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Another Chinese supplier drops McDonald's in the fryer

Jonathan Cooper-Bagnall
May 13, 2015 9:56:00 AM

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In the latest example of the extent to which a geographically far-flung supplier can negatively impact a corporation’s reputation, we present the case of McDonald’s and their Chinese french fry supplier.

Last week, it was reported that Beijing Simplot Food Processing, a company supplying fries to McDonald’s franchises in China, had been slapped with the largest pollution fine in Chinese history after it was found that wastewater released by the company had organic compound levels that exceeded the legal limit.

In itself, this fairly localized incident may not seem like a big deal. But the timing of the negative publicity could not be worse for the beleaguered fast food giant that is losing sales, closing stores across the US and seemingly fending off supplier driven crises with concerning regularity. It was just a year ago that McDonald’s became embroiled in another scandal when a different Chinese supplier was found to be using and supplying McDonald’s with expired and potentially tainted meat.

But back to Beijing Simplot, McDonald's itself may have had no visibility, involvement or oversight into the practices that led the supplier to run afoul of local pollution statutes. But that doesn’t quite matter when it comes to perception or media coverage. Consider that a quick search on Google News comes back with more than 200 articles on the news of the supplier and its polluting practices. The McDonald’s name is included in each and every headline. One would need to read a few paragraphs into the article to find the actual name of the supplier.

Large global corporations rely heavily on suppliers and, more often than not, reap tremendous benefits. This we know. But, we are reminded again this week of the risks to reputation, brand and bottom line that accompany this reliance. And, we are reminded of the need to monitor the activities and practices of external suppliers while treating them as an extension of the organization. Without this level of routine oversight, brands will face increasing reputational risk wherein a simple side of fries can turn into a significant side of scandal.

So with research showing that suppliers are now more important to your business than ever before, isn't it time you took control of your extended supplier base?

As always, if you have any thoughts or comments, please add them to the box below.

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