A leadership lesson in whey

reputationYou can’t build a reputation on what you are going to do” – Henry Ford

Only if you live behind a rock you don’t know about the Fonterra milk powder scandal. I don’t want to analyse or discuss the potential or actual impact on the industry or New Zealand’s reputation with its international partners. There are sufficient of these in the media.

No, I want to look at the action or non-action between the incident itself that caused the contamination and the information of the public.

The timeline

May 2012: a dirty pipe caused 38 tonnes of whey to be contaminated. As far as I can find the seriousness of the contamination is either not known or not understood. 20 tonnes of the product is delivered to 8 Fonterra customers. 18 tonnes are stored. Although, a further investigation has been triggered because of a “potential quality issue“.

March 2013: 10 months after the event Fonterra prepared to use the remainder of the contaminated product. This time tests showed a serious problem. Botulism was not yet mentioned. However, a question about either the rigour of the testing (it was the same batch that was cleared for sale) or the judgement of the accountable manager must be raised. At least this time the person in charge followed through and triggered further tests.

31 July 2013: It is clear that the lethal strain Clostridium Botulinum is in the contamination. According to Fonterra they informed the 8 customers of the initial May 2012 delivery immediately. Taking into account that it can take up to 10 days to be sure it is Clostridium Botulinum, I have to ask why it took more than 4 months (!) for Fonterra!?

up to 6 August 2013: Slowly the news became clearer for New Zealanders and people in other countries including which end products are affected. Parents of infants and babies are at high alert what product are safe to use. Fonterra’s senior management apologised to NZ and the World. Too little too late? Or just lucky that no one died? 90% of the contaminated product has been recalled or contained. The dirty pipe was destroyed. I couldn’t find confirmation that the remaining 10% were recalled, contained, or destroyed.

The lessons (so far)

  1. Quality control is best done at the source. Every Quality Manager knows that. Every Operations Manager, too. Short cuts have a nasty habit to bite back. (see slide 56 for reference)
  2. If in doubt, check again. Or as my uncle (a builder) said, “measure twice, cut once”. The assumption “she’ll be alright” is wrong – especially when lives are at risk.
  3. Once you know you made a mistake earlier, correct at once and advise all stakeholders. The longer you wait, the bigger the mess.
  4. Review existing and implement appropriate measures (training, authority, communication, processes, quality control, …) that prevent further occurrences and talk honestly about it.
  5. Respect your customer today, tomorrow and in the distant future. Trust is built over time but lost in a second.
  6. Complete and close the incident. Let your customers know.

“It takes 20 years to build a reputation and five minutes to ruin it. If you think about that, you’ll do things differently.” – Warren Buffet

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2 comments on “A leadership lesson in whey

  1. Andrew Latimer says:

    Hi Frank,
    I can add an extra perspective on this. As you may recall I spent 9 years working as a microbiologist in a dairy testing laboratory, and several more testing food, water and wastewater elsewhere, so I know a little of the processes inside organisations like Fonterra. When I first started working in dairy the company was a local cooperative. As the years went on the company merged with larger and larger organisations, eventually falling under the Fonterra umbrella. My personal observation and recollection is that as the company grew the focus shifted. While there was much more talk of the importance of quality the reality became the opposite. Often product quality took a rear seat to the financial side of the business, and it was reasonably common-place for product falling outside of company specifications to be released and cleared for sale by production management keen to get product out the door. However this tended to be only product failing chemical analyses such as %fat and the like, I can’t recall any time where product which was potentially harmful was cleared. However given the timeframe taken for some microbiological tests to be confirmed and the short shelf-life of some dairy products it did occasionally happen that product was hot-shipped before all the results came back. For longer shelf-life products like milk powder the need for hot-shipping speaks more of terribly poor production planning than anything else. Once, however, a ship in transit did have to be turned around because a batch of milk powder had been hot-shipped only to test positive for a potential pathogen. Embarrassing for the company.
    Often analyses for some pathogens are tested on a composite sample of several batches of product to save costs. If this tests positive then you need to go back to the original batches and test a sample of each individually to isolate the offending batch. This may be what happened with the recent whey issue. What I find most surprising is that according to some of the news reports I’ve heard the product was picked up as having a low level of the clostridial toxin, but was still within specification, which led them to investigate further. For a toxin potentially as nasty as the Clostridium botulinum one, and in fact for any other pathogen, any detected presence is usually considered sufficient to fail specification. Note however that Clostridium was one of the few pathogens I haven’t tested for, so it is possible I’m mistaken. Still, I find it extremely unlikely that we’ve been fed the complete truth through the media about this one, some of the comments from Fonterra spokepeople just don’t ring true to my ears.

    • Frank G says:

      Thank you Andrew. Always good to have a different perspective!

      That confirms for me that “big is not equal to better”. A focus shift to “making money” and “satisfying shareholders” from “serving the customer” is a poor incentive.

      I still hope that “providing a better product” becomes the main objective for any organisation.

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