Lean takes on a new meaning

Update 8 October 09:
This morning's NYTimes reports that Costco has worked out a supply agreement with Tyson, allowing Costco to test Tyson's products prior to resale. And, there's some speechifying from the administration and Congress. Would be encouraging if this goes somewhere, but it's hard to see it will.


The Sunday NY Times featured a front-page story, shocking and deeply disturbing, that explained how E. coli contamination is allowed to occur in the US meat industry. In one example, meat sold under the product name "American Chef’s Selection Angus Beef Patties" was actually a mixture of meat products made by Cargill from three separate suppliers. None of these suppliers, nor the producer of 'American Chef's Selection Angus Beef Patties,' tested their products for contamination. Ms. Smith, a young woman who ate a hamburger made of this meat, became critically ill and is paralyzed.

In combining the ingredients, Cargill was following a common industry practice of mixing trim from various suppliers to hit the desired fat content for the least money, industry officials said. [...] In all, the ingredients for Ms. Smith’s burger cost Cargill about $1 a pound, company records show, or about 30 cents less than industry experts say it would cost for ground beef made from whole cuts of meat [....] The listed ingredients revealed little of how the meat was made. There was just one meat product listed: “Beef.”

But, you may wonder, I thought Sinclair's The Jungle changed all of this last century ... don't we have regulations that protect the consumer? That would be the USDA, and this is what they say:

Dr. Kenneth Petersen, an assistant administrator with the department’s Food Safety and Inspection Service, said that the department could mandate testing, but that it needed to consider the impact on companies as well as consumers. “I have to look at the entire industry, not just what is best for public health,” Dr. Petersen said.

No doubt Cargill has worked its supply chain relationships to drive down costs, but it's certainly not practicing Lean principles. This is old-fashioned greed. The article takes pains to point out that Costco, known for its supply chain and cost management, insists on testing the meat it procures: those suppliers who don't want their products tested (like Tyson) don't sell to Costco. Dr. Petersen should not worry about protecting the businesses he regulates. If they have to charge 30 cents more to produce meat that is clean, so be it. What consumer wouldn't prefer to pay an incremental difference for the peace of mind?

The kink in that argument is that consumer trust is badly eroded, because regulation has not been enforced where it exists, and it has been severely cut back. Protections we once enjoyed have been hacked away under the philosophy that government is bad. We are reaping the results now, not only in unclean food but also in huge economic failures. If consumers no longer trust that they are being protected, how can a business assure its customer that the higher price of its product is due to the product really being what it's labeled? Bubba Burgers, the article tells us, attempts to differentiate its product by this label: “100% whole muscle means no trimmings.” Until I read this article, I would have had no appreciation for what's behind this message (or what something called 'fine lean textured beef' really is - for starters, the raw material for this substance is up to 70% fat; centrifuges and ammonia are involved). If you're purchasing ground beef based on label information alone, which would you think the safer choice for your family: Bubba Burgers, or American Chef's Selection Angus Beef Patties? They both bear the USDA Approval label. What are you supposed to make of that?

And yet, I have little expectation that the article will have much more of an effect than grossing out its readers. Maybe Costco will get a brief uptick in their meat department. Maybe grocery store butchers will have more requests this week for grinding whole cuts of meat for customers. That's fine, but it's not the solution. Why shouldn't we expect businesses to eliminate costs by reducing waste, not by reducing quality? Why should we not insist that government do what we individually cannot do? Why are we paying the salaries of bureaucrats who seek to protect the industries they are supposed to regulate, at the expense of citizens? Why aren't we demanding substantive change?

President Obama campaigned on change, and surely that's the message that gave him a four-year lease at 1600 Pennsylvania Ave. Yet since January, simply the prospect of change has become radicalized. Even in the face of incontrovertible evidence that the status quo is harmful, leaders are fearful of taking a stand for change, as if the safe position was to stand pat. Geoffrey Miller, in his book Spent, cites studies that correlate threat of disease in a population with low ratings of openness. The more people sense threats they cannot control, they become more resistant to change and fearful of outsiders. We can look around us and see catastrophe on all sides: environment, financial sector, housing, employment, education, health care. The response of some will be: "We need to do something about that!" Apparently, even more people will hunker down in their misery, and attack those who press for change.

You don't have to play to those fears, however. If they trust their leadership, people can be inspired to overcome their fears and act. Recently at work, we set a challenge for the stores to achieve sales levels never consistently met before. We were responding to the same economy that other retailers are using to justify hunkering down: cutting back, hyping poor values. But, we decided to inspire new levels of performance. I could give the stores no magic bullet, no certainty that they would succeed -- just my belief they would. I asked them to look only within the walls of their own stores to see what they could do to transform the experience of our customers, and deliver even greater value to them. And you know what? They did it.