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Contaminated Baby Formula: The High Costs of Poor Quality

At the Sturgis plant, contaminated baby formula led to serious illnesses and a crippling shortage (see earlier post).

Sloppy procedures, deficient product testing, and a company culture prioritizing output quantity over quality were the precursors to a widespread crisis that could have been prevented. The FDA’s nonchalance and a lack of swift, corrective action have imperiled the lives of many and cast doubt that all root causes of the problems have been eradicated.

Video Spotlight: FDA: Problems at Plant behind Baby Formula Recall (March 23, 2022, Wood TV8) 

This post is based on the Bloomberg Businessweek article, How Deadly Bacteria Spread in a Similac Factory—and Caused the US Formula Shortage, by S. Berfield and A. Edney, August 24, 2022, and the YouTube video in the Spotlight. Image source: JGI/Jamie Grill/ Blend Images LLC.

Discussion Questions:

1. What are the costs of quality? Explain how they were incurred at the Sturgis plant.

Guidance:  Review prevention, appraisal, internal failure, and external failure costs. With insufficient training, delayed maintenance, a history of hidden violations, and poor conditions (e.g., pool of water), efforts on prevention seem to have been minimal. Similarly, quality control procedures and frequency were inadequate. Notably, a lack of “quality at the source” and fail-safing along with an overreliance on final product testing hindered accountability and early detection of problems. When defective products were not permitted to leave the facility, substantial internal failure costs were incurred. However, the external failure costs are by far the worst: extensive recalls, litigation from affected families, substantial loss of output and revenue, and poor image.

2. Contrast the culture at Abbott and an organizational culture focused on zero defects.

Guidance: According to this article, the culture at Abbott emphasizes profit making at the expense of making it right the first time. It seems that the company is more concerned about avoiding problem detection than avoiding problems themselves. It has a history of hiding problems and failing to report them to the FDA in a timely manner. It also emphasizes the lack of a direct linkage between the contaminated formula and an infant’s illness or death rather than finding the root causes of the contamination.

3. Which ones of Deming’s 14 points seem most relevant to this case? Explain.

Guidance: All points are relevant, but points #5, 6, 7, 8, 11, and 13 are especially important. Training (#6 and 13) appears to be deficient, leading to a multitude of mistakes in production and quality control. The leadership tries to hide problems (#7) and does not emphasize quick corrective action and continuous improvement (#5). Rather, it prioritizes output quantity (#11) and instills fear as indicated by several employees’ comments and their dismissal (#8).

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