Supply Chain Reaction

As I write this, Germany’s health minister has just warned the citizenry that more deaths are likely from an outbreak of E. coli that has already killed at least 33 people. It is widely considered to be the deadliest such outbreak on record. This, despite repeated news accounts that “the cause has been identified.”
Initially, some authorities identified the culprit as Spanish cucumbers. Although that was soon debunked, the misidentification cost Spanish farmers in the marketplace, prompting many of them to deposit hundreds of pounds of vegetables on the German consulate’s front doorstep in Valencia (and the Spanish government to make big noise about “reparations.”)
Finally, the German health minister declared that “the source” of the problem was vegetable sprouts from an organic farm in Lower Saxony. The farm was closed and all its products recalled. But that wasn’t enough for some. Among many other misguided reactions, Russia outlawed the import of all fresh vegetables from the entirety of the 27-nation European Union, only agreeing to lift the ban after pressure during a formal summit with the EU.
So here’s the thing. The source of E coli was not sprouts—any more than the source was hamburgers during the infamous 1993 Jack in the Box outbreak that sickened 750 children and killed four. How to put this delicately? The source of E. coli is bacteria from an animal’s colon.
Excrement makes cheap, effective fertilizer, and—not to put too fine a point on it—there’s always plenty to go around. So residual fertilizer finds its way onto produce and, depending on the abattoir techniques being used, excrement also ends up on the carcasses of slaughtered livestock. Alas, it also seeps into water tables, as New Yorkers learned at the Washington County Fair in 1999, when agricultural overflow turned the drinking water deadly. Today, a dead zone the size of New Jersey currently sits like a horror movie in the Gulf of Mexico, traceable straight up the Mississippi River to fertilizer runoff from the farms and ranches of America’s “bread basket.”
On E. coli and food, the answer is both proper hygiene on the provider end and proper preparation (cleaning and/or cooking) by the user. Blaming the vegetative matter is like blaming a ceiling’s water damage on the plaster.
The importance of this systemic failure for our purposes is the cautionary tale it offers to procurement officers and supply chain managers. A problem can lurk almost anywhere upstream, but you have to know where to look.
Supply chain sustainability involves all the logistics of the business network—measured by social, ethical, cultural, and health (SECH) metrics. Importantly, the notion has salience for both the customer base and workforce. Each has become more aware of the environmental impact of transactions (whether b-to-b or b-to-c). Along with pressure from nongovernmental organizations (NGOs), this is spiking new demand for anti-sweatshop labor codes, locally-produced goods that support independent businesses, and heightened safety standards (whether for produce or imported toys.)
As the new transparency feeds this new demand in the marketplace, those with responsibility for procurement oversight increasingly are taking note that supply chains can account for 75 percent or more of a company’s carbon footprint. Smart managers therefore focus on how they can reduce that footprint and, in so doing, improve their SECH rating.
Top-down pressures apply, too. The Dodd-Frank Wall Street Reform and Consumer Protection Act signed into law by President Obama in July 2010, contains a supply chain sustainability provision addressing so-called conflict minerals. The provision requires companies that are regulated by the Securities and Exchange Commission to conduct independent audits of the company supply chains. They’re looking for stuff like tin, tantalum, tungsten, cassiterite, wolframite, or gold—and whether the source ores were mined from the Democratic Republic of Congo (DRC).
The reason? The Congo is beset by armed conflict and human rights abuses, and the profits from the sale of these minerals finance continued carnage. Of course, you wouldn’t know to monitor the sourcing of these minerals if you didn’t know that they are essential components of mobile phones, laptops, and MP3 players.
In parallel, American military forces are facing increasing scrutiny over contract labor in places like Afghanistan. Charges have been leveled against the U.S. Army’s local subcontractors, who have been accused of impressing slave labor into their operations. Again, knowing to look for that must precede finding it.
As with liberty, the price of supply chain sustainability is eternal vigilance. But vigilance on what? Separating first causes (contamination, water leakage, conflict minerals) from the places where problems appear (sprouts, ceiling plaster, mobile phones) is the sine qua non of true solutions.
The truism goes that what gets measured gets managed. Fair enough. But that makes it all the more important to measure the right stuff.

Tags: Consultants & Advisors, HRO Today Global, Professional Contribution

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