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How ERP systems help companies mitigate risk and vet their recall preparedness.
Recall is a word that no one in the manufacturing industry wants to hear. In addition, the negative attention that social media can circulate adds another dimension of fear over a recall incident. Disparaging tweets, unfavorable Facebook posts, or poor online reviews can project undesirable information about your products and company out of your control, producing long-lasting effects brought on by loss of trust and/or tarnishing the company’s brand well into the future.
Unfortunately, recalls are not uncommon. FDA issued over 9,000 product recalls in 2017.1 In fact, the Centers for Disease Control and Prevention estimate that one in six Americans get sick each year from foodborne illnesses.2
Mitigating the effects of a recall or preventing recalls from happening in the first place is essential. Being prepared is critical, and it’s imperative your manufacturing company has an effective recall management plan and solution in place to identify and reduce unnecessary risks in your organization.
Product recalls involve retrieving a batch or entire production run of an end product, usually involving a lot or many lots of the product or raw materials used to create the end product. Recalls are most common due to a defect or safety concern, including due to undeclared ingredients or allergens, inadequate plant safety, mislabeled products, cross-contamination, or lack of temperature control. The procedures involved in executing a recall are tedious, thorough, and involve oversight by the FDA.
Your company needs to be proactive rather than reactive in addressing safety concerns. It’s important to ensure unsafe products are removed from store shelves and reported per regulatory standards in a timely manner.
Recalls happen to even the most conscientious of companies; yet, it is how a company responds to a recall that makes a difference in mitigating negative blowback. Failure to handle a recall effectively has serious consequences both financially and legally. Being unprepared leaves your company open to risks and potential litigation, including the inability to recall a product, untimely recall handling, or lack of compliance with governmental regulations, all causing potentially devastating consequences.
Even with the most comprehensive recall management plan, both direct and indirect costs can occur. Direct expenses include laboratory testing, production stoppage, overtime pay, legal penalties, class action lawsuits, managing the return and disposal of affected products, and post-recall marketing efforts to lessen the negative effect on your company’s reputation. Indirect monetary effects include erosion of customer confidence, stock price instability, and loss of brand loyalty and future sales-all costing your company in unquantifiable ways that will require damage control.
Consumer are increasingly growing aware-and concerned-about safety in the food supply chain. Health demands from the public further highlight the need for recall preparedness to meet supplier, retailer, and regulatory expectations.
Pressure to meet these rising expectations has become a focus of companies as they strive to foster transparency throughout their manufacturing operations. Consumers are oftentimes the driving force behind increased governmental regulations as their knowledge prompts legislative change regarding the quality, safety, and health benefits of products consumed. Today’s increasing connectivity of consumers makes them a voice to be heard by all manufacturers.
Recall Prep: As Easy as 1, 2, 3
To institute a successful recall, three steps must be taken to mitigate risk and plan for the possibility.
1. Utilize Effective Tools
Ensure that you have a documented, FSMA compliant Food Safety Plan. A recall procedure should include integral components such as an appointed and properly certified coordinator, traceability procedures, contact information for regulatory agencies and legal counsel, sample notification letters for media and retailers, and access to a current list of customer purchase history. A chain of command should also be designated to establish protocols and accountability for implementation of the plan.
An industry-specific ERP (enterprise resource planning) software solution is a vital tool in recall preparedness and effective management. ERP can assist with helping to prevent and execute a product recall. A real-time, integrated software with full forward and backward lot traceability and allergens tracking saves time and eliminates errors caused by manual methods and disparate systems, providing timely identification and location of possible contaminants.
An ERP system can help you achieve end-to-end traceability, maintaining a comprehensive record that tracks ingredients and products throughout the supply chain using barcode scanning, linking product and lot information to batch tickets, shipping documents, and labels. Certificates of analysis (CofAs) and quality-control tests can be generated to bolster preventative measures in production, ensuring product consistency.
ERP functionality supports current Good Manufacturing Practices (cGMPs) and FDA requirements and industry regulations with the ability to manage and retain detailed inventory information, allowing raw materials and finished projects to be located quickly within the first maximum 24-hour time period of a product recall.
2. Develop a Communication Plan
The value of communication is often overlooked, but its impact on recall preparedness is immense. Failure to address proper communication channels can have devastating consequences, worsening the impact of a product recall on your brand and reputation.
Establishing a sound and comprehensive communication plan that details recall efforts to all stakeholders and that involves ways to test the plan’s effectiveness and resolve any communication issues through practice is key. Once in place, a plan can help to drive the recall process and deliver consistent and timely company messages to the appropriate individuals. These elements should be included in the communication plan:
Having a communication plan in place prior to a product recall allows for the efficient and effective sharing of critical information to necessary individuals. An ERP solution retains contact information of stakeholders and regulatory bodies and detailed data records, including purchase orders, bills of lading, CofAs, and shipping information to easily identify affected outlets and consumers.
3. Perform Mock Recalls
The importance of mock recalls cannot be stressed enough. The adage “practice makes perfect” is truly applicable in this setting. Even though regulatory requirements do not require a company to conduct mock recalls, they’re a crucial component of your company’s preparedness plan and should be considered a best practice for process manufacturers. With an integrated ERP system at the helm to guide the mock recall process, you’re able to test and refine plans regarding recall procedures.
Simulated exercises test recall procedures, the goal being the ability to locate 100% of designated products within the assigned timeframe and notify interested parties. Employees also have the opportunity to familiarize themselves with procedures and responsibilities within the plan.
While a successful simulation involves being able to locate all contaminated products and notify clients, vendors, and government agencies quickly, ideally the goal is to identify trouble spots to improve the plan. Conducting a mock recall identifies issues, mistakes, and deficiencies of the plan and allows your company to refine the key personnel, processes, and the communication plan. Multiple mock recall simulations may be necessary to solidify procedures. Your organization should develop a schedule for regular performance of mock recalls to evaluate the recall plan’s effectiveness.
An industry-specific ERP solution supports the following for recall preparedness:
With the time, money, and effort you’ve expended to bring your company’s products to market, it’s important to make sure a recall doesn’t destroy your efforts. Implementing proactive measures and crafting a well managed response plan prevents recalls and saves lives while allowing your brand to continue to thrive. With effective tools, a detailed communication plan, and utilization of mock recalls, you’ll have a well-thought-out, well-executed plan to succeed and remain competitive in the marketplace in the event of a product recall.
Daniel Erickson has been with ProcessPro since 1999. As ProcessPro product strategy manager, Erickson focuses on driving overall market success by ensuring products meet both current and future market demands. His diverse experience with the customer base within the food, beverage, nutraceutical, personal care, pharmaceutical, cannabis, and chemical industries within ProcessPro provides a strong foundation for his position.