Guest Post: Quality, Marketing and Cross Contamination

Professor Howard Weiss shares his thoughts about a variety of unusual OM topics with us monthly.

People with food allergies typically check the ingredients of a food product very carefully to ensure that the product does not contain an ingredient to which they are allergic. The top 8 allergens in food production are soy, wheat, milk, peanuts, tree nuts, fish, and shellfish.

Bimbo Bakeries, headquartered in Mexico with bakeries in 35 countries including the U.S., has taken a unique approach to listing allergens on some of its products. U.S. inspectors reported that Bimbo Bakeries USA — which includes brands such as Sara Lee, Oroweat, Thomas, Entenmanns and Ball Park buns and rolls —”listed ingredients such as sesame or tree nuts on labels even when they weren’t in the foods.” (Bimbo claims to be the largest bakery in this country).

The reason a company might purposely list ingredients that are not in its products is that it may be concerned about cross-contamination in a bakery plant and wants to ensure it will not be legally responsible in the event of cross contamination. In other words, rather than trying to introduce quality control procedures to prevent cross-contamination in its plant, the company is willing to be untruthful when listing ingredients to minimize the chance and or cost of a law suit.

It may be very expensive or difficult to prevent cross-contamination from one part of plant to another or from one machine to another. So to stay within the letter of the law some companies have deliberately added small amounts of allergens to products that previously did not contain these allergens. This helps the company avoid liability and legal costs.

Cross contamination can occur in several different ways:
 primary food production — from plants and animals on farms
 during harvest or slaughter
 secondary food production — including food processing and manufacturing
 transportation of food
 storage of food
 distribution of food — grocery stores, farmer’s markets, and more
 food preparation and serving — at home, restaurants, and other foodservice operations

There are strategies available to minimize the chance of cross-contamination. The best way is for food manufacturers to process products that contain allergens in a separate facility. If this is not possible then scheduling the production of products that contain allergens at a different time than other products may help. Cleaning procedures can be used to minimize the chance of cross contamination.

Guest Post: Changing the Supply Chain

HowardWeiss2 Our Guest Post comes from Prof. Howard Weiss, who recently retired from Temple University.

Ghana, the second-largest producer of cocoa beans, currently ships the beans out of the county for production into chocolate. This means that Ghana receives less than 2% of the profits on chocolate. According to Financial Times (June 3, 2021), in order to reduce the poverty level in Ghana, the country’s president has set his country the challenge of producing chocolate bars on a commercial scale.

The Supply Chain Management chapter in your Heizer/Render/Munson textbook (Ch. 11) defines vertical integration as “developing the ability to produce goods or services previously purchased and cites an example of “Apple deciding to manufacture its own semi-conductors.” In the case of Ghana, the president is proposing the backwards integration for the entire industry, not just a single company. This would develop more income than a strategy of raising prices.

Chapter 11 also notes that “Backward integration may be particularly dangerous” and in the case of Ghana there are several challenges to producing its own chocolate bars. Ghana will need to import milk powder, develop packaging facilities and face issues related to energy because more energy will be required in Ghana than say, Switzerland, to keep the chocolate from melting and energy is more expensive and less reliable in Ghana. In addition, it is further away from markets so transportation costs will be high.

ghana

In spite of the challenges, the change has already begun with Fairafric, a German-Ghanian company, building a $10 million plant in Ghana. Fairafric demonstrates Corporate Social Responsibility, as defined in Supplement 5 of your textbook, “By not only sourcing the cocoa in Ghana but by producing the chocolate from bean to (wrapped) bar in Ghana”.

 

Classroom Discussion Questions

1. For what other resources in Africa might it be profitable and socially responsible to modify the supply chain?

2. What are the major benefits that will accrue to Ghanians from more profits staying in Ghana?

OM in the News: Terrorism and The Global Supply Chain

It’s not every day that The Wall Street Journal publishes an editorial by the US Secretary of Homeland Security, Janet Napolitano, entitled “How to Secure the Global Supply Chain” (Jan.6,2011).  In it, Napolitano writes, “The complex supply chain that consumers and businesses in the US rely on every day is a target for those who seek to disrupt global commerce”. This is certainly a topic we need to consider adding to our discussions of global OM issues in Ch.2 and Ch.11.

Regardless of where a terrorist event takes place, a significant disruption of our supply chain may follow.  An example was the Oct., 2010 plot to put explosives on a UPS cargo flight bound for the US from Yemen. Following that act, the Dept. of Homeland Security required all cargo on passenger planes within the US to be screened. It also screens all US-bound air cargo that is considered high risk (most likely from terror-sponsoring countries, I would surmise).

Napolitano names 3 elements to the US plan:

1. “Preventing terrorists from exploiting the supply chain to plan and execute attacks”. This means working with customs groups and shippers to keep chemicals out of the hands of terrorists.

2.”We must protect the most critical elements of the supply chain, like central transportation hubs, from attack or disruption”.

3.”We must make the global supply chain more resilient, so that in case of disruption it can recover quickly”.

Incidentally, 2 days after this article, the Journal reported that Secretary Napolitano received a small bomb in a package that exploded in her mailroom (WSJ, Jan.8-9,2011).

Discussion questions:

1. In what ways can a disruption of the global supply chain impact a business in the US, such as IBM, GE, or Boeing?

2. What other events, beside a terrorist strike, can effect the supply chain? How?