Blog > Food traceability solutions for painless product recall management
Product recalls aren’t a new phenomenon, but as supply chains grow so do their complexities and the risk and probability of facing product recalls. Using reliable and scalable food traceability solutions to maintain full visibility in both straightforward and intricate supply chains is of utmost importance to safeguard both the brand and consumers.
And the cost of product recalls is substantially high. Food withdrawals, rejections, and recalls cost the food industry $7 billion annually. According to the Grocery Manufacturers Association, the average direct costs to a company of a recall start at $10 million, plus indirect costs such as brand damage and lost sales.
With the right food traceability solutions that we’ll explore, you can avoid or minimize these impacts and benefit from significant savings on recall execution costs and retain greater consumer loyalty with limited stress on customer relationships.
Read on to learn what leads to product recalls and the solutions you should implement to ensure you’re equipped to manage them in the most efficient way possible and minimize any negative impacts.
Varied causes and costs of recalls
The common causes of contamination include noncompliance with quality standards, incorrect labelling and undisclosed information, lack of information on raw material sourcing, undeclared allergens, microbial, mislabelling, packaging faults, biotoxins, and foreign matter. Recently, undeclared allergens have been the leading cause of food recalls under the FDA jurisdiction, at 43.5 percent of all food recalls.
A recall itself can be triggered from various situations including notification from a supplier of contamination of an ingredient lot or batch; results from regulatory or your own sampling and inspections; complaints from distributors, retailers, or consumers; and real or threatened product tampering.
There are numerous logistical challenges and direct costs that result from a recall including:
- notifications to regulatory bodies, supply chain stakeholders, and consumers
- the reverse logistics of tracing, returning, storing or destroying the defective products and the associated labor required for this
- third party expenses such as removing the defective product from the shelf and their concomitant loss of sales
- laboratory and investigation costs
- legal, public relations and other professional advice
- cleaning of contaminated premises and potential redesign along with the closure of the plant or production line this involves
- and additional staffing expenses for things like consumer help lines
Indirect costs are also significant and often include lost sales to the company, potential litigation, fees, and lowered market value and brand reputation.
In a Harris Interactive poll, consumers indicated that,
55 percent of consumers would switch brands temporarily following a recall, 15 percent would never purchase the recalled product again, and 21 percent would avoid purchasing any brand made by the manufacturer of the recalled product.
Minimize recall costs, time, and effort
As an Operator, Distributor, Manufacturer and/or Producer it’s near impossible to ensure you never experience product contamination, so the best course of actions is to be certain your supply chain management tools are automated and streamlined with a straightforward process that’s ready to go in case of recalls.
Unfortunately, and as we’ve seen first-hand in recent years, many businesses don’t have as much control over their supply chain as they believe, and their recall management systems aren’t as efficient as they could and should be for the food industry. An average recall takes 14 days to identify and 34 days to enact, and due to the lapsed time typically only 40 percent of the products can be collected.
The three leading causes of poor recall management are:
Ensure your supply chain management system can provide you with the information you need to properly manage product recalls and avoid the challenges and mess that you’ll face if you don’t have complete visibility and traceability.
An automated system in itself can reduce the recall process from days to seconds but the focus needs to be on making sure that you’re using the best supply chain solutions for your operation that are purpose-built for the food industry to handle unique challenges.
Use the below as a guide to review your supply chain management system to ensure you have access to the information needed for efficient product traceability and successful product recall management.
How to successfully prepare for product recalls
Traceability
There are a number of types of traceability to make the product visible through the supply chain. You need both forward and backward traceability, as well as internal traceability (such as product design, raw materials origins) to find the root causes of the defect, and external traceability (public data for the partners in the supply chain to ensure end-to-end traceability, location of items to recall, and returns management).
This requires maintaining quality records, and an appropriate system or automation technology for doing it. Products need to be able to be traced to a lot or batch and to a specific ingredient or additive used, requiring batch codes. Records are required for ingredients, process control points, and shipping including the name of the shipper. This includes customer and supplier records and contact details, for both sales and receiving.
Visibility
Along with streamlined traceability capabilities, you need to be equipped with tools for enhanced visibility into and throughout your supply chain.
You need the ability to capture data across all supply chain checkpoints in real-time and be able to share it on a common platform that’s visible to all stakeholders in the supply chain. Automation technologies can be used to detect undeclared allergens, correct mislabeled products, and ensure formulation/ingredient control at the outset, minimizing the likelihood of a recall at the outset.
This data can be automatically and securely stored from multiple sources to enable quick, easy, and accurate tracing of contaminations and subsequent alerts to downstream vendors. This can include not only issues at the farm or processor, but problems related to storage at the warehouse or shipping such as truck temperature regulation. In some instances, this can prevent a recall from occurring if the issue is caught early enough in the chain.
Food traceability solutions for accurate, real-time supply chain visibility and traceability
Direct Store Delivery/Proof of Delivery
TELUS Direct Store Delivery (DSD/POD) for example, provides you with the track and trace capabilities you need including:
- Real-time visibility into the movement of products, enabling businesses to track products from the point of manufacture to the point of sale.
- The ability to accurately locate affected products and quickly remove them from the market.
- The ability to effectively monitor delivery and sales activities to assure compliance and security.
Order Management
A good order management system such as the TELUS Order Management System (OMS) software can provide enhanced scanning capabilities and route reconciliations that make external traceability easier. Users also benefit from:
- Enhanced inventory visibility for insight into which products have been recalled and which ones are still in stock to prevent the sale or distribution of affected products and reduce the risk of harm to consumers.
- Efficient communication with customers, suppliers, and other stakeholders during a product recall.
- Automated process of sending notifications, updates, and real-time information to affected parties.
- Extensive product detail from GS1 data including allergens, ingredients, nutrients, and images with TELUS DATUM that centralizes all your organization’s product attributes for a single version of the truth.
Warehouse Management
The TELUS Warehouse Management System (WMS) software is the tool you need to successfully maximize staff productivity, manage inventory effectively, and comply with food safety regulations.
This WMS system will give you the benefits of:
- Lot traceability, including system-generated receiving lots and tracking attributes to the order product lot for food safety compliance like country of origin and harvest locations.
- Improved inventory turns and product visibility.
- Product Traceability Initiative (PTI) compliance, GS1-128 Global Trade Item Number (GTIN) compliance, as well as voice box codes for productivity as well as efficient traceability
All of the above food traceability solutions will help streamline your processes so you can efficiently manage a recall and comply with regulations by different sources including food manufacturers, distributors, or by government agencies (USDA or FDA) to avoid regulatory penalties or a potential shutdown.
Ultimately, automated and streamlined supply chain management systems that are purpose-built for the food and beverage industry, including direct store delivery systems, order management systems, and warehouse management systems can improve the traceability and visibility of your products to reduce recall likelihood, action time, cost, and pain.
Again, product recalls aren’t a new phenomenon and for the last 40 years TELUS solutions have been at core of ensuring your operations and customers have minimal negative impact from a recall.
Find out more by visiting our supply chain management solutions page or contact us to request a demonstration by an SCM expert.
