Increasingly facile access to global labor sources must not be tainted by a strategic shift in management control practices from oversight to abdication. Vertical integration of corporations is rapidly breaking down in the face of more effective, disaggregated models that retain a core executive responsibility for capital allocation, but are prepared to in source or outsource all other functions.
The most effective outsourcing relationships, however, manifest the same requirements as managing your local mail room. The required level of competency to handle the current work and the capability to recover from future problems must be guaranteed by the management team. In the spate of pet poisoning incidents last summer, with tainted protein supplements imported from China, it became clear that the horizontal organization of the various distributors, middlemen, and manufacturers left few with the technical resources, or the inclination, to retain responsibility for the integrity of the final product.
Menu Foods of Canada, one of the largest private label pet food manufacturers in the U.S., ordered supplements from ChemNutra in Las Vegas. ChemNutra imported wheat protein from Xuzhou Anying Biologic Technology Development Co. in China. Xushou Anying purchased wheat protein from independent distributors across their district in China.
In a telling expose written by the NY Times, interviews with local distributors, small farmers, and melamine suppliers (melamine is a coal waste product that registers as “protein” on standard feedstock tests) highlighted the fact that putting melamine into food was a standard practice in China, not an isolated incident. Tests at the FDA indicated that melamine by itself is non-toxic, but the melamine had been mixed with cyanuric acid (used to adjust pH in swimming pools) which formed crystals that blocked kidney functions. Cyanuric acid manufacturers in China noted that they had been selling the chemical to local food manufacturers for years.
The point for corporations involved in BPO activities is certainly not that China exports poison. The point is that a correctly managed outsourcing arrangement requires the same level of care and measurement as any internal function. As the global model of loosely coupled, highly distributed, companies continues to evolve and expand we need to assess the regulatory costs as an integral component of the final price to the consumer.
China may have exported a few thousand tons of adulterated protein in the past year, the U.S., on the other hand, exported trillions of dollars in toxic securities over the past decade. Assessing which product defect contaminated more lives and caused more damage can be left to history, but everyone involved in the complex realities of our new global economic infrastructure needs to start figuring out who let the dogs out.
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