 75 people have been infected across 13 states—most reporting they ate a Quarter Pounder before falling ill. The states include Colorado, Montana, Nebraska, and others throughout the Midwest and West.

After tests confirmed that its beef patties were not linked to the E. coli outbreak, McDonald’s has reintroduced Quarter Pounders in several restaurants. Although the Food and Drug Administration (FDA) initially examined both the beef and slivered onions, it ruled out the patties. Early evidence indicates the onions are the likely source, but the FDA’s investigation is ongoing.

Taylor Farms, based in Salinas, California, recently issued a voluntary recall of four onion products due to possible E. coli contamination. McDonald’s identified Taylor Farms as the onion supplier for all locations connected to the outbreak and confirmed its decision to halt orders and deliveries from this supplier.

McDonald’s chief supply chain officer for North America, reassured the public that the outbreak was limited to a specific ingredient and region. He expressed confidence that all contaminated products had been removed from their supply chain and are no longer present in any McDonald’s restaurants.

This outbreak highlights the importance of quick and efficient food traceability for high-risk foods like cut onions. The Food Safety Modernization Act (FSMA) focuses on shifting the FDA’s approach from reactive to proactive. A key part is the FSMA 204 Food Traceability Rule, which requires more detailed recordkeeping for high-risk foods. The rule, discussed in OM Podcast #18: An Inside Look at the U.S. Food Supply Chain, goes into effect in 2026.

Classroom discussion questions:
1.  What are the challenges associated with traceability of cut food items from farm to fork?
2.  How do slivered onions present different food safety challenges than cooked beef patties for McDonald’s?

OM in the News: Misplacing the Blame for the Baby Formula Shortage

Due to global supply chain disruptions over the past 2 years, Americans are getting used to product shortages, but they were still surprised by the recent shortage of baby formula, putting babies at risk.

As an immediate relief measure, military planes were recently used to transport baby formula from Europe and Australia to the U.S. Also, Abbott Laboratories, closed by the FDA in February, 2022, just resumed production at its Michigan plant. Despite this, Americans learned that this crisis will not end yet.

There is plenty of blame to go around, write Professors Babich (Georgetown U.) and Tang (UCLA) in Industry Week (June 17, 2022). There are many culprits they say, except for one that has been widely blamed: industry concentration, which is an innocent bystander.

The leading suspect is Abbott’s Michigan baby formula plant, which had poor quality control issues for years, but was not shut down by the FDA until Feb., 2022. The crisis would have been less severe had Abbott adopted the Toyota Production System, our topic in Chapter 16, by fixing its own quality issues sooner.

The runner-up suspect is the FDA. Its inaction and lack of urgency dates to 2019 when it was warned about Abbott’s quality issues. The FDA’s bureaucratic inflexibility means that milk formulas sold in Europe are banned in the U.S. because they exceed the FDA’s nutritional standards due to technicalities, like labeling. Its failure to do its own job is one root cause of the shortage.

Then there is the federal Women, Infants, and Children (WIC) program that funds over half of the baby formula purchased nationwide. The WIC contracting process has an unintended outcome of enabling the “approved” state provider to become a near-monopoly of the formula market for that state.

The press blamed the milk formula crisis on industry concentration–too few U.S. manufacturers. Politicians also tagged this as the culprit, as 90% of all production of baby formula is controlled by 4 companies. But industry concentration is a result of economic forces. Milk formula is a staple with stable demand, so there is no incentive for producers to invest in “just-in-case” capacity.

The crisis may continue beyond Abbott’s plant reopening. Once panic buying mentality sets in, it is difficult for consumers to switch back to normal purchasing habits.

Classroom discussion questions:
1. How is this an OM issue?

2. Explain why the WIC program has impacted the shortages.

OM in the News: Tylenol, J&J, and a Quality Disaster

A timely topic to bring to your students when discussing quality (Ch.6) is an embarrassing and expensive problem currently facing Johnson & Johnson. It’s a tale that has been making news for months now,  but just ended with the US government taking over 3 Tylenol plants a few days ago (New York Times,March 10,2011). This follows a blizzard of drug recalls and an FDA criminal investigation into safety issues at the factories. The government also indicted two execs, the VP-Quality and the VP-Operations, for failing to comply with manufacturing standards.

The scathing report on 20 manufacturing violations and criminal investigation follows eight recalls of Tylenol, Benadryl, and Motrin that have been ongoing since  2009. J & J was warned over a year ago about the unsanitary and unsafe practices in the plants (one in Puerto Rico and two in Penn.), but the company was slow to fix them. Now, all drugs recalled must be destroyed, a “consent decree” allows independent experts to control the plants until safer manufacturing processes are in place, and one of the Penn. plants will remain closed until the FDA stamps its approval. Fines will also be levied at $15,000 per day up to $10 million annually until the FDA clears the company.

Production is expected to be hurt while the corrective actions take place. But as Philip Crosby wrote in his 1979 classic, Quality is Free, “What costs money are all the actions that involve not doing it right the first time”.

Discussion questions:

1. What happened in Tylenol’s 1982  famous recall?

2. What did Crosby mean when he wrote “quality is free”?

3. What is the role of OM in this dilemma?