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Tom Fox: How to avoid those supply chain blues

At one time there was nothing more Texan than Blue Bell ice cream. Unfortunately, that was before the company nearly went under from a scandal involving listeria-tainted ice cream which caused the death of multiple consumers back in April 2015.

The company was forced to recall its entire product lines, shut its operations for several months, and completely eradicate the unsanitary plant conditions that led to the listeria outbreak. It was a massive effort and cost. The company paid a $850,000 fine to the state of Texas as well.

The company had resumed operations and was trying to put its food processing nightmare behind it when, last fall, Blue Bell products with cookie dough flavoring were found to have listeria in them. The company was forced to issue yet another recall for all cookie dough flavored products and face the wrath of its customers yet again. Fortunately for Blue Bell, this time it was not the direct cause of the listeria.

The U.S. Food and Drug Administration determined that an Iowa based supplier, Aspen Hills, which supplied the cookie dough products used in Blue Bell ice cream, was the culprit. According to the Houston Chronicle, “the FDA’s findings confirmed that Aspen Hills had indeed lapsed on safety practices” and these lapses led to the listeria outbreak.

The consequences to Aspen Hills have been catastrophic, as the company shut down its operations in December and the owners have now announced they are going to exit the business.

This sordid story emphasizes two important lessons for every anti-corruption compliance practitioner.

First, the integrated nature of your supply chain. To the public, it really doesn’t matter that it was a supplier to Blue Bell that caused the health and safety issue. The tainted cookie dough was found in a Blue Bell product. Corporate liability might ultimately point to Aspen Hills as the culprit but the public will perceive that Blue Bell put the listeria-tainted ice cream on the market. In other words, you are only as good as your supply chain.

Second is the lesson for ongoing monitoring and auditing of your key supply chain partners. If your supply chain partner’s products are so critical to your operation, — like the cookie dough flavoring in cookie dough ice cream — you need to engage in ongoing monitoring and auditing of the services that deliver the product.

FDA inspectors found multiple health and safety violations at the Aspen Hills facility on an announced visit. The question for Blue Bell is why they weren’t even looking.

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Tom Fox is a Contributing Editor of the FCPA Blog. He has practiced law in Houston for 30 years. He’s the creator of the award winning FCPA Compliance and Ethics website. He is the Compliance Evangelist. His best-selling seminal book, “Best Practices Under the FCPA and Bribery Act: How to Create a First Class Compliance Program” (available from Amazon here) is widely viewed as one of the top volumes on the nuts and bolts of compliance.

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