Monday, July 21, 2014

SUPPLY CHAIN RISK

McDonald's and KFC--


From South China Morning Post--


McDonald's, KFC launch probe after China supplier 'used rotten meat in fast-food products'

Mainland fast-food giants used supplies from Shanghai plant, but not in Hong Kong outlets
PUBLISHED : Monday, 21 July, 2014, 10:11am
UPDATED : Tuesday, 22 July, 2014, 5:38am
 
More mainland fast-food chains have said they sourced food from a Shanghai factory shut by authorities amid allegations of using rotten meat.
But the affected chains - including McDonald's, Pizza Hut and KFC - all said that none of their Hong Kong outlets used meat from the factory.
Mainland fast-food chain Dicos yesterday said it had taken breakfast sandwiches off its menu because its ham had been sourced from Shanghai Husi Food Company.
Swedish retailer Ikea also said it had bought chicken meat for its mainland branches from the factory between September 2012 and August last year.
Shanghai food authorities on Sunday shut the factory, owned by a US-based company, as it investigates allegations that Husi falsified the expiry date on some of the meat products sold to international chains McDonald's, KFC and Pizza Hut.
Watch: China supplier of KFC, McDonald's accused of using rotten meat in fast-food products

The move followed a news report on Shanghai's Dragon TV exposing the malpractice at the factory. The report showed an e-mail from management, which allegedly asked employees to extend the expiry date of 10 tonnes of frozen beef. The meat, reportedly already green and odorous, was reprocessed, refrozen and repackaged with a new expiry date, the report alleged.
The report featured footage showing staff picking up food from the floor and throwing it into processing machines. Discarded Chicken McNuggets, a McDonald's staple, could be seen being reprocessed until they passed inspection. The report indicated that clients did not know about the practices.
An officer seals off a computer at Shanghai Husi Food Company. Photo: Xinhua
Screenshot from the Dragon TV report on Shanghai Husi Food Company.
McDonald's and Yum Brands, owner of the KFC and Pizza Hut franchises, reacted by saying they had stopped sourcing meat from Husi and had started investigations. Both companies apologised, and said their mainland restaurants could now face a shortage of certain products.
Yum Brands identified its sausage and egg burger and a "spicy roasted burger" as being affected. McDonald's did not specify any products.
Husi's parent company, the Illinois-based OSI Group, apologised, saying it had formed an investigation team and was fully cooperating with inspections conducted by the authorities.
Workers have nothing to do at the workshop of Shanghai Husi Food Company. Photo: Xinhua
Screenshot from the Dragon TV report on Shanghai Husi Food Company.
"Our ... management believes this to be an isolated event, but takes full responsibility for the situation and will take appropriate actions swiftly and comprehensively," its statement said.
The China Food and Drug Administration has launched an investigation into the company.
Xinhua said administration investigators visited the processing facility in Shanghai's Jiading district on Sunday evening, but were stopped by security guards until police arrived.
Shanghai Husi Food Company supplied restaurants including KFC. Photo: Reuters
The agency said it had since closed the processing facility and seized suspected raw food items. It ordered clients to take the factory's products off their shelves.
The factory was licensed to export to Hong Kong and Japan, its website said. The Centre for Food Safety said it had no record of any meat imports from the Shanghai factory to Hong Kong.
A spokeswoman for McDonald's Hong Kong said it did not receive any products from Husi Shanghai but had been using meat supplied by OSI group branches outside Shanghai.
Chicken nuggets production line at the Husi plant. Photo: Reuters
KFC and Pizza Hut told media that they did not use any products from the factory in question.
The Shanghai factory processed 25,000 tonnes of food annually. It received a food safety award from Jiading district this year.
OSI, which has close to 60 manufacturing facilities worldwide and had revenue of over US$5 billion in 2012, has been supplying McDonald's in China since 1992 and Yum since 2008.
McDonald's has about 2,000 restaurants in China. Yum has 6,200 branches in China, while Ikea has 16 stores.