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Focusing Only On Price Can Kill…

Chinese say U.S. shares blame in food scandal – USATODAY.com

I’ve been tempted a few times to post about the pet deaths from contaminated pet food — the contaminated ingredients came from China. This article caught my eye last week:

Fed up with weeks of Americans bashing their food safety standards, Chinese government and industry officials say that bargain-hunting U.S. food companies share blame if contaminated Chinese ingredients wind up in food.

On this blog, we often talk about companies chasing cheap labor to China and how that’s often NOT the lowest total cost solution. In this case, where the contamination was intentional on the part of the Chinese company, it would be easy to blame the Chinese company, end of story right? Well, the Chinese are fighting back and saying, basically, “if you weren’t so damn cheap, we wouldn’t be pressured into doing stuff like this.”

“Officials like me in the Chinese government can supervise the producers here, but U.S. companies doing business with Chinese companies must also be very clear about the standards they need, and don’t just look for a cheap price,” says Yuan Changxiang, a deputy director in the ministry responsible for inspecting imports and exports.

Here are the Chinese lecturing us, basically the same thing that Dr. Deming always preached in his 14 Points, he always said:

End the practice of awarding business on the basis of price tag alone. Instead, minimize total cost in the long run. Move toward a single supplier for any one item, based on a long-term relationship of loyalty and trust.

Now, it’s one thing to buy cheap components for a PC or some other somewhat disposable consumer product. It’s another thing altogether to do business in a way that indirectly leads to poisoned food.

Thousands of cats and dogs in the USA may have died from eating foods made with tainted ingredients imported from China.

Inspectors are on the lookout for melamine, a chemical used in making plastics, and related compounds that were used to artificially raise the apparent protein level of flour so it could be sold as high-priced wheat gluten and rice protein concentrate to brokers in the USA. They then sold the products to pet-food companies.

The Chinese companies gamed the system. They figured out a way to make their product appear to be more expensive than it really was. It’s a shame we can’t always count on people to do the right thing, to do business in the right way. Being cheap has consequences.

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Mark Graban's passion is creating a better, safer, more cost effective healthcare system for patients and better workplaces for all. Mark is a consultant, author, and speaker in the "Lean healthcare" methodology. He is author of the Shingo Award-winning books Lean Hospitals and Healthcare Kaizen, as well as The Executive Guide to Healthcare Kaizen. His most recent project is an book titled Practicing Lean that benefits the Louise H. Batz Patient Safety Foundation, where Mark is a board member. Mark is also the VP of Improvement & Innovation Services for the technology company KaiNexus.

4 Comments
  1. Mike Gardner says

    Mark, I can’t agree that the Chinese have a valid argument. That’s the same as the burglar saying it was the victim’s fault because he had money.

    It is also worth noting that the pet food company that bought the contaminated products was Canadian, not American.

  2. Mark Graban says

    Ah, but the person being robbed didn’t voluntarily agree to that transaction the way two companies do.

    If you’re putting out a product, you have an obligation to make sure that your end product is safe — you have to make sure your suppliers are more than cheap.

  3. Anonymous says

    In another twist to this sad story, the chief of the Chinese food and drug administration has been sentenced to death for corruption. Do we really think this is going to solve the bigger problems though?

  4. Mark Graban says

    Here’s an article about that death penalty conviction:

    Link

    This is probably a systemic problem that one execution won’t solve, don’t you think?

    Here’s an article on tainted toothpaste from China:

    Link 2

    Is this a “China is bad?” story. No. It’s more a problem with unregulated business and people getting away with what they can get away with to make a buck. It’s an ethics/morals story not limited to any one country.

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