No single cause

When something goes badly wrong, everyone wants to pin the blame on someone or something.

However, often there isn’t a single person or thing at fault, but a series of mistakes and this is what Fonterra has found in the operational review in the wake of the debacle over the precautionary recall of products containing why protein concentrate.

In an email to shareholders, chair John Wilson said:

The Review found that there was not one single cause of the precautionary recall. It was the result of a number of separate and unrelated events occurring in an unforeseen sequence:

  • The decision to reprocess the original WPC80 and not downgrade the product, in combination with the use of an item of non-standard equipment, was the cause of the contamination.
  • A one-off lapse in information sharing across two parts of the business led to delays in testing.
  • This issue should have been escalated to CEO-level earlier.
  • A major upgrade of the computer systems at some of our sites immediately prior to the recall resulted in product tracing taking longer than it should have.
  • Although Fonterra has clearly established domestic and international product recall systems, the size and complexity of the WPC80 recall was a factor, particularly given the product had itself become an ingredient in the products of multiple customers.

Having established what went wrong, the company is determined to improve its practices to prevent a repeat of the problem.

Business Improvements
To help prevent an incident like this happening again, Fonterra will:

  • Ensure our world-class food production standards continue to be maintained at all times, across all sites, in areas such as quality control, testing, and product specifications.
  • Further increase the business’ focus on quality and safety across the end-to-end supply chain.
  • Increase transparency, internally and externally, to improve information flows and the speed of escalation. 
  • Ensure Fonterra strengthens its product recall and supply management systems which allow the tracing of all product that is in its control, and collaborates with customers on how to link different supply chains and quickly trace products.

The business is now making changes based on the lessons learned in this review, including:

  • Establishing the new role of Group Director of Food Safety and Quality reporting directly to the CEO.
  • Strengthening the remit and scope of the Food Integrity Council.
  • Launching an internal Food Safety and Quality Hotline for staff and contractors to escalate any concerns about potential food safety risks.
  • Quality audits have been completed at our sensitive nutritional plants, including Hautapu.
  • Comprehensive staff training on use of an upgraded computer to efficiently trace products across our entire supply chain has been completed.

Other actions to follow involve a review of any upcoming system changes, strengthening our crisis management capability, and reviewing our traceability systems in our global businesses.

The business is also introducing additional authorisation requirements for non-standard processing and testing, and conducting specialised audits of our global manufacturing plants and product quality standards.

We’ll also be looking to implement any findings from the Board’s independent inquiry.

Everything in our power is being done to rebuild absolute confidence in our processes and products, and to strengthen New Zealand’s already strong food safety and quality system – and make Fonterra even stronger for the future.

Now that tests have confirmed there was no botulism risk the company is being criticised for “crying wolf” but it was right to act when there was a risk that babies’ health might be at risk.

Food safety must always come first.

However, while the precautionary recall was necessary, so too was far better communication than the company provided.

Fonterra  did the right thing but it communicated what it was doing and why badly and that is where it let itself, its shareholders, customers and the country down.

Lessons learned from what went wrong must result in improved practices to prevent a repeat and far better communication if there is another problem.

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