Video"From 1993 to 2002, 95 percent of my revenues came from cases involving E. coli tied to hamburger," Marler says. "That has dried up to nearly zero since 2003. Once producers started testing and getting a lot of positives, they began looking at their procedures and processes to figure out how to eliminate the contamination. The fact that they were able to eliminate it to such a degree has put me out of the hamburger business, and I'm happy about that, candidly. I never thought I would say this, but I think the food industry across the board needs to take a really hard look at what the hamburger industry has done."
Dexter Manning, national food and beverage practice leader for accounting and consulting firm Grant Thornton, says much of the industry is already moving in that direction. "The government continually comes out with new recommendations and rules for food safety, but nothing as stringent as what companies themselves are doing," he says. "They're doing audits and bringing in consultants. Nobody wants an E. coli scare, and nobody wants people to get Salmonella." — R.M.
The Spice Trade
How McCormick Manages a Global Supply Chain
While most food company supply chains are still relatively short — the less distance perishable goods have to travel, the better — the supply chain for Sparks, Maryland-based McCormick & Co., the world's largest spice company, spans the globe several times over. McCormick buyers trek to Uganda and Madagascar for vanilla, to China and Nigeria for ginger, to Yugoslavia and Albania for sage, and to India, Turkey, Pakistan, and Syria for cumin seed.
To keep that vast supply chain an asset rather than a liability, McCormick goes to great lengths to ensure the quality and safety of its products, from source to sale. "It is of paramount importance to us," says Francis Contino, McCormick's CFO and executive vice president for strategic planning. "We've been doing it for over 100 years, and we like to think we do it better than anyone else in the world."
Although not dissatisfied with its existing safety processes — the company developed a comprehensive sourcing program with extensive quality-assurance components 25 years ago — McCormick nonetheless undertook a major enterprise risk management (ERM) review of its policies and practices last year. "We didn't have any great 'ah-ha' moments," he recalls, "but we did find great value in engaging the top 10 people in our leadership team and then extending that down to another 40 or 50 people. It spread the awareness of how important their jobs are to the greatest risk the company has, which is damage to the brand."
While most of the herbs and spices McCormick imports are dry, and consequently not subject to the same array of risks inherent in perishable poultry, meats, or vegetables, the company nonetheless maintains rigorous safety controls. It prescribes microbiological testing programs for its suppliers and requires that they provide a certificate of analysis with each of their shipments. It also does its own redundant testing on many incoming goods, and subjects some that are more susceptible to possible contamination to a steam sterilization process. Since the terror attacks of September 11, 2001, the company has also beefed up physical security at its facilities and incorporated more security issues into its vendor-certification program. Meanwhile, two of its employees spend the year auditing suppliers around the world.
Although the company keeps an eye on costs associated with its safety protocols, Contino says safety projects aren't always required to meet the same return-on-investment hurdles that other capital projects must satisfy. "When we undertook our ERM initiative last year, for example, we did not do our typical investment analysis for ROI. It was just a governance requirement, and it was clear to us that we had to do it," he says. "I wouldn't say we don't care what it costs, but in some ways that's true." — R.M.
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