As David Barboza reported over the weekend in The New York Times, Chinese authorities are expanding their melamine investigation. Melamine is the toxic chemical that should not be making its way into the food supply chain — but that nevertheless has been. By now, some may be tuning out news about food (and product) safety scandals. Not sourcing executives… Managing risk — particularly food and product safety risk — has risen to the top of the agenda of most sourcing executives. The same is true for government regulators, both here in the U.S. and abroad.
What is perhaps most interesting, though, is that there really aren’t a lot of good ideas on how to effectively manage this category of risk. I was struck by this comment from a professor at NYU, who was quoted in Barboza’s article:
“’A year ago, everybody should have been in a complete panic about it and done something then,’ said Marion Nestle, a professor of food studies and public health at New York University and the author of ‘Pet Food Politics: The Chihuahua in the Coal Mine.’ ‘Someone should have required that melamine not be in any food product.’”
Professor Nestle seems to be assuming that simply requiring that melamine be excluded from the supply chain would have solved the problem. Not so — and particularly not so in China. The number of participants in the food supply chain — just in China — is huge. How would you communicate new requirements to all these participants, let alone enforce these requirements?
Putting the right regulations on the books is perhaps a necessary step, but a much more comprehensive approach to solving the problem is required. As noted above, regulation must be coupled with communication and enforcement. In addition, key players (government regulators, inspection agencies, private sector leaders) must agree on standards and provide for transparency about who is abiding by these standards. This last piece creates positive incentives for good behavior — an important complement to punishments for bad behavior.