Piecing The Recall Puzzle Together

Most companies assume they will never have a recall. Don’t be one of them.

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Faced with a recall? The key to success is to be prepared. Food Logistics spoke to Ashley Kerman, director recall product management for Winston-Salem, NC-based Inmar Inc., to find out the basics of putting together a recall program.

When putting a recall program in place, where should a company start?

The best first step in planning for a recall is to develop a recall protocol. Most companies assume they will never have a recall. Recall protocol and mock recalls are types of contingency planning. Multiple people within the organization need to be included in the planning—anyone that is part of the supply chain. This includes logistics, marketing, sales, finance, legal, IT, regulatory, legal, accounting, shipping, customer service, call center, warehouse operations, executive, PR, brand management and quality.

Each area plays an important role whenever there is a scenario that requires that you execute your plan. A recall protocol needs to include who does what when in each of the functional areas. It is also important to think through various scenarios and include this in your plan. From a recall standpoint, some of the elements include:

  • Communication timing and method—Internal, external, call center, website;
  • Notification methods to customers—E mail, fax, letter, business reply cards, press release;
  • Product retrieval (pick-up or ship to location);
  • Product storage location (third party or distribution center location);
  • Processing procedures (scanning of items and at what level such as lot code);
  • Crediting or payment procedures (based on customer paperwork or actual processed items);
  • Disposition and storage;
  • Reporting to executive management and any government agencies.

When these decisions are made, a discussion needs to be held with those that would be responsible. Their input is needed to determine if they can handle the additional volume, if the systems can handle the level of detail that is needed, etc. This is especially true with recalls since it is a return with special requirements that does not fit the forward distribution world.

At a minimum, a contingency plan for recalls should be reviewed annually with all the parties involved. People change positions so those that initially understood all the details may no longer be part of the team. New members need to be up to date. In addition, a mock recall is a great way to test your process to see if it works according to plan. Associates within the company become active participants in the event.

The mock event then allows the company to make the necessary refinements to the plan before the crisis happens. It is also helpful to have a third party company that specializes in recalls work with a company on a plan or protocol. Their experience in working with various companies can provide an insight and best practices approach to the plan.

Does company size matter? Can a company be small enough that it doesn’t need a program?

A recall can happen to any company, regardless of its size. Any company impacted by a recall will be required to follow the same procedures regardless of its size. The basics are notification, retrieval, operational processing, financial settlement, disposition and government reporting. As it should be, the company focus is to ensure consumer safety and protect brand image. Smaller companies may have even more limited resources and therefore need to rely on outside assistance to manage the recall, especially the operational back-end components.

Why should a company work with a 3PL such as Inmar to handle reverse logistics? What benefits does it offer?

Recalls are handled through the reverse supply chain. Manufacturer’s forward distribution networks are designed for effectively processing full-case, first quality goods. Most manufacturers don’t have the systems, the experience or the facilities to deal with the individual items/ eaches that are returned with a recall.

For those that choose to manage a recall in their forward distribution facilities, the process can create chaos and lost productivity for forward distribution. Not to mention that many times the recalled product requires special storage such as a quarantined area to meet regulatory requirements. The systems to collect and account for the returned products should be automated and provide daily updates to meet not only the credit needs but also the reporting requirements for the government agencies.

Given the extreme cost of executing recall events poorly, having an expert partner on board to ensure efficient, cost-effective execution is like a good insurance policy.

Another supply chain challenge is the urgency of the recall. Given the time sensitive nature of recalls, retrieving product back from your customers completely and timely is critical. One way is to coordinate and manage the transportation through the use of returns kits. However, one risk is that more product than just the recalled product will be returned. Another alternative is to utilize a field team to retrieve the recalled product and then ship to a designated location.

Many retailers and wholesalers prefer to handle their product through their existing reclamation process. If recalled product flows through the reclamation process, Inmar already has this product accumulated on behalf of our retailer/wholesaler customers in one of our 33 facilities. Recalls also occur infrequently so dealing with a 3PL such as Inmar assures that changing regulatory requirements are met and resources familiar with recall procedures are dedicated to handling all aspects of the recall.

Six Actions To Enable Efficient Traceability

By Rik Schrader

Recalls have quickly become the rule in today’s food industry, rather than the exception. One look at the USDA Web site shows multiple recalls announced each month.

These incidents include products ranging from cereal to produce, and the stakes are high from both the food safety standpoint and the business perspective.

Thus, traceability—or tracking product movement through the supply chain—is needed to manage this issue and proactively respond to crises.

Increased government regulations and industry requirements for product quality and traceability are driving food distributors worldwide to create more efficient and integrated supply chains. Distributors are gradually turning to technology providers to help meet this demand.

As with any initiative, companies have to learn how to crawl before they walk—and ultimately run. With traceability, most distributors are still crawling, and those that are idle are strongly considering a move in 2010.

The crawlers are combining technology and the Foodservice GS1 US or the Produce Traceability Initiative to automate some or all supply-chain functions—from TMS and WMS to delivery, enterprise and POS systems.

However, the wide array of available solutions can be daunting to some distributors, leaving them to ask “where do I begin?”

There are six primary actions that distributors should consider to enable efficient traceability.

1. Integrate technology: Seamless integration of all supply chain systems and processes is vital for effective traceability and keeping total cost of ownership in check. Integration creates a unified, well-oiled machine that not only enhances traceability, but provides more visibility, best practices and control over all supply chain functions.

2. Synchronize data: Automated data synchronization plays hand-in-hand with system integration. No matter how advanced a technology solution may seem, if product data comes from sources that aren’t fully in sync, then distributors cannot rely on the accuracy of that data. Integrated technology helps distributors synchronize data sources and create a central data repository for effective workflow, swift access and reporting.

3. Capture detailed information: It’s all in the details. The more information a distributor collects, the better prepared they will be for a recall. Those details should include Global Trade Item Numbers (GTINs), lot numbers, expiration dates, “born on” dates, and inbound/outbound GS1-128 labeling, among others. Without the ability to rapidly access this data, businesses and consumers will be at risk. Many legacy systems cannot manage this information, so distributors need to evaluate risk and make critical decisions about upgrades or new solutions.

4. Enable detailed delivery: Part of capturing details lies in product delivery. Companies should consider technology that tracks items from the warehouse dock to the customer’s door. Ideally, drivers would use mobile devices to view route and account information, access invoice details, collect signatures, apply payments and print invoices.

5. Deploy distribution/transportation best practices: Distributors should also enact industry best practices that ensure company processes and procedures can maximize their technology investment. Those best practices include ensuring accuracy of data and warehouse touches; automating capture of warehouse touches without manual entry; and aligning data use from distributor to retailer.

6. Apply traceability processes to enable rapid recall processes: Lastly, after distributors deploy traceability, they should ensure the system is applied effectively to meet industry requirements and standards, while deploying an automated tool that enhances supply chain efficiency. Getting to the detailed information quickly will allow all supply chain players to successfully react with resolve.

The traceability topic won’t go away soon. Companies should act now to protect themselves and gain a competitive advantage for future success.

Schrader is senior vice president at Retalix Ltd., a retail and supply chain technology provider in Plano, TX. Contact: [email protected].