Fire at a Tyson Foods beef processing plant has affected the company’s ability to maintain supply. The plant processes 6% of the fed cattle in the US.
Processing capacity in the US is nearly maxed out, so the dip in capacity will increase beef prices nationally. Tyson is working to move production to other sites.
Video Spotlight: Tyson Foods CEO: Raising Expectations | Mad Money | CNBC
This post is based on the Supply Chain Dive article, Tyson shifts production after plant fire to ‘keep supply chain full’, by Emma Cosgrove, August 13, 2019, and the YouTube video Tyson Foods CEO: Raising Expectations , by CNBC, November 2, 2017. Image source: Foodcollection.
1. What capacity management strategies should Tyson employ now?
Guidance: Students should recognize the need for back up sites or arrangements. Ask students to describe how outsourcing arrangements might be used to acquire short term capacity with smaller meat processing facilities. Do any small processors exist? If not, what other arrangements can be made at the remaining Tyson plant to increase capacity or raise production? Is the remaining plant operating 24/7 already? Can some beef processing be moved to Canada or Mexico? Are there regulatory issues that prevent this? Is there enough transportation to make this happen? The goal is to get students to consider issues that Tyson should have anticipated in the event of a disaster at this major plant.
2. Have the students apply risk mitigation frameworks to the Tyson disaster. What risk mitigation strategies should have been considered in advance?
Guidance: Review risk mitigation strategies. Students may not consider that inventory in safety stock could have been placed in cold storage to buy time until the plant could be put back into operation. Could the plant be designed to have redundancies such that loss of one part of the operation would not result in the entire plant being closed? This is a good short article to introduce risk mitigation and to possibly explore the need for safety cushion and/or safety stock.