Manufacturing slip-ups provide food for thought
Author: T.D. Clark, ThomasNet
Peanut butter, rib meat and chocolate — whoa! Major American food manufacturers ConAgra, Tyson and Hershey are dealing with significant supply chain slip-ups right now, and while their efforts to turn things around sound ambitious, only time will tell if they will actually work.
The Associated Press initially broke the news that The Hershey Company is cutting 1,500 jobs, closing plants and outsourcing a portion of its production to Mexico. Hershey said the three-year blueprint would reduce the number of production lines by more than one-third while saving the company as much as $190 million a year.
“We recognize this will involve considerable change over the next three years, and intend to make this transformation of our supply chain as smooth as possible for our employees and customers,” said Richard H. Lenny, Hershey’s president, chairman and CEO.
The reason for the restructure? Hershey, the nation’s largest candy maker, reported a 10 percent drop in fourth-quarter earnings last month on lackluster sales. Results lagged due to weak merchandising and a recall of products made at a plant in Canada last year after salmonella bacteria was discovered.
Wachovia Securities analyst Jonathan P. Feeney said Hershey’s plan isn’t so sweet:
"We are skeptical that pulling capacity out of the system while allocating capital away from the core business accomplishes the critical mission, which is to reinvigorate consumer response to its core chocolate products," Feeney wrote.
Feeney poses an interesting point. Why shouldn’t Hershey do all it can to remain on top in the U.S.? While a part of its turnaround strategy involves attention to product innovation and more aggressive marketing tactics, it does feel like Hershey might be spreading itself too thin. Speaking of spreading …
ConAgra Foods announced last week it would recall all Peter Pan and Great Value peanut butter made at its Sylvester, Ga., plant as federal officials have linked the peanut butter to a salmonella outbreak that has sickened almost 300 people nationwide since August. That isn’t all:
The company's Sylvester plant remains closed while the FDA investigation continues, ConAgra spokesman Chris Kircher said Tuesday. All of the jars of peanut butter involved have a product code on the lid beginning with "2111," which denotes the plant. ConAgra said customers may return the lids or full jars of peanut butter to the store where they bought them for a refund.
Reports indicate that the recall will cost ConAgra up to $60 million. How did this dangerous outbreak happen to such a beloved brand that earns ConAgra some $150 million per year? Aren’t there already stringent measures in place to prevent these types of things from happening? While we wait to learn came to be (if it ever becomes known), it would indeed be interesting and helpful for the entire industry to learn the details.
Also, Tyson Foods inadvertently forgot to add some very important details to a couple boxes of rib meat sent to Japan. As a result, Japan has suspended beef exports from one of Tyson’s seven U.S. beef packing facilities since it was assumed the meat exceeded Japan’s age requirement on beef. Here’s more:
The beef was from cattle under 30 months of age, Tyson said. The boxes, which had a total of 95 lbs of boneless short ribs, did not contain any materials considered a possible risk for bovine spongiform encephalopathy (BSE), commonly called mad cow disease, Tyson said.
Tyson says it is currently working with the USDA to get back on track. It is quite the revelation to learn that such a small stipulation could get one of the world’s largest meat producers into so much hot water. At the same time, it is nothing short of terrifying to think of the outcome — had those cases been infected and reached their final destination.
So, three very different supply chain slip-ups are making headlines and headaches. Have these companies handled the situations appropriately?
Technorati tags:
food manufacturing recalls restructuring
A
Author: T.D. Clark, ThomasNet
Peanut butter, rib meat and chocolate — whoa! Major American food manufacturers ConAgra, Tyson and Hershey are dealing with significant supply chain slip-ups right now, and while their efforts to turn things around sound ambitious, only time will tell if they will actually work.
The Associated Press initially broke the news that The Hershey Company is cutting 1,500 jobs, closing plants and outsourcing a portion of its production to Mexico. Hershey said the three-year blueprint would reduce the number of production lines by more than one-third while saving the company as much as $190 million a year.
“We recognize this will involve considerable change over the next three years, and intend to make this transformation of our supply chain as smooth as possible for our employees and customers,” said Richard H. Lenny, Hershey’s president, chairman and CEO.
The reason for the restructure? Hershey, the nation’s largest candy maker, reported a 10 percent drop in fourth-quarter earnings last month on lackluster sales. Results lagged due to weak merchandising and a recall of products made at a plant in Canada last year after salmonella bacteria was discovered.
Wachovia Securities analyst Jonathan P. Feeney said Hershey’s plan isn’t so sweet:
"We are skeptical that pulling capacity out of the system while allocating capital away from the core business accomplishes the critical mission, which is to reinvigorate consumer response to its core chocolate products," Feeney wrote.
Feeney poses an interesting point. Why shouldn’t Hershey do all it can to remain on top in the U.S.? While a part of its turnaround strategy involves attention to product innovation and more aggressive marketing tactics, it does feel like Hershey might be spreading itself too thin. Speaking of spreading …
ConAgra Foods announced last week it would recall all Peter Pan and Great Value peanut butter made at its Sylvester, Ga., plant as federal officials have linked the peanut butter to a salmonella outbreak that has sickened almost 300 people nationwide since August. That isn’t all:
The company's Sylvester plant remains closed while the FDA investigation continues, ConAgra spokesman Chris Kircher said Tuesday. All of the jars of peanut butter involved have a product code on the lid beginning with "2111," which denotes the plant. ConAgra said customers may return the lids or full jars of peanut butter to the store where they bought them for a refund.
Reports indicate that the recall will cost ConAgra up to $60 million. How did this dangerous outbreak happen to such a beloved brand that earns ConAgra some $150 million per year? Aren’t there already stringent measures in place to prevent these types of things from happening? While we wait to learn came to be (if it ever becomes known), it would indeed be interesting and helpful for the entire industry to learn the details.
Also, Tyson Foods inadvertently forgot to add some very important details to a couple boxes of rib meat sent to Japan. As a result, Japan has suspended beef exports from one of Tyson’s seven U.S. beef packing facilities since it was assumed the meat exceeded Japan’s age requirement on beef. Here’s more:
The beef was from cattle under 30 months of age, Tyson said. The boxes, which had a total of 95 lbs of boneless short ribs, did not contain any materials considered a possible risk for bovine spongiform encephalopathy (BSE), commonly called mad cow disease, Tyson said.
Tyson says it is currently working with the USDA to get back on track. It is quite the revelation to learn that such a small stipulation could get one of the world’s largest meat producers into so much hot water. At the same time, it is nothing short of terrifying to think of the outcome — had those cases been infected and reached their final destination.
So, three very different supply chain slip-ups are making headlines and headaches. Have these companies handled the situations appropriately?
Technorati tags:
food manufacturing recalls restructuring
A