Maintaining Competitive Advantage with Recall Readiness in your ERP
Recall readiness is a critical component of any CPG company’s business strategy. Companies are increasingly exposed to the potential for costly product recalls in today’s global marketplace. The increasing complexity and size of recalls has made it essential for manufacturers and retailers alike to have plans in place that ensure they can respond quickly and effectively when a recall is initiated.
A strategic approach is required if you want to minimize the impact of product recalls on your brand’s reputation and bottom line. ERP software for manufacturing companies can help you keep audit trails throughout the supply chain and beyond, meaning recall readiness is a matter of course.
The importance of Recall Readiness Plans
As the size, complexity and risk of recalls continue to grow, so too does the importance of Recall Readiness Plans.
Recalls are a fact of life in today’s world. In the wake of global disruption due to the pandemic, universal staffing shortages, the political landscape and surging costs, recalls are on the rise. The Canadian Federal Government’s online database of recalls shows an uptick in numbers from 2018, when they first peaked above 1,000 products. They hit a high in 2021 with over 2,000 consumer products issued recalls. In 2022, the average cost of a recall could be in the millions, and the reputational damage is often irreversible. There is also the other cost: the human cost, with people falling ill, getting injured or potentially even ending up in critical care.
The key to successful recall management
In a world of increasing globalization and complex supply chains, it’s imperative that companies consider all possible risks before they occur. A recall can be a costly and damaging event for any company – but if you’re prepared for it by taking the proper precautions, you can minimize the impact on your business.
A successful recall response includes three key components: preparation, communication and collaboration. By being proactive in these areas, you’ll be able to take control of your supply chain and minimize downtime.
The Recall Process & Recall Management Systems
Before a recall occurs (or even while it is in progress), you need to have the right people and processes in place.
The best way to do that is by creating a recall readiness plan. This plan should include your strategy for:
- The recall process
- Who will be involved, how it will be executed, and how long it should take from start to finish. With a full-scale ERP made for manufacturers, tiered supplier management and full traceability can help streamline this part of the plan, removing much of the investigative work.
- The investigation Process
- What items were affected, where those items were distributed, the lot numbers and SKUs and any machinery that was involved in the issue. This again comes back to traceability software and the data collected by a manufacturing ERP. Easily locate SKUs affected, where the affected Lots went and who should be notified.
- The communication process
- How and when you communicate with employees or customers. If required, you may need to publish a press release with details. ERP software can help you pull all of the information together in a few clicks. When integrated with your CRM, customer follow-up can be documented and followed by anyone with access.
- The recovery process
- All materials and machinery involved in the issue can be identified and dealt with appropriately: disposal of impacted ingredients or finished goods, or maintenance of the machinery. If your ERP is integrated with your financials, you can adjust to account for the recall. This makes it easier to track and manage policy changes.
How Recall Management Software Can Help
Streamlined and seamless capture of traceability data can only be useful when all processes of material planning are fully integrated within the context of a modern manufacturing business management system – one that not only controls business operations but also provides a complete “business picture” that can be quickly re-enacted in case of a product recall. That’s where a solution like Sage X3 plays a major operational role.
It supports bi-directional tracking: registering a customer complaint and tracking its components back to all other affected customers, manufacturing processes and raw ingredients.
Alternatively, it offers the ability to trace forward based on a supplier’s recall or advisory notice can also link production with quality management testing – an integral way of detecting what other products might also be at risk because they use the same equipment or production method.
Lot control is not only an essential means for tracking information related to production batches, but it can also become a potential time-saver when associating ingredients and intermediates with lot-specific attributes.
Since common ingredients can be used in a multitude of intermediates, the scope of a potential recall can be limited to specific subprocesses associated with these so-designated items.
A significant majority of recalls are preventable and could be avoided by having the right tech in place but they are also a fact of operating a manufacturing business. The key is to anticipate problems before they happen and prepare for them with a detailed Recall Readiness Plan and traceability software.
Technology tools like lot tracing, supply chain traceability and quality assurance procedures are all interrelated business processes that work together to prevent and manage recalls in a way that only a modern integrated enterprise system like Sage X3 can address.