Measuring the total people impact of food borne illness outbreaks.

February 17th, 2009

We don?t often see much more than the actual number of people taken ill or deaths when these cases are reported. There are always more.

We don?t often see much more than the actual number of people taken ill or deaths when these cases are reported.

This author has posted many blogs on this subject and in particular has posed many questions relative specifically to the tow large Salmelosis outbreaks in North America over the lat two years.

We are all painfully aware of the more than 1600 people affected and of the unfortunate deaths attributed to these outbreaks. In a recent blog post I indicated that these numbers made me uncomfortable as to their accuracy because of the number of people that don?t or can not report their illnesses due to a variety of reasons which can include the fact that they do not have a health care program or the money required to go to the doctor.

Today we learned the company at the epicenter of the latest outbreak Peanut Corporation of America has filed for Chapter 7 bankruptcy which is a liquidation of assets and distribution to creditors. Your first question might be why not Chapter 11 or some other forms of reorganization. Was the company that bad off financially? Or is this the easy way out in order to protect from the cost of litigation in the future. It is purely my opinion, but current loses associated with product recalls will pale by comparison to the losses associated with upcoming lawsuits by the families of those taken ill or those that have died. The obvious question now, is if the existing entity no longer exists, what other company in the supply chain might be culpable or held accountable now or in the future.
With over 2000 products recalled, the list of potential distributors in enormous.

So far we have only discussed those directly affected by the food borne illness associated with these products. The losses however go much deeper. What about all of the employees of Peanut Corporation of America and their families. What about companies that service this company such as landscaping and cleaning businesses that will now also suffer a reduction in business? What about the distributors of these products that are now required to find new sources of supply. What about increased switching costs and higher prices as a result of reduced demand. What about reduced retail sales during a crappy economy when retailers are already challenged with profit pressures? What about products with an affiliation to peanut based products? Do they suffer category losses as well?

The waterfall effect is endless as are the lists of potential questions are endless. One thing we are certain of, is that there are varied and far reaching impacts anytime poor safety practices are followed.

How can your procurement company help mitigate your risk in this area?

As always, we look forward to and appreciate your comments.

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