UNCONTAINED: The company you keep…and defining 'oversight'

How well do you know and trust your packaging material suppliers? It might be time to reassess what you think you know.

Kellogg Co. learned the hard way and is now reviewing how it evaluates and monitors its suppliers. The company, along with many others, has voluntarily recalled many products due to the salmonella outbreak with peanut butter from Peanut Corp. of America. PCA was an ingredient supplier to Kellogg. This doesn’t mean the Kellogg products are contaminated for sure, but the company isn’t taking any chances.

What strikes me as très bizarre in this whole mess is the supplier audit process and what it could mean for the future. Kellogg selected PCA after food-safety auditors from the American Institute of Baking (AIB) gave PCA superior ratings in 2007 and 2008.

It turns out, though, that a superior rating doesn’t mean that the auditor didn’t find any problems.

Ah…excuse me? Say again?

Yes, that’s right. According to AIB, a superior rating doesn’t mean the plant didn’t have problems (which is obvious now).

AIB president Jim Munyon explains in an article in USA Today: “He considers the audits Kellogg’s property and wouldn’t say what the audits found or whether the inspections were announced. He did say that AIB wouldn’t see internal test results unless PCA shared them. ‘They show us only what they want to show us,’ he says.”

Two things trouble me:

1. PCA paid AIB for the audit, which is the industry norm, by the way. Seems to me this model gives them more control over the process than they or any other supplier should have.

2. Several packaging suppliers have been touting their AIB audit status. These audits are expensive and should provide a point of differentiation in a more-than-difficult business climate. I can’t help but think that these leading suppliers have gotten shortchanged because of recent events and the damage to AIB’s reputation.

“Oversight” shouldn’t mean “Oops. We missed something.” It should mean that you know enough about your suppliers and how they do business that you can trust them. I wish I had a better solution for you, but I don’t.

Please share your suggestions on the best way to do this. This is a time when even competitors need to work together to solve an industry-wide problem.