Food Logistics serves the entire food supply chain industry with targeted content for manufacturers, retailers, and distributors.
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34 JANUARY/FEBRUARY 2015 • FOOD LOGISTICS www.foodlogistics.com It's surprising how many companies are confident that they will never have a product recall and have no contingency plans in place. To have that confidence is to ignore the simple truth that there are risk factors that are not completely within your control. Fortunately, recalls are not common. But, they do happen. When they do, the best response is a prepared one. Denial of potential prob- lems is risky. But recognizing risk in your business and preparing contin- gencies is powerful and bears a direct impact on how well you respond and recover. Every consumer- goods company should plan for these contingencies, particularly in the food industry, where the potential impact to consumer safety and brand equity has far-reaching implications. Many companies do take some measures to reduce recall risk, implementing strong quality controls and even positioning quality as a brand differentiator. But, more is required. Think about these external factors that led to high- profile recalls: • A plant in China that used paint with cadmium content on a product used by children to consume liquids. • Dog treats produced overseas that turn out to have ingredients toxic to dogs. Striving for best-practice quality, with safety baked in, isn't the whole picture. There is more complexity to contend with, not the least of which are global manufacturing and supplier bases providing raw materials and ingredients for your products. You can impose and monitor quality standards with vendors and suppliers, but measures must be taken to plan for the defects that are outside of your direct control … those low-probability, high-impact events like product recalls. 'That will never happen here' Good recall preparedness isn't being able to look at your quality controls and say, "That kind of thing will never happen here." It's knowing what you'll do if it does. If your company has robust reverse logistics capabilities you shouldn't make the mistake of thinking that those capabilities will suffice in a safety recall. And, don't make the mistake of thinking your forward logistics program is recall-ready. Some large consumer-goods com- panies have tried this approach and learned it doesn't work that way. Forward logistics don't effectively reverse for returns management, and recalls are a different set of circumstances alto- gether. A reverse logistics program is a compo- nent of the response to a recall, but it is not by itself a solution to a recall. The process you have in place for everyday returns, seasonal product withdrawal, liquidation, etc., is designed for efficiency, economy and value recovery. It is a continuous process that runs relatively predict- ably and at scale. By comparison, recalls are much more issue- and event-specific. Each will be unique and may be driven by safety and regulatory requirements. It's important to note here that resources and capabilities are not the same as process. Companies that are good at reverse logistics may have the general agility and capabilities that are necessary for effective recall execution, but recalls are issue-driven. The same process used in everyday returns man- agement won't completely meet the requirements of a recall. So recall preparedness warrants knowing how you'll use those resources and capabilities when you need them in that context. Recalls often come with strictly defined requirements for product withdrawal. Product may have to be destroyed onsite; it may have to go to a designated facility to be destroyed; that disposition may be very market-, loca- tion- or audience-specific, subject to regulations at federal, state and even local levels. Take the example of a recall for health hazard or food contamination: there may be requirements for onsite destruction using specific protective equipment and clothing to minimize handling and avoid potential human exposure or cross- contamination within the supply chain. While recalled products that are already 3 P L / R E C A L L S Don't Rest On Quality Alone: Recalls Demand Preparing For The Unexpected R ecalls. Just the men- tion of the word can send shivers down the spine of a supply chain manager. No one ever wants to have one, and you can't blame anyone who doesn't even want to think about it. You should. Planning is essential to effective response, consumer safety and minimal business disruption. BY STEVE DOLLASE