Stage 1: Crisis Generation
Several negative events converging on Kellogg’s Eggo production resulted in the national Eggo shortage (see appendix 1). Two out of four major Eggo manufacturing facilities were non-operational and one of these facilities has suspended Eggo production indefinitely. The two offline facilities are located in Atlanta, GA, and Rossville, TN, Tennessee being the major contributor (Pepitone, 2009). Although, the facilities in Blue Anchor, New Jersey and San Jose, California are still operational Kellogg's is unable to meet the consumer demand. Lack of preparation on Kelloggs part has created an organizational crisis (Perkins, 2010).
The Atlanta, GA facility has faced two issues. First, during a routine inspection on Aug. 31st of 2009 by the Georgia Department of Agriculture (GDA) (see appendix 5), Listeria monocytogenes was found in a batch of Eggo’s Buttermilk Waffles. The GDA pointed to sanitation problems as causing the contamination, including such things as dirty utensils and equipment, and lax employee hygiene (Popovich, 2010). The plant closed on September 2nd to address these issues and temporally eased production. It remained shut down for the duration of September to clean and sanitize the facility. In addition, they recalled about 4,500 cases of Eggo Cinnamon Toast Waffles and Toaster Swirlz Cinnamon Roll Minis made at the Atlanta facility during this time (McCormick, 2009). However, no related illness was ever reported. In late September, they were ready to reopen the facility, but heavy rains hit Atlanta. This further delayed production into October which was in a news segment titled "Bacteria, Flood, Shut Down Atlanta Eggo Plant". While the Atlanta Eggo Plant was closed from the flooding, the U.S. Food and Drug Administration (FDA) performed an inspection at the facility. The inspection was in response to the Georgia Department of Agriculture finding in August 2009. During the inspection, the FDA also found Listeria monocytogenes (see appendix 6), the same bacteria that was discovered by the GDA. Beside the bacteria contaminations, FDA noticed many other violations such as employees using high pressure water in cleaning near exposed raw materials, trash was located too close to the exposed food products, condensation and drippage above the production line, and employees touched their shoes, nose and mustache after washing their hands without re-washing before going back to work. On January 27, 2010, FDA issued a formal written warning letter to Kellogg regarding the Atlanta Plant and gave the company fifteen days to have some specific plans for corrections in place. Furthermore, the Rossville, TN facility was closed for renovations during the time period that the Atlanta facility was having problems. The renovation team has encountered some unforeseen problems, causing delays in reopening. This is a major hit to the overall supply of Eggos because the Rossville facility was responsible for producing roughly half of all Eggo waffles (Perkins, 2010).
All these factors, represented in the time time below,combined have created a crisis for Kellogg's. The company has no back-up plan in place to amend this situation or prevent it from happening initially. The market for Kellogg's popular breakfast treats has suffered due to the shortage the crisis created. The Eggo crisis opens a door in the market for competitors to take advantage of Kellogg's shortcomings. Kellogg must evaluate the situations and make some changes so the world famous breakfast treat will be at consumer's fingertips. Understanding more about the company's management style, products, and history will give insight into alleviating the crisis at hand. Stage 2: Investigation
(See Appendix 2)
Management Style at Kellogg
The management style at Kellogg is based on a solid foundation of integrity. The company has “K values” which are to act with...
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