Peanut Products Recall – What does it help us learn?

The recent recall of peanut butter and products containing peanuts offers a good opportunity to discuss how a major product quality problem at one supplier can have an impact on an entire industry.  It’s not enough for a single company to do a good job at product quality… the entire industry has to do a good job in order to remain credible in the eyes of the public.  There are also broader lessons here for companies in any industry.

In this case, the contamination leads back to a single supplier, the Peanut Corporation of America (PCA).  The FDA has determined that tainted products from this plant were shipped to more than 100 consignee firms, which then use them as ingredients in hundreds of different products offered to the general public (http://www.fda.gov/oc/opacom/hottopics/Salmonellatyph.html).  On their website, the FDA describes how PCA shipped products even after samples tested positive for salmonella contamination.  The FDA is careful to caution that their investigation is ongoing.

PCA has now filed for Chapter 7 bankruptcy protection (http://www.lawyersandsettlements.com/articles/11905/peanut-butter-bankrupt.html).  

Eight people died and thousands were made ill.  That speaks for itself.  But the economic damage is tremendous.  This impact is not limited to PCA – but extends to the entire industry.  Peanut butter sales are down by an estimated 25% across the board (http://www.nytimes.com/2009/02/07/business/07peanut.html?hp).

Even though the PCA recall affects only a small percentage of total peanut products sold in the USA, it caused a massive negative reaction from the public. Shoppers are simply shunning products that contain peanuts.  National brands have run advertisements simply to tell the world that their products are safe. The timing couldn’t be worse.  In this weakening economy, products like peanut butter are staples that shoppers typically stock up on.

A major area of focus for Apollo training and Artemis investigations relates to supplier quality.  Typically, the primary areas of interest in any supplier quality escape are:

1.    Why did the problem happen?
2.    Why wasn’t the problem discovered before delivering the product?  This question applies to PCA, regulators, and customers.

What can we learn from this?

Analyze Near Miss Events:
Companies who work to develop a problem-solving culture learn that errors and near misses are great opportunities to identify systemic weaknesses.  As with most undesirable events, many causes of this problem existed before the event occurred.  Usually in cases like this, employees are aware of risks before they become reality.  Employees should be empowered to report near-misses without fear.  Problems that go unreported are opportunities missed.  PCA clearly did not have this kind of support structure in place (http://www.nytimes.com/2009/02/09/us/09peanuts.html?scp=1&sq=&st=nyt).

Develop a Problem-Solving Culture:
It is not enough to simply report problems… action needs to be taken.  Employees need to be empowered to investigate and analyze the causes of undesirable events.  Training helps, but just as important is the internal infrastructure that supports a problem-solving culture.  What triggers a formal root cause analysis?  Who performs the RCA?  Who participates in the investigation?  Who completes action items?  Who allocates resources?

Implement Solutions:
A scenario that causes extreme frustration is when effective solutions are generated during a past analysis, yet not implemented before another incident occurs.  New priorities come into play.  We feel better about letting previous action items slide as time passes and no new event occurs.  Solutions need to be validated and verified in a timely manner.

Look for Systemic Causes:
The best investigators identify systemic causes.  Systemic causes are woven into an organization’s infrastructure, and as such often remain hidden.  However, because of their durable nature, they often play a role in past problems.  Left unchecked, they will contribute to future events as well.  The removal of systemic causes provides the best chance at reducing risk.

The lessons learned in this case are fundamentals that are applicable to any industry.

Any thoughts? Notice how I didn’t mention anything about disciplinary action – what role does disciplinary action play – either directed towards an individual, or levied against an organization by a regulatory agency?  Also, I didn’t talk about what consignees who use PCA products can do to help ensure they are getting safe raw materials.

Brian Hughes, Vice President - Apollo Associated Services - Posted 18 February 2009

*Note: Peanut Corporation of America is not a client of Apollo Associated Services, LLC or Artemis Investigations LLC.