Product Recalls and Reverse Logistics

It’s no secret that product recalls have increased in recent years, especially in the food and beverage industry. And, while the recalls involving tainted food naturally make the headlines, there are plenty of other product recalls and reverse logistics projects that are equally important in their own right.

In addition to food and beverages, Genco ATC gets involved in various sectors ranging from pharmaceutical to retail, consumer products, health care, automotive, and government, explains Gene Bodenheimer, senior vice president, damage research, for the company.

The reverse logistics projects themselves, however, are anything but typical.

“What we offer is customized solutions,” says Bodenheimer. “It could be a straight returns and credit processing project, it could be testing, repair, and refurbishment of electronics, or it could be engines, transmissions, and drive trains for an automotive manufacturer.”

Bodenheimer likens Genco ATC’s reverse logistics services to the foundation of a house. “We operate from a standard base, and from that you can build whatever you want on top.”

Inmar is another major player in the reverse logistics space and they also serve an array of industries, from the food and beverage (including wine and spirits) sector to footwear, pharmaceuticals, automotive, electronics, and sporting goods. The company’s nationwide network includes 33+ facilities encompassing 4 million square feet.

Not surprisingly, Inmar’s involvement with various sectors means there is a lot of interaction with federal agencies.

“If you can think of the acronym, chances are I have to deal with it,” remarks Jeff Pepperworth, president of Inmar’s reverse logistics. Indeed, that means interacting with the DEA, the FDA, EPA, USDA, and CPSC, for starters.

An evolving market

New and evolving government regulations coupled with a host of other factors are driving changes in the marketplace, says Pepperworth.

“It’s resulted in a heightened state of sensitivity,” particularly for the food and beverage companies, he says.

In addition, Pepperworth is observing tighter government activity further up the supply chain. “Typically, government agencies would visit a reclamation center or a distribution center. But, because of some of the forward stream of activity that’s happening in the storefront, we’re starting to see more government agency visits at the storefront with the expectation to levy fines.”

The days of issuing a warning seem to be over as well. “They are penalties nowadays,” says Pepperworth. “Government agents have also been given more authority and the fine schedules have been extended too.”

Genco ATC’s Bodenheimer adds that the Bioterrorism Act, along with Sarbanes-Oxley, which focuses on more rigorous auditing, are also impacting the marketplace.

Food and beverage producers have not been industry leaders when it comes to their ability to track and trace product, however, especially in the event of a recall.

“When you look at the food and beverage sector, more often than not, when there’s a safety recall the store just gets ‘cleansed,’” says Pepperworth. That’s in contrast to the pharmaceutical industry, he says, which tends to be a lot more ahead when it comes to identifying lot and date problems, making them “better equipped to account for the items in question.”

Perception is another concern, says Pepperworth. For instance, “when you totally deplete a retail shelf, you create customer concern, and you risk brand loyalty in some cases.” The retailer, meanwhile, is more concerned with the product being purged from inventory and less worried about how the customer will perceive the empty store shelf.

Although the food and beverage industry may be a bit behind the curve, it’s working hard to catch up, according to Pepperworth and Genco ATC’s Bodenheimer.

Pepperworth says his work in a range of industry verticals allows him to take best practices from various sectors and apply them across Inmar’s customer base.