Profiting At The Bottom Line™

This month’s focus: When the “little things” can cost big time.

Regardless of the business there are many operating where there’s a simple step, maybe a procedure, or some non-adherence to a known standard operating procedure, implied rule of thumb, or legal mandate of compliance which a company may not be following because it’s deemed “Too onerous” or “Nobody really cares or ever checks anyways so why bother.” Or, there maybe something many agree in theory is a known wrong yet, since no one has ever been called on it, continue the “bad practice” reasoning: it’s far easier (or less costly) than rectifying it.

These are just a few examples and the list could go on near indefinite. However, for the sake of brevity I’ll stop here and let the following case study serve as prime example. It’s also why when anyone states or suggests why not doing the “right thing” isn’t a problem I near immediately retort, “It’s never a problem – until it is. Then what?” The answering of that “what” is what any executive worth his or her salt must know. Period.

Case Study: In 1997 Hudson Foods™ of Rogers, Arkansas found they had an issue stemming from a positive E. coli sample testing during a production run of its hamburg patties. The company originally recalled 1.5 million pounds of the suspected product. This occurred shortly after the recent nation wide implementation of HACCP (Hazard Analysis And Critical Control Points) which were the new guidelines and procedures that effected all food manufactures supervised by the USDA’s Food Safety Inspection Service.

During this time detailed standard operating procedures for every aspect of the handling of product needed to be chronicled, explained by the company, then approved by the inspectors. Followed by a rigorous non-deviating adherence or following of said documents and procedures. This was to ensure many things, but what it also did when followed properly was helped to compartmentalize issues. i.e., If an “issue” happened the ramifications could be isolated and dealt with expeditiously. And hopefully – economically reasonable.

The detailing and following such operational procedures were, and are; exacting. Having been involved as well as one of the first in the country to write such programs I know via experience. Every step (and every means just that) must be accounted for. And it’s easy to see when one is not. A glaring example of “it wasn’t a problem till it was a problem” bared its teeth when a simple easily visible misstep was taking place daily.

For what ever the reason an oversight by everyone involved managed to go un-noticed when a simple cleanup procedure where the left over product that’s too small to use, yet to large in quantity and value to throw away (it was reported to be no more than a pail sized left over) was properly removed, properly packaged, properly refrigerated then just added to the next production run.

Hence lies the issue. Yes, it fits a general code of common sense food handling and is no issue when there is no issue. Once there was? (e.g. a positive E. coli test) This undocumented, as in non-approved process and procedure would come back to haunt when it was shown by allowing this one procedure to take place the need to recall 1.5 million pounds was increased to a need to recall 25 million pounds of possibly contaminated product – crippling the company.

The increase was directly accountable because the small amount of product as well as the undocumented step had the ability (not that it did, but that it could) contaminate following batches one after another. A procedure (I estimate) anyone within the company involved with and understanding of these procedures and the chronicling involved must have known and/or questioned to themselves but thought, “what’s the big deal?” Till it was.

The 25-year-old family founded company was then purchased just weeks later by Tyson™ Foods in what many believed was that or: they would need to close outright for the financial impact of such a recall was devastating.

© 2015 Mark St.Cyr

Profiting At The Bottom Line™ is a monthly memo, which is pithy, powerful, and to the point. It focuses on innovative techniques and or ideas that you can put to work immediately in your daily or business life.