Confirmed: Software upgrade contributed to dairy scare

A review confirms ZDNet analysis that a software upgrade contributed to traceability delays
Written by Rob O'Neill, Contributor

The world's biggest dairy exporter, Fonterra, today confirmed a software upgrade was one factor that contributed to last month's botulism scare and international product recall.

In a statement to the New Zealand Stock Exchange, on which its shares are listed, New Zealand dairy cooperative Fonterra said an operational review found that among other factors a major upgrade of computer systems at some of the company's sites just before the recall resulted in product tracing taking longer than it should have.

“Shortly prior to the recall, we had upgraded the computer system in some of our sites, and had yet to complete comprehensive training, which affected the speed at which we were able to trace product. We have now completed this training and are confident that our people can use this system to efficiently trace products across our entire supply chain," Fonterra chief executive Theo Spierings  said.

A spokesman confirmed, as ZDNet earlier reported, the upgrade was a rollout of SAP enterprise software at Fonterra's Australian operations. 

The spokesman said the issue was that Fonterra's Darnum plant was in a "transitional phase" after the upgrade.

Darnum is where irregularities in New Zealand manufactured whey protein concentrate were first detected. Since what Spierings called the "precautionary recall", further testing established botulism was not present.

In its statement, Fonterra said a "one-off lapse in information sharing across two parts of the business led to delays in testing". 

Spierings said the issue was not the result of a single cause, but of a number of "separate and unrelated events occurring in an unforeseen sequence".

“The operational review has enabled us to strengthen our systems, while continuing to process this season’s fast-growing milk flows," he said.

To prevent any recurrance, Fonterra is implementing improvements including increasing transparency, internally and externally, to improve information flows and the speed at which issues are escalated. 

Fonterra said it will strengthen its product recall and supply management systems which allow tracing and collaborate with customers on linking different supply chains.

“We are well underway in implementing these improvements," Spierings said.

“We also plan to carry out a wide-ranging review of our traceability systems in our global businesses. We are introducing additional authorisation requirements for non-standard processing and testing, and are conducting specialised audits of our global manufacturing plants and product quality standards," he said.

A summary of the review's findings will be available early next week.

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