Tomatoes that terrorize--or the recall to recall

StevenSimske — Sat, 21 Jun 2008 06:15:00 GMT

There are three topics that, as part of the HP community blog team, we are not to discuss on our blog: religion, politics and the ingredients in a hot dog. The topic I discuss tonight is a close fourth. So, I will try to be a little delicate here.

The recent tomato recall (http://www.fda.gov/oc/opacom/hottopics/tomatoes.html) may end up being as severe to the tomato industry as the cod moratorium has been to the Newfoundland fishing industry. Based on the cost of present goods and the infrastructure depreciation, etc., a year's loss of sales translates into roughly 10% lost value in an entire industry. Meaning that no tomato sales this year, and the tomato industry is worth 90% of what it was worth before this year...for a long, long time. Was that 10% factored into the "streamlined" supply chain the tomato--like any other agricultural--industry uses to reduce costs, provide just-in-time inventory, and devalue tomato picking? Of course not. Like counterfeiting, massive recalls are simply not modeled by the proponents of the just-in-time, multi-input, massive throughput supply chains that describe virtually every product type on the planet today.

We all know the stories about how many different cattle you're eating when you eat a burger (again, I must not talk about the hot dogs)--it's in the dozens. But do we know how many different raw material providers are involved in the production of a pharmaceutical? Of a tea bag? Of an automobile? Dozens, hundreds, thousands? The more there are, the harder it is to audit each and every element of the product provenance. So many have given up trying. Close your eyes, pretend it won't happen to you, and when it does, well, pull everything off the shelves--TOTAL RECALL. Aside from the incredible waste of such a recall, the lauded efficiencies of scale under non-recall situations simply don't ring true either.

For the food industry, one need look no further than Pollan's excellent book, the Omnivore's Dilemma (http://www.michaelpollan.com/omnivore.php), to see how "supply chain efficiency" has resulted in tragic inefficiency (fossil fuels are converted into corn syrup that converts us into obese diabetics). An Amazon.com (Bunny Crumpacker's) review of it (http://www.amazon.com/Omnivores-Dilemma-Natural-History-Meals/dp/1594200823) notes ominously:

"Each bushel of industrial corn grown, Pollan notes, uses the equivalent of up to a third of a gallon of oil. Some of the oil products evaporate and acidify rain; some seep into the water table; some wash into rivers, affecting drinking water and poisoning marine ecosystems. The industrial logic also means vast farms that grow only corn. When the price of corn drops, the solution, the farmer hopes, is to plant more corn for next year. The paradoxical result? While farmers earn less, there's an over-supply of cheap corn, and that means finding ever more ways to use it up."

All this to have a just-in-time inventory? When gas hits $10/gallon (and it will...soon) will it still be worth it? It costs nearly $1000/day to run a farm tractor already (just ask a farmer). Why have we allowed this to happen?

So, add recalls to the lengthening list of why outsourcing to unaffiliated parties is a recipe for disaster. Here is the potentially delicate subject. I am not against all out-sourcing, and a true Flat Earth is not a bad thing. But we all know that the earth looks flat from space (the earth is size-proportionately smoother than a cue ball), but up close it has all these inconvenient hills, dales, valleys, vales, arroyos, lifts, canyons and rifts. It's messy in the details. Nothing is flat, not even Friedman's cerebral cortex (sorry, too easy a joke there, but Friedman seems to think that people with the manufacturing jobs somehow won't learn how to design and be creative--a huge oversight, in my opinion). If you outsource to people you're intentionally hiring to save costs, you have opposing motivations. You want them to cost less, they don't care if you succeed. You think they're cheaper than employees, they think you're too overstretched to look too closely.

In short, you're asking them to try to cheat you. Guess what? In many cases, they're happy to oblige. And it serves you right. Outsourcing to disenfranchised third parties is a very short-term strategy that has been deployed for medium-to-long-term already. Take a cup of cluelessness, add a dash of denial, and you've got a supply chain that doesn't hold to inspection.

Which brings us back to those terrorizing tomatoes. What went wrong? Sure, Sam and Ella, that dynamic duo, reared their ugly heads. The problem was, no one knew where their necks were. The supply chain is simply too convoluted, with too many on and off ramps, that trying to do a partial recall is simply not worth the effort.

Time to reclaim the supply chain. It's not just about counterfeiting. It's about knowing what you're actually getting.

-Steve

Security Printing and Imaging : Recall, Counterfeiting

Tomatoes that terrorize--or the recall to recall