Why inventory software is essential in the event of a product recall

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Think your business will be immune from a potential product recall catastrophe? One glance at the FDA’s archive recalls page for 2015 should be enough to dispel any business owner’s illusions that it can’t happen to them. From faulty airbags to a salmonella outbreak, product recalls can affect practically any company in the business of manufacturing, buying and selling products.

Product recalls are something most businesses pray they never have to deal with but need to be prepared for in case they do occur.

While it is generally only the most sensational examples of product recalls that make the headlines, many companies, large and small, find themselves having to handle situations where goods need to be recalled for one of a myriad of reasons.

In such instances, it is essential to have a product recall protocol already set in place coupled with the infrastructure, (logistical and I.T.), to carry out the recall as quickly, quietly and cost-effectively as possible.

An integrated inventory management software system with the capability to track, trace and account for inventory in real-time as it moves through the supply is a necessity in the case of product recall.

Here’s why:

Product traceability throughout the entire supply chain

Once an issue within a product batch is identified, it is critical to quickly trace the movement of a particular unit or batch of units through the business’ supply chain. To this end, most inventory management software solutions work off a barcode or RFID tag system. This ensures that each item of inventory moving the supply chain is clearly and easily identifiable.

Through the integrated inventory management software system, the team tasked with carrying out the recall will have access to a centralized pool of real-time data including lot and serial numbers, origin and date of manufacture, sell by and expiry dates, ingredients, orders pending, as well as orders shipped. Such information is invaluable in the event of a product recall.

This allows for a rapid appreciation of the size and scale of the recall issue, the number and identity of the customers the products were shipped to and also exactly where in the distribution chain unshipped products from the defective batch are being held. This allows them to be quickly removed from the supply chain.

Without transparency into the supply chain in real-time, businesses could find themselves locked in a protracted and very costly recall situation that could severely damage both the reputation and bottom line of the company.

Proactive planning and preparation

Of course, prevention is always better than cure. A powerful inventory software solution enables businesses to ensure that all the required safeguards are in place throughout their supply chain to prevent defective or expired product from being shipped out to customers. This pre-emptive approach to stopping a recall situation before it occurs is undoubtedly one of the major advantages inventory control software imparts.

For businesses that deal with high obsolescence rate products like perishables (food and beverages, pharmaceuticals, cosmetics and beauty care products etc.), the inventory software should be aligned with the nature of the products moving through the supply chain.

This ordinarily entails setting a First-In, First-Out strategy (FIFO). FIFO inventory management basically ensures that the first stock manufactured or brought in from suppliers is also the first stock to be picked, packed and shipped out to customers when an order is fulfilled.

Handling the response

Once the business discovers or is made aware of a situation requiring a product recall it is imperative to step up, accept responsibility and work to resolve the issue as quickly as possible.

Attempts to cover up the issue and tactical reactions have been demonstrated a number of times to be the worst approach a business can take in dealing with a recall situation.

If it is a situation involving a threat to public safety, the business must use all communication channels at their disposal to alert the public to the specific nature of the issue as well as the steps the business will be taking to address and remedy the issue. The sooner the business is able to get out in front of the problem and work from a strategic standpoint the better.

While working with regulatory authorities is always advised, waiting for them to carry out investigations and confirmations is not. The primary concern for any business is always public safety. This more often than not entails alerting customers to the issue immediately (without waiting on regulatory body findings) and putting the necessary steps in place to recall product and prevent any other product from leaving the supply chain.

Do what’s right, not what’s required

Business owners who fail to understand that customers expect businesses to do what is right, not simply what is required, inevitably learn a very painful lesson. This lesson could cost them their reputation and hundreds of millions of dollars.

The epicenter of any product recall operation will be its inventory management software. The strategic steps required to carry out a speedy and safe product recall need to be planned out and prepared in advance by management. However, without the ability to track, trace and account for every batch, item or ingredient moving into the supply chain with pinpoint accuracy, no product recall can be effective.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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