Successfully Managing a Food Product Recall
Despite best efforts, food manufacturers are constantly at the risk of dealing with product recalls. More than 2500 product recalls occur in the USA across all industries (not just food) every year. Let’s look at some capabilities that can minimize damages to manufacturers.
Defected or unsafe products making their way down the supply chain to consumers, as in high profile cases in Canada’s food industry, such as XL Foods Inc., can have a large impact not only in a company’s finances, but also in its company and product reputation (read more on how to survive a product recall).
The Canadian and US governments offer guidelines on how to deal with product recalls and both countries highlight the importance of having systems in place to identify when a recall is needed and then how to accurately execute it. Business management systems like Enterprise Resource Planning (ERP) solutions offer users the capabilities necessary to minimize risk of a product recall, plus be diligent and swift when one does happen.
Quick Access to Information
In a recall situation it becomes extremely important to act quickly and to communicate openly with customers, suppliers, and government agencies. An ERP solution allows for quick access to critical information about products, manufacturing processes, location of items in the supply chain, and contacts of people that must be engaged during a product recall.
A web-based solution like Sage X3 is ideal for food manufacturers because users can access the system’s database from any computer with Internet to pull critical information needed (such as lot number, item number, date of manufacture, recipe of ingredients, etc) in order to determine the scope of the recall, identify which items are defected, and stop the product in the supply chain.
Locate Any Item in Supply Chain
An ERP solution like Sage X3 brings these new benefits of traceability, (along with bar codes and RFID) to the food industry. Manufacturers are now able to locate any item, right down to a specific basic ingredient, along the supply chain. It takes it even further, linking with production and quality management testing – meaning it can identify what other products may be a risk because they were produced with the same equipment or production method. Since all company processes, like manufacturing, distribution, inventory, warehousing, and sales are automated, the risk of missing a product due to human error is minimal.
Transparency and Open Communications
Communicating openly with suppliers, customers and government agency will also minimize the impact of a food product recall. Transparency goes a long way to build trust, and with an ERP solution like Sage’s X3, manufacturers can communicate with stakeholders and define the level of access external organizations have into its own systems. Users can easily email documents, alerts, instructions (i.e. – how/where to dispose of products, etc.), and updates, in either bulk or individual emails to contacts directly from the software’s interface.
The system also allows forward and backward communication (along with traceability), meaning that whether an alert for a recall is received from a supplier or through a customer’s complaint, it can be moved in the correct direction through the chain. Plus, in case it’s necessary for a faster recall, manufacturers can also temporarily open access to product location information by authorizing external users, like suppliers or customers, to access and pull information from their systems.
Global Considerations
For companies operating in a global scale, it becomes even more critical to have processes in place to act quickly and communicate openly, as the repercussions of a global recall usually have a larger impact. An ERP system with global capabilities (multi-company, multi-currency, etc.) that address specific challenges of food manufacturers, like importing raw materials or overseas production, will help minimize interruption to the global supply chain while quickly removing defected products.
At the end of the day, a company will be judged on how it was prepared to deal with the recall and how it acted when things began going sour. A company that is prepared with tools and procedures for stealthy recall signals to customers and supply chain partners that it values their relationships. Being able to quickly track and remove defective problems and communicate transparently along the way can significantly soften the impact a company feels after a product recall, be those financial or to the business’ reputation.