All product recalls, not just those involving safety concerns, are on the rise and are a very real threat to a business which must be managed effectively. Allianz Global found that in the past five years defective products culminated in liability losses totalling $2 billion with product recalls being a significant means of dealing with them.
Besides defective products and safety concerns, recalls are now being instigated for a range of issues including ethical and religious negative implications or connotations, societal pressure and as a result of social media backlash. The triggers are everywhere and if a business, particularly a food manufacturing and beverage business, is to survive a safety recall, they must be prepared.
In this article, we consider what the impact is on your company when faced with a possible product safety recall and signs that you may not be as prepared as you thought.
The impact of a product safety recall
The Food Marketing Institute and Grocery Manufacturers Association in the U.S. conducted a joint study on food recalls in the food and beverage industry and found that the average recall costs a company millions as a starting point, with additional brand damage, litigation costs and lost sales to come. This is significant and, depending on the size of the company, can be detrimental to their future. In addition to the direct costs, compromised reputation and lost sales, a product safety recall also results in a great deal of extra work to effectively carry out.
Food safety detection
A first-ever study completed a few years ago by Queen’s University in Belfast on all recalls announced in the UK, US and Ireland in the preceding 10 years, found that of the 2,439 recalls, a mere 21% were instigated by the company involved whereas 68% were a result of regulatory body analysis during routine spot testing. 56% were due to operational errors including mislabelling, failure to declare all ingredients and cross-contamination in production, while a significant proportion were due to fraudulent activity and sabotage by suppliers downstream, which of course highlights the importance of traceability in your supply chain.
5 signs your company may struggle in a food safety recall
The food and beverage sector is under incredibly stringent control as public health can be compromised significantly if safety precautions during manufacture are not adhered to. Therefore, there are several areas in a recall which may highlight a company’s shortcomings in terms of public health and safety.
1. Failure to maintain meaningful divisions in batches to uphold integrity
One way of controlling batches, especially where safety and quality it concerned, is to create meaningful and systematic divisions which are manageable and can easily be analysed for integrity. This also creates natural isolation if one micro-batch is compromised so that the entire production run may not need to be scrapped.
Learn about batch tracking your products
2. Failure to maintain a clean, pest-free environment
As you can imagine, a logical source of cross-contamination from other food products or bacteria is unsanitary preparation and storage environments. This can include proper storage containers and conditions, the work environment in terms of pests, and the cleanliness of workbenches. Failure to recognise this, control for it and verify it is controlled, is a certain way a company could end up facing a food safety recall.
3. Failure to label products correctly
Attention to detail is paramount when it comes to labelling food and failure to label correctly is a guaranteed way to face a food safety recall. It has been found that a significant cause for recalls is incorrectly labelled products or failure to declare all ingredients in a product. This can be reason alone for a recall, but it can also result in significant safety issues where allergens are unwittingly consumed with sometimes fatal effect.
4. Failure to store food correctly
The storage of food is just as important as its manufacture, where proper temperature control and airtight containers are imperative. This is still a leading cause of food recalls and rightly so — improper storage conditions can easily result in the growth of harmful pathogens and the cross-contamination of products.
5. Failure to maintain paperwork, uphold traceability and run practice recalls
When something goes awry, it is important to isolate the source of the error so that it can be minimised or eradicated. This is done by tracing it back to its roots. This often involves consulting documentation that should accompany manufacture at every step. If a company does not maintain these documents and promote traceability, food recalls can become a nightmare and if the cause of the error is not understood correctly, then it can easily be replicated, often unknowingly. Therefore, it is vital to maintain good paperwork practices and run recall drills so that in the event of the real thing, it will be effective, efficient and achieve a good outcome with minimal impact.
Dedicated inventory management software gives product businesses a way to track and organise their stock using the cloud. Learn more about inventory control.
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.