The impact of product recalls and how to avoid them

Over the years product recalls have cost organisations billions in lost revenue, damaged brand reputation and reduced consumer confidence. Food and beverage and consumer packaged goods manufacturers demand high volumes at low margins. As production rates increase to meet consumer demands and expectations, maintaining optimum quality is vital.

The FSA deal with around 1500 incidents every year1, therefore unsafe products, or products of poor quality are still reaching consumers, and manufacturers need to avoid it. In the Food and Beverage industry alone, the Food Standards Agency (FSA) recorded approximately 75 food recalls in the past six months, many of which were allergy alerts due to the inclusion of gluten, milk, nuts, and soya.

Over the last few years technology and processes for traceability and quality management have improved greatly, so why are there still so many product recalls? Could complex global supply chains be creating higher risks in food safety? Could both improved systems and tighter regulations have enabled more issues to be identified? Why are these issues still making it out of the factory door and onto the supermarket shelves? 2

Bad news travels fast in today’s digital world, so far more people will see a recall notice. It will have a damaging effect on brand reputation, distributors’ confidence, and the potential to reduce market share and decrease profits. Ideally, manufacturers need to avoid recalls by identifying issues before products are shipped.

Ask yourself:

  • What is the cost of rework?
  • What is the cost of labour associated with quality loss or rejects?
  • What is the cost of losing market reputation for poor quality products?
  • What is the cost of customer satisfaction?

Read these ten handy tips on how to reduce the risk of a product recall and how to mitigate some of the damage if one occurred:

1) Get to know your Marketing and PR department

Help your Marketing and PR team to understand the products you manufacture, how the process works, where problems might occur, and which distributors would be affected. This will help them to form crisis management strategies and prepare tactics for different scenarios.

2) Audit raw ingredients/components regularly

Check your supplier processes, quality standards and recall plans. Are your suppliers meeting legal requirements? Can each batch be traced? What is their biggest risk?

If your suppliers have an issue with their products, will it have a major impact on your operations?

3) Ensure that all machinery has auditable records

All tools, machinery and equipment within your facility must be kept fully serviced and have auditable records. Recalls, especially in the food and beverage sector are often due to suspected or actual contamination by machine parts. You should also ensure storage and transport facilities are in full working order.

4) Ensure your processes and policies are up-to-date and being completed

Are your current processes being followed? Are all relevant staff fully trained? Carry out unannounced spot checks and ensure that staff feel competent enough within their roles to make sound quality decisions. All training, competencies, checks and controls must be recorded, to demonstrate due diligence. Sometimes, mistakes do happen, but you will need to demonstrate that you have done everything in your power to avoid them.

5) Create a culture of continuous improvement

Safety and quality should always be valued higher than increased production quotas. Sustainably increasing production whilst maintaining and improving quality should be the ultimate goal. Ensure that the ethos is communicated to all departments, not just quality.

6) Have a recall plan in place

Who do you need to contact - government authorities, suppliers, distributors? What is your plan of action? What information will you have to hand, and who needs to know it? Run through the recall plan with key personnel, PR and distributors. Having an effective recall process in place and containing the problem before it continues through the supply chain can mean escaping extra costs.

7) Have adequate insurance cover

Ensure that your insurance covers everything. Recalling products is costly; your plant may have to shut down if an investigation is required, production lines will be halted, and your overheads will still need to be paid. Your customers may lose confidence and you may lose them. You may also require extra funds for a PR campaign to re-strengthen your brand.

8) Consider adopting digital technology to reduce the risk

Adopting digital technology such as a quality management System (QMS) ensures that recalls can be targeted quickly and efficiently, reducing the impact of the recall. Real-time quality and traceability data from across operations can prevent product recalls from happening and gives manufacturers the ability to take control if a recall should occur, enabling optimum product and safety recall responsiveness, whilst protecting the brand. Having such systems will reduce the likelihood of any issues being shipped out of the door, enabling you, and your PR team to sleep at night!

9) Quality processes need to be integrated with operations

Quality needs to be an integrated function within operations for it to yield truly beneficial results. It happens frequently; 2-3 days after a batch run, the results are in from Quality Control and the whole batch needs to be scrapped! Often shop floor operatives will capture data, not truly understand it, and pass it off to someone else. Whereas the specialised, stand-alone data analysis performed in QC will give you results and insight. Bringing QC and operations together, in process quality checks coupled with real-time results, will enable step changes in production quality results.

10) Engage & empower operations personnel

Engage and empower operators throughout the production cycle, by providing real-time feedback, or notifications of rule violations, upcoming tasks or HACCP checks and workflows if something is trending out of specification. Ensure employees know the standards required, what may happen if that standard is not reached and what action to take. Providing actionable intelligence, giving the right information to the right people at the right time will no doubt encourage quality improvements.

For more information on how to improve yield, reduce production waste and avoid costly recalls, please email enquiries@cimlogic.co.uk or call Cimlogic +44 (0)1274 599955.

References: 

(1)  https://www.food.gov.uk/news-alerts

(2)  https://www.foodsafetymagazine.com/signature-series/recall-the-food-industrys-biggest-threat-to-profitability/