Not Yum Yum but Yuk Yuk!

The latest food scare in China is a surprise to some but not to those who work on the factory floor in the industry. Worse, even without visiting these factories the scandal at Shanghai Husi Food  was predictable and the shiny suited execs in their offices in Shanghai. Hong Kong and Illinois (Reuters reports that Shanghai Husi is owned by the OSI Group Inc., a global food processor based in Aurora, Illinois) should have been thinking harder about what could go wrong. Why do I say this? Because no system of reporting and incentives was in place to guarantee that this sort of malpractice cannot happen.

McDonald’s, YUM’s KFC, and Pizza Hut are now feeling the pain but there are simple solutions to this crisis – and the ones to come. But if there is no change there will be more food scares and more pain for the big brands. To remind you of how bad the latest news is, workers at the Shanghai Husi Food factory were filmed adding condemned meat and products picked up from the factory floor to the factory’s mixing units for hamburgers, chicken nuggets and other products. Not Yum Yum but Yuk Yuk!

Let’s be clear, this is not just a Chinese problem. There have been examples of bad practice in the food industry in all parts of the world and it has taken time, training and investment to minimize these problems in the developed economies over decades. But there will always be a criminal element ready to take advantage of a loophole or weakness in the system – even now. I submit that this is not what we see in China however. There is a more general problem that starts on the factory floor and in factory management. China has, generally, robust food safety laws at central and local government levels. And the large foodservice customers like McDonald’s have strict codes of practice and rules of behaviour for their suppliers. Those head office execs put their faith in these laws, codes and rules. But the issue lies in the implementation of these laws and codes at factory level and this has not been properly addressed. Crucially for China, with its double digit rates of growth in processed food consumption, there is not the luxury of time that the western food industry had when developing its food safety training and auditing. Note also that western food factories did not operate with such global supply chains or with social media 20-30 years ago – so a local problem stayed local.

Let’s also be clear that the answer is not more policemen – no auditor can sit and watch all the production lines in all of the factories seven days a week. There are millions of products produced each day in just one city. There are too many burgers and not enough time….. or auditors.  So, what is the answer?

The solution lies in the quality control reporting line and the incentives and training given to factory workers. QC must become a key head office function with dual reporting functions to central and local management. Crucially, only central management must hire and fire local QC inspectors so that there is no question of interference with QC reports at local level. Furthermore, workers must be given training and accreditation without which they cannot get access to the factory floor, This is not costly when e- learning and digital certification is used – and, importantly, it is difficult to acquire by workers fraudulently. It is also good for the workforce and the brand owner. Production line team leaders must also be given higher level training and certification to complement their e-learning. Finally, and key to all of this, factory QC reports must be part of an incentive scheme for workers’ pay. A positive QC report each week, posted on the factory floor, must qualify factory workers for a bonus. In this way each worker then has an incentive to be a policeman – everyone on the production line has a reason to ensure there is no deviation from factory procedures. The auto industry learnt this lesson many years ago – when will the Chinese food industry wake up to this best practice?

There you have it – it’s simple really. Let QC people do their work safe in the knowledge that their jobs depend on head office and give the factory workers a pay incentive to do their jobs properly. I wonder if they are thinking hard about these issues in Hong Kong, Shanghai and Illinois this week?