Closing the sale for quality assurance

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if you've got now additional questions from Jeff's presentation and Jason's presentation pass those in or out to the outside and and various staff will pick those up I've got to say as a member of a ranch family as I was sitting over here listening to these three phases something sort of hit me and I'm going to share something I'm embarrassed about as a family we only pay a dollar ahead to get this kind of work done we're a$ 55 billion Farmgate business and alls I'm investing is a buck ahead shame on me [Applause] I remember the first audit and I was pretty excited as a young faculty member to get to participate in the first audit and we got the results and I raced back to Gunnison to the High Country to show it to my father it's always a good checkpoint for how things are going my dad listened and he looked at all this stuff and then he said so what the hell do you want me to do right fair enough so dad here's what I want you to do I want you to answer this question how do I we deliver best in World products and services not just good best in the world because when I think about the amount of risk all of you take and the amount of pain it is to be in business today is anything else really worth the effort given the amount of risk we got in the game that's what the audit asks us can we be best in world three pillars eating satisfaction product Integrity telling the story those three pillars ought to drive a lot of the way we think in my opinion and so as we listened through the strategy Workshop there were a whole lot of things that sort of came to bear and we will be handing out when we're all done the a copy of the executive summary and the full-on reports John Patterson will be available online is that right that's correct and so that this stuff really is worth studying so here are a few key action steps here's one of the challenges that I think we've learned is that we don't Define the words in the same way any of us who are married understand the problems that occur when words are defined differently so we need to Define value and communicate them broadly because in fact if you think back to that what's the root cause this may in fact be the root cause of the communication problem inside the industry we're saying one thing and hearing another when we talk to people up and down the chain we need to build a proactive strategy based on the recognition that quality encompasses more than just the product early on we were it was so cool because we could focus on make the product attributes better get rid of bruises get rid of injection sites improve taste flavor eliminate waste work on consistency that was awesome man because that was a product attribute it was easy to get your hands around but what we hear in this audit it's also the process and the closer you get to the consumer the more the process matters and I've got to tell you based on Gary Smith's comments I think this is the one that could undo us if we miss on explaining the process in the right way up and down the supply chain we may be a risk continuous Improvement here's what I take away from the audit and there and there's great news in this audit we did a lot of things well we're doing a lot of things better we've made significant changes in industry but as Peter drer said the productivity of people requires continuous learning as the Japanese have taught us it requires adoption in the west of the specific Japanese Zen concept where one learns to do better what one already does well and I know how hard that message is to deal with in the light of corn prices and drought and government intervention I get it every single day because we fight it with you but if we take our eye off of this we're going to be wrong and so it's this intense quality focus and I think it's really simple it's just no excuses just unrelenting effort by everybody everybody and we got to reconnect with our friends in the dairy industry we need to ask them to come to the Quality table on beef and we got to ask the trucking industry to come to the table with us and we got to ask everybody who sells an input into our industry to come to the table when when we engage people good things happen when people are engaged good things happen this is results from Gallop who does an awful lot of work and looking at productivity and and quality management inside lots of companies a million employees over hundreds of companies representing tens and dozens of Industries if you compare the top engagement those employees who by God I'm bought in I believe I'm an owner as opposed to those employees who are actively disengaged I don't care if you compare those two quadrants the top 25 for engagement and the top 25 who just don't give a damn and you compare them across all these industries this is what's really cool and I want to point to about four things one safety failures for people go down 49% when people are engaged when they've bought in when they have the mindset of an owner quality failures defect rate goes down 60% when your people behave like owners owners 60% that's phenomenal and of course because I'm a blatant capitalist profits go up 12% and productivity Falls at 18 and customer satisfaction is higher so when our people are bought in we do better and that's an important question for all of us to ask is everybody in or do we have folks On The Fringe who haven't quite bed into the story and we got to communicate the story we know that okay I spent La part of last week in Washington DC God I'm glad I'm back here it's time for courage in our message and it is time to set aside any effort that's about spinning it what's the truth period no spin just the truth we can't afford to be selectively transparent as an industry we cannot afford to be selectively transparent every decision every process every input every technology needs to be utilized intentionally and the way to get at that intentionality is to ask three questions of everything we do will this decision that I'm about to make affect the eating quality the product does this decision improve the product integrity and thus grow consumer trust and third is the thing that I'm about to do am I going to be proud to make this part of my industry story that's the easiest way for me to take all this data and put it into action for us now I'm going to be bold for a second you know I'm a professor sign get away with this I think I got to tell you I think phase one phase two and phase three results ought to be Central to the decision making of every industry body for the next five years where you spend your time your money and your energy is pretty well dictated in this in these results there are great messages about where we should go with our time energy and money and all of us who care about this business should buy into this and we should study this with great intensity because there's a lot of data it is a large massive complex data set it is detailed mining it understanding it and leveraging the information for progress is absolutely critical or we will have wasted the money and that would be unspeakable Chuck Schroeder when he was at ncba in 2000 said if we don't take advantage of becoming customer oriented we'll just be one more generation that missed the opportunity the food business climate is one of impatient customers and aggressive marketers what you decide here will determine the direction the industry takes and I think that's right we determine that every single day in every decision that we make there are two options to be honest in business we can get it right or we can explain to customers clients and critics why we didn't there's not any other options those are the two options one is easier than two in our society today we have lots of examples of that don't we so the choice is ours it's yours it's mine it's it's a shared choice that we get to make we're going to take the Baton I think it's an important question I'll leave you with that question why because it matters to him glad to get the rest of the questions up and we'll start into our Q&A session let's thank our three [Applause] presenters okay and in no no particular order we'll just start with some of these and and I'm going to ask a couple I think that just i' like all three of you to respond to this is sort of like the presidential debates no spin though just the truth guys what is our industry's single biggest vulnerability based on what you saw in the audit in total we'll just whoever would like to start but what's the biggest single vulnerability for our business or you look at me I'm going to say uh food safety as an industry part of the communication disconnect that appeared to occur is prioritization of the importance of food safety to the longevity of the industry and uh I'm I'm sort of a quality guy personally I mean that's what I do but uh food safety has long-term ramifications and we need to make sure that we continue to improve on the product Integrity issues that we've we've been good about dealing with we need to continue that progress I agree with Keith the the that's the area that that if something goes wrong it can really go wrong quality is a gradual gradual Improvement or gradual decline but safety can be a blow up or something and so I think that's the greatest Vil I guess I'd have to say uh providing information to Consumers and I think yes we're trying to do a better job of that and having uh ranchers where cattle are coming from on the internet and on YouTube but if a consumer wants to know why cattle are fed corn versus grass do we have that information available in an unbiased uh no spense science-based manner same with the use of any technology or or or anything so I I think it has to do with uh why we do certain things in the industry and a basis for that that a consumer can have access to readily so I would just ask both Jeff and Keith so if we accept food safety as the the number one vulnerability then let's think down to number two cuz I'm curious what number two would be in in in maybe all three of your your minds what's the next thing following food safety if we H food safety right then what's the next one that that that's the The Tipping Point mistake that if we make it we may lose consumer demand I don't think you'll find any disagreement among amongst any of us I mean this disconnect that we have with the general public at this point and what Dr hola mentioned of being able to transmit information with cattle and beef products up and down the marketing chain it's huge it's huge we've got to be more proactive and making the general public aware of how and why we do things I agree on that too I think and I don't know where you go I mean if if you look at the power that people have that within a 15 20 minute time period they could be blogging they could have a a side up anti whatever you're doing because they have a agenda or they don't understand the power that has today is just remarkable and so how you get out of the front side of that and that's you know the greatest development the last several years is the all the people that hungry for information right or wrong information about all kinds of things but especially where food comes from so you know that that's also that that part and and even s you know I remember years ago I heard a guy that talked about that he was at the county fair with his child grandchild or something and he they were leading the heer out and he reached behind and grabbed the tail and pulled it up on the back and I'm not going to ask for show hands but 80% of the people in here have done that and somebody went ballistic and seen that and said how dare you harm that animal like that so you can just imagine just all these other things that go on that that if you don't have an answer if you're not providing the answer somebody else will and U so that's a threat that's probably not within the scope of the quality audit other than some of the things that Keith has brought up that have been important about some of the concerns that people furthered down of the chain have to maybe paraphrase this question bit we early on in the uh audits it was sort of eliminate waste fat enhance taste fat and and it would appear that we've made pretty significant progress in enhancing um marbling taste fat so we've improved quality grade we've made good progress what else do we have to do to maintain and enhance customer satisfaction relative to the eating composite value of our product what Beyond just that push for marble what's what else do we need to focus on taste taste has become the number one most important thing to the sectors of the industry that deal most closely with the consumer and so we need to EXP some effort now to ensure that we maintain a flavorful and tender experience for everybody that consumes be and so the attribute so the actual action steps to do that where do where do cowf producers feeders Stocker operators Focus to to enhance taste I think we have some information coming on that I know ncba has grasp on to to this endeavor and I believe that we're starting to develop some data that indicates where we are uh and perhaps what sorts of things we can do going forward um I wouldn't say there's any solid answers at this point because I think this is a relatively new phenomenon that we're actually studying taste to the degree that we are Dr sa will probably want to comment on this but this is It's been a topic on and off over the years but to really focus some energy towards it I believe something that's new and it's going to be one of those things that we work on over the next 5 to 10 years Dr sa you turn it up just a little bit so wear you uh how do you do that put it put it in the middle up closer yeah better excellent Tom I I think that going back with and Keith had a very interesting part when he talk about that in out on the table the executive summary of the National Beef tenderness survey is there and you know with all the things that have G on the last you know number of years and concerned about quality and concerned about tenderness and all that you know those data look very very good and so I think he brought up good points that once you get to this kind of acceptable level of tenderness what else kind of kicks in and probably then that's for flavor and that's where you know beef is differentiated probably more importantly than probably the other proteins that that consumers have there and so again if you have a tender product that that doesn't deliver on something on the flavor it may not necessarily be more satisfying and U so I think it'd be kind of interesting to see how this kind of goes through and you're right we talk about taste fat and waste fat but that further defining what all that characteristic of taste you know years ago we fought the tenderness battle so much I mean if you didn't get a tender didn't matter how well what the flavor was and so I think we've made great strides or this industry's made great strides in that so now it's kind of that second thing what are you doing to make sure that people are satisfied with the eating satisfaction and you know they can also be preparation too you think about the number of meals they're eaten out and things like that having some properly prepared properly seasoned you know presented and all those and helping people understand how to cook it at home too that's that's a part of it that's in addition to the inherent nature of the product there's this evolving Trend that we're noticing and I don't know if everybody else is noticing this trend but there's sort of these crowd of folks that's sort of food Geeks they've food has become an art again and I'm kind of excited about that because I think it offers some really neat opportunities for our industry and going forward I think knowledge about taste and all of the other attributes texture and other things that we've sort of forgotten about um I think those are going to be important in helping create beef as an art form going forward and I hate to admit in front of everybody but I'm more likely to take a picture of my food before I eat it than I end to pray about it you know I'm just like everybody else now it's just they bring the food out and first thing you got to do is get your camera phone out and take a picture of it put it on your blog and so I mean it's just you just watch go to restaurants and see that so Keith's right it's kind of this celebration of food and one great food experiences and and all those things and sharing that with people you know um and as you start following people that are in that I mean every restaurant they go to they'll talk about what they've eaten how good it is or maybe how not good it is and so the pressure to deliver is probably the highest it's ever been to follow up on the marbling concept marbling was really close between instrument grading and visual grading in terms of the average uh score how much variation though was was the the variation around that mean the same between instrument grading and and the visual assessment that was done as part of the cooler audit you know I don't know I mean I I'd have to go back and look at that I don't know that we've looked at that um specifically and somewhere there's probably some standard deviations to go in those reports uh for that um so I don't know right off the top of my head based on what you saw and and and the experience that all of you have though is instrument grading predicting the extremes as effectively as it is predicting the mean I think so I mean I think if you I think if you look well obviously Keith and and his colleagues have got some great information that they presented check off funding research where they' looked at the power v m grading uh on looking at the different marbling scores and how they delivered and you take some pretty good information from the 80s and you even make that even better as far as the relationship between marbling and eating satisfaction it may be taking some variation out of the human factor or whatever else is may be predicted within that but U I just think that if you look at its exciting time that you can look at information gathered so so differently over such a you know different time period and all that and you kind of come back and they're basically once predicting the other and I think that's great news I don't know what we've done if it been different uh but I think the fact that you end up doing that get to the end of the day and you got such closeness and even when you look at variation how much of its Prime Choice select even that they're they're extremely close within that I think that's great Keith you want to expand on any from your War I think it's Human Nature nature to sort of compress things from the extremes towards the middle and instruments don't do that instruments will call a carcass what it is and so the net benefit of instrumentation is no matter what the standard was before instruments were implemented the standard will remain constant from that point forward and so if the line for Choice was X you know with human grading it could move a bit back and forth with an instruments that doesn't happen whatever it was on the day became the official that's going to be there you know 5 10 15 years from now another product attribute question variation in riy size particularly on the the large end of that distribution what what is what's the real problem that the variation Reby size causes As you move through the chain and what's the solution let me let me text tack that and see if these guys have when we talk to you know Food Service operators probably been most vocal on this and part of that goes back to the point there's there's two things happening they are they are selling product that is to be sold on a portion size so when you go to a restaurant somebody sell a 12 O steak 8 O steak 6 o steak whatever so you know making all that fit magic of something that gets bigger this way something has to give to get it to to the right ounces that will be sold well that's that's easy for everybody to understand but the second thing that has happened especially in the last three years or three four years now is as we talk to Food Service operators they're saying you got to figure out some way to give me some smaller portions and part of that goes back to the economy that if you've got something where smes coming in you got to be able to have a portion size that they can sell for $9.99 or $10.99 or something you know so you've got this this kind of two things going at the wrong direction and so if you look at a lot of the restaurants you go to now where they've got special menu Parts these are foods that you can get for under $10 or this is the $9.99 type thing like that and I know talking to cattle producers that can think about I'll give me the biggest thing you got it's kind of like you know said before that's great for you but when you're out here trying to figure out how to to compete in the marketplace it's this this thing of trying to do that and you know there's been great work you know and it's not to to say that there aren't some Alternatives of course ncbaa and the check office looked at uh beef alternative merchandising looking at some ways to cut Cuts differently and you know if you really look at it the last 20 30 years the beef industry has been doing that I mean you look at what Box Beef was when it first started and you basically had whole almost primals that were in the box versus now when you go to a packing plant and I remember sitting at the end of the line one of the plants were in this past year and thinking about how many pieces came down there that were about this big you know they're all export they're going to something so it's being cut into further iteration that's also helped us remove all the waste fat you know it's also helped us find cuts that can go to different carpet and things like that but you know somewhere in there you know you've still got this thing of what do you do with these Cuts as they get bigger and bigger and I think on the instant grading the biggest riy we found on that was 28 in and I you know I don't know but you know I've been in Europe and saw some Belgium Blue that had 28 in rib eyes Bulls you know but I don't know what you do with that that luckily there's only one of those somewhere invite a lot of friends to dinner yeah some somebody in here said can I get that Keith observations or Jason well ncba and and Bridget did a lot of good work a few years ago and what they called I think was how do we deal with non-conforming product so the extremes the 28 in RI eyes and the you know the 1200 lb carcasses which we're seeing more of pretty frequently at this point um I think there's a couple things going on that are good news on that regard Dr Sable and I were with the company uh that told us that they now sort carcasses 45 different ways uh in their coolers to to address the different marketing streams that those might fit the bad news is none of those are weight SS and so going forward there's going to be a threshold at some point at which we're going to meet either the biological ability of cattle to get that big or we're going to meet the biological ability of the market to handle it and uh and that that's going to be the end of the line interestingly enough when when they were doing the non-conforming beef study we we had a strategy Workshop much as we do with the uh in fact we did it at Texas A&M um much as we do with the National Beef quality audit and a lot of the Food Service operators that are pretty V about how large the cuts in the cattle are becoming they told us some interesting things we asked them what cuts of the beef carcass are a problem what would they say they would say it's the riine they would say it's the riine we'd say what other cuts are a problem that's it's the ribeye they say if you could make the ribe eyes reasonable size and then you could make the tender loins really really big and that' be a really valuable C so so there's some opportunities with this fabrication and and carcass breaking and those sorts of opportunities that I think you still need to pursue another question that comes from the I I think's an important one and it's it's one that's worth some thought I think so we've made the population of cattle more homogeneous in their color and their appearance do you think that's translated to a more homogeneous product and a more homogeneous eating experience and if not why not and what's the step to get the industry to go the next series of steps towards Improvement and not resting on this sort of artifactual approach to to genetic identification not V for you well I I guess I'd almost think I'm not sure we've made them as homogeneous as we sometimes think you know just in terms of you know maybe hide colors increasingly black but as we all know there's multiple uh breed types involved in that and I almost think uh you know you're just looking at the number of calves that are lightweight and going to grass or going straight to a feed yard there's almost a a Divergence of marketplaces for Cavs at weaning it's traditionally you know they went to a feed yard and so I'd almost say we we're actually getting a little bit more variation in some cases and and thanks to very high-tech feed lot management feeding practices we're actually bringing them back around at at the end so um you know I I don't know I don't know if I have a good answer to that you know I well and I wonder Tom what the what the power of you know grid marketing programs that are obviously more in place now than at any other time of the Audits and the economic signals that are being you know sent about types combinations of grades quality grades yield grades weights and things like that and these marketing programs so agent Source verified and and all the Myriad of Angus programs that are out there um how that stuff's playing out and you know as you I'm fascinating when I listen to cattle feeders talk about stuff and they'll talk about you know sorts and management things I think things been managed so much differently and more intensive today than any other time you know then just get in bunch of cattle feed them and and take them and sell them and and just pray and figure out what or somebody else is problem there's more information going back and forth there's more people trying to figure out what can I do to fit this particular Target because there's economic rewards in that and I think that's why you we see fewer outliers maybe in some of these and you've seen this increase in uh percent choice of crime would probably even though the weights have gotten bigger well that's just going to happen but we're not out here what I think going in there and having all these non-conforming uh carcasses I think that that's being reduced and I think that's a great thing but I think it's the signals that people have people understanding more about what it is to take to produce either they're doing it out of the goodness of the heart or they're getting paid for it let's turn our attention to process real quick let me stick my neck out on this just a little bit I don't know if anybody noticed in the quality assurance NB QA video there's a set of black cows in there with some white calves on on the mothers in there and I think that is indicative of an opportunity that I think a lot of you have taken advantage of I think at the seed stock level we're moving genetics towards combining the best of traits to Pro at the have calf level to produce maybe a more uniform perhaps I don't know um a higher quality set of calves and I think we're doing that with things like terminal crossbreeding programs use of hybrid biger and those sorts of things just one person's a good observation process so the audit said there are things that the supply chain cares about food safety and it cares about how and where animals were raised and it cares about our processes so if you were able to give advice to this body as to how as an industry we evaluate where our risks are in those processes that we use as an industry how would you go about that what do we do to deal with that potential disconnect between us and consumers relative to the processes protocols and approaches we take as managers so that we don't get caught in the crosshairs I go ahead I think anything you can do to get as close to Consumers those people that are deal with consumers and get the information that they're getting the questions that they're getting and try to to help formulate responses as we do especially our beef 101 program that tends to have uh that is nonproducer related is more you know endusers or people might be further down the chain or even uh some retail and Food Service markets it's amazing when they'll ask us questions our customers are asking us about this and it's you know antibiotics steroids they'll use those terms mean all these and all these things that they feel like are something going on I think the more you can take that and kind of come back it goes back to what Jason said at the start of this and try to figure out where are you more successful what what is the message that somebody else is saying that you can try to come back and provide information on that and I think that the negative has been so great over the years and continues to be so and it can be magnified so quickly today that um you know almost doing a a risk analysis what is it that we're got the greatest risk now what do we do to be able to provide responses or modify necessary well I've just gotten a note from the boss that we need to start wrapping up so let me ask one last question um to each of you for cow CAF producers seed stock operators for folks who make their living raising and managing cattle feed yard operators etc for those of us who work with these magnificent living beings what's the take-home message that you'd like them to go home with from the results of the hard work you did in this study I I'll throw my two cents out here first I uh I probably worked closer at least with the data from those producers unfortunately you know we couldn't do some of the face-to-face things that Dr belel and his crew did but um we we heard some things pretty loud and clear in terms of of where they're coming from and I was very encouraged by the involvement that they have with influencing quality and realizing how much they can influence quality and I I guess I'd have to say that um I think they're actually in a great spot you know there there's a lot of great news in this audit that's it's a little dangerous because the last thing we want to do is sit back and say look at all these great things we've accomplished you know uh let's just kind of hang out here for a while and and assume there's no problems but I would say that the take them to those producers it does come to this major emphasis from the Strategic Workshop uh strategy Workshop that these producers came in and even told us is that the industry needs to tell the story and that that means a lot of things to a lot of different people but some of that is the fact that things aren't documented things aren't written down there's no paper trail there's no information that flows with the cattle and I would say with with a lot of those producers you know generally they're doing things right I mean the vast majority of them I think are doing things right but nobody knows that and nobody knows or is able to distinguish between the ones doing it right and those few that do it wrong and so they lump all of them together and so when the people that do it wrong get in the news it ruins everybody else's image so I just think to me that's the I think I said at the beginning that's the biggest threat to our industry but biggest opportunity for these entities a packing plant is not going to be able to deal the entire beef story like you say we've got to start with the genetics and the gametes and go all the way through the system so absolutely I think it's it's telling the beef story and and but doing it strategic Al you know the same terminology the same methods science-based noow Spin A lot of the things you talked about I think if you look in the last 20 years out of the First Quality audit one of the things came out of that especially I know in the Texas group of coming up with producer training programs beef 706 had its birthday in that and birth in that and you know think about the tens of thousands of cattle producers that have been trained in many states and and all that since that time you know the message we continue to say is understand what you're producing you know if if you you're cow c producer you got to still know what the end result of that calf is even though it may be six months or a year later before that gets to that point what's probably different today that's still the same message what continues that is how is it been transported how it it's being handled what are the other factors involved in that and today it would also be what what's the sustainability of that approach are you being a good Steward as far as the total program so those continue to be added to the whole thing that people have to know about today and be responsible Keith two things quickly when I teach any class but particular particularly the undergraduate meat science class that we teach the moment I use the word food safety I get a bad evaluation and there's a reason for that it's not sexy nobody is passionate about food safety and and I could say the same thing about perhaps some of the quality things that we talked about a lot of you have heard about a lot about these things you know for the past 10 15 20 years my point is don't lose sight of the ball these are still clearly the primary demand drivers for our product and so don't lose sight of the ball we need to continue to focus on those attributes secondly don't be shy there is a need for consumers to become part of our industry we need to make them part of us we need to eliminate this disconnect between what we do in production and what they do at consumption and so we all need to do including us we need to do a better job of helping them understand how our production system works great thank you John any last comments you need to make to the group you bet couple comments number one this would not have happened if it hadn't been from be board excuse me from be check off funding These Guys these guys have spent twoth thirds of their career collecting information and trying to improve the beef industry they need to be committed for that I'd like for you to give all these guys a