A Holistic Approach To Recalls

Managing reputational risk, media, logistics costs and more.


He also urges companies to ask themselves the hard questions. Such as: “Where are we at risk? What has happened to others in our category? Where are we vulnerable? If we had a recall situation, what could possibly go wrong?” And, that includes things that could go wrong upstream or downstream that could impact a company’s business, reputation, and ability to deal with a recall quickly and effectively, adds Goldberg.

 

Talk is NOT cheap

While Goldberg says that the “technical side” of handling recalls has been steadily improving over the years, there is still much work to be done regarding communications, public perception, brand protection, and “taking responsibility for what is happening and taking responsibility for protecting your customers. This is where the real risk to reputation occurs,” he says. “The message your company delivers and the tone you set as an organization either builds the trust of your customers and supply chain partners, or diminishes trust.”

Moreover, “Information and perceptions form much more quickly today. It’s instantaneous now and organizations need to be prepared to answer the ‘new telephone,’” he remarks. In other words, “Thirty years ago the housewife wrote a letter to a company, 20 years ago she picked up the phone, 15 years ago she used AOL to go to the company’s Web site and maybe submitted a question online and waited for a response. But, social media is the new telephone. Instead of having a one-to-one conversation with the company’s consumer affairs representative, the housewife is having a one-to-hundreds or a one-to-thousands conversation with her Twitter followers or Facebook friends.”

Simply put, the advent of social media means a reputational crisis today can very quickly spin out of control, warns Goldberg. “Especially in times of a crisis, a company has to be equipped to know what is being said about it in real time and has to respond in real time. Think about the perception when a customer has a product issue, contacts the company via social media, and gets a response back, ‘I’m Bob. Please DM (direct message) me.’ That customer is very likely going to go and tweet their satisfaction with that company. But if the company fails to respond or they hide behind some corporate policy, the customer is probably going to tweet that too.”

When it comes to social media, “the larger companies get it and they have teams of people who are dedicated to monitoring it and responding to customers with meaningful information in real time. As for other companies, there are various levels of sophistication. Some are willing to hire out this function, but you cannot ignore it. You need someone to take on that role even if it’s for a limited period of time so that an organization can gear up to take the function in-house. And that’s important, because it’s always going to be better received and more authentic when the message comes from within the company. I’m not a big fan of ghost tweeting.”

While the food industry’s number one goal is to eliminate the need for recalls, they still happen, and on occasion pose a threat to consumers, says US Foods’ Pallaske.

“Our recall system is the last line of defense for our customers. The faster we can communicate with our customers and have them remove recalled products from the marketplace, the more likely we will prevent a foodborne illness. No matter how large the recall, all US Foods’ customers receive direct email and voice message notification via our automated system (built by Seneca) moments after we are notified of a recall. The system then tracks customer response to the messages and provides US Foods with a list of customers who haven’t responded. Those customers then receive one-on-one contact from our distribution centers,” he says.

 

Technology as the enabler

According to RedPrairie’s Tom Kozenski, vice president of product strategy: “Recalls are a broad issue that require various processes to navigate successfully, not the least of which is collaboration with your customers and your suppliers.”

He adds that, “Technology helps provide very accurate data around inventory genealogy and shipping history. In short, when we are alerted that there are tainted goods in the supply chain, we can find out where those goods are in real time, and all of this information can be maintained in real time in a customer’s database.”

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