Did you know one of the fortune 500 companies, which is well known for it is ready to cook noodles, faced a loss of USD 152 million just because of the poor quality?
In June 2015, the brand suffered a huge loss in brand value as the government labelled it unsafe. This started when a food inspector checked and found a lot of lead content in the noodles whereas the company claimed and wrote on its packaging about ‘No added MSG (monosodium glutamate)’ in their product.
A government official from Government’s Food Safety – Uttar Pradesh, India spotted this claim in March 2014 during one of his routine audits at one of the retail outlets. The sample of the noodles was then sent to the state laboratory at Gorakhpur for testing. The results that were generated happened to be positive of noodles containing lead.
The samples were then sent to the Central Food Laboratory – Kolkata, India where the results showed that – “MSG & Lead – present in the noodles: 17.2 ppm (parts per million)”. The amount of lead found in the sample was over 1,000 times more than what the company had claimed.
On seeing these results, the Food Safety Commissioner – Uttar Pradesh, sent a formal notice asking to revert with a clarification on MSG & Lead in the noodles. The company did revert with the internal monitoring documents but did not consider taking any proactive step to counter any possible aftershock.
The company never thought that this could lead to an estimated loss of half a billion dollars including erosion of brand value. In June 2015, the government declared a ban on the noodles due to the results of the MSG & lead found in the noodles. The company was asked to recall all its noodle packets from the stores across the nation.
A globally respected brand valuation organization had calculated in mid-June 2015 that government action had caused them damage of around $200 million to $2.4 billion.
Quality turned out to be a major factor that affected the brand value and sales of the company. This leads us to the fact that, no matter what happens or how big the brand is, Quality Management is the fundamental framework that can help one in building robust processes and identifying the issues at the source.
As we see, even one abnormality and improper attention towards quality cannot only cost billions but can also impact brand image. This kind of loss born by the company is not just for one time, the image that has been created after this scenario puts a lifelong impression of a brand in its consumer’s mind.
Organizations are investing in quality management frameworks to avoid such situations because Quality is no longer an order winner, it is an order qualifier!
Have you embarked on the quality journey yet?
Compiled by Faber Priyal