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Are CEOs Prioritizing Profits Over Safety?

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How do you feel about the fact that 97 percent of our country’s antibiotics are made in China?

Should free enterprise be “free” to compromise our safety as a nation?

The COVID-19 crisis has made the answers to these questions clear. Now more than ever, safety is paramount—and it has prompted leaders to reconsider their business models.

When determining critical priorities, I always recommend falling back on one of the basics of Lean: SQDC. This acronym stands for Safety, Quality, Delivery, and Cost, and it means we should use this pecking order of sorts to prioritize safety over any other objective, quality over delivery and cost, and so on. It’s a hallmark of the Lean business model.

What does this look like in practice?

  •       We would never ask employees to risk their health or safety to meet other goals of quality, delivery, or cost.
  •       We would choose to incur higher expedited shipping costs to make a delivery commitment, as delivery trumps cost on the SQDC priority list.
  •      We would never ship a product that doesn’t meet quality specifications for the sake of meeting a delivery commitment.

Although the principles of SQDC seem rather straightforward, I’ve seen how easy it is to get away from them when a company is under pressure, particularly when CEOs and senior leaders are measured and compensated under policies that run counter to these principles.

CEOs regularly tell me they believe in Lean thinking to eliminate all forms of waste, and they contend they understand the premise of SQDC. Then they ignore my counsel and empirical statistics against moving their manufacturing facilities to a foreign country just for the sake of lowering costs. When they move their supply chains thousands of miles away from their customer base, it’s common that they’ll never realize the initial objective of maximizing profits.

Big Pharma’s Safety Paradox

Pharmaceutical company CEOs certainly are putting cost ahead of safety when they decide to source antibiotics and raw materials for essential medicines from China. It’s an industry-wide practice: according to a recent U.S. Department of Commerce study, 97 percent of all antibiotics in the United States come from China.

To be fair, these CEOs may be thinking about Lean safety in the realm of workplace injuries or accidents. However, I believe it’s crucial that they consider safety in the broader context of the general health and well-being of our citizens.

Amidst precarious foreign relations with China, which include contentious trade negotiations, why are we putting so many essential eggs in their proverbial basket? What would happen if China decided to overtake American industries that produce life-saving medicines, such as antibiotics, and other critical medical technologies?

Award-winning global health journalist Maryn McKenna paints a dim picture of this possible future:

“In a world without antibiotics, three of 10 pneumonia patients would die. For every 1,000 births, five women would not survive. Essential organ transplant operations would come to a halt. Since 80 percent of all antibiotics in the United States are used for farm animals, our food supply would be significantly altered.

The death toll resulting from cutting off our nation’s supply of antibiotics would make the effects of COVID-19 seem trivial, at best.

If CEOs can’t put our nation’s safety ahead of profit objectives, we may need to resort to government intervention and federal regulation. Instead, let’s rethink the role of SQDC and Lean to show the path to profitable growth—via superior quality and lead times—for companies who make the standard commodity items we can’t live without.

**Originally published at The New Rationalist

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