Few things keep food producers up at night like the prospect of a product recall. At best, a product recall is a benign mistake that causes nothing more than aggravation, inconvenience and perhaps an angry customer or two. At worst, the consequences can be tragic, in both human and economic terms.
Industry research generally puts the average cost of a food product recall at around $10 million. That average figure includes all three classes of recalls (see the end of this article for a refresher on the FDA’s classification scheme for food recalls). Some companies can weather a loss like that without skipping a beat. Can yours?
Before you answer, consider that only the direct costs of a recall are included in that $10 million estimate. For the full cost, you have to further account for the immediate lost sales caused by the recall as well as the long-term damage to your top line caused by consumers’ erosion of confidence in your products.
The larger your company is and the more public attention it enjoys, the greater the cost of the long-term reputational damage. Case in point: what do you think of when someone suggests Jack in the Box? If tainted meat and deathly ill diners come to mind, you can appreciate how lasting reputational damage can be; that E. coli outbreak at Jack in the Box happened nearly 25 years ago.
Consumers have long memories for companies that poison them. Even when your response to a recall gets described by experts as a textbook example of effective crisis management, the damage is severe and persistent.
Indeed, food producers lose more money to product recalls than any other industry. A recall is generally caused by one of the following:
The first cause is the most dangerous. Contaminants are what make people sick. With the exception of undeclared allergens, the other two causes are generally benign from a health standpoint, though incorrect or incomplete labels account for the plurality of food product recalls.
Fortunately, there are many ways you can prevent the need for a recall. Here are a few.
Establish pre-receipt quality checks
Confirm the quality of an ingredient before you receive it into your warehouse. When contamination happens upstream of your production facility, pre-receipt checks can intercept problem ingredients before you add value to them and before they have a chance to cross-contaminate your other ingredients and equipment.
Check for quality throughout the production process
Quality checks can’t stop at pre-receipt. To ensure that you’re doing everything possible to prevent recalls, you have to check for quality at various stages throughout the process. Make those checks part of your standard operating procedure. Advanced features can help you create and enforce approval gates, stopping a process until a critical check is successfully completed. As well as performing checks as a routine part of your production process, you should also conduct periodic audits to evaluate 1) how effective your quality checks are and, 2) how consistently they’re performed.
Consistent tracing not only simplifies recalls, but helps prevent them as well. The only thing worse than identifying a recall-worthy problem is not knowing which products are affected. Knowing exactly what’s affected means you can conduct a highly targeted recall rather than a more expansive (and expensive) one. You may even be able to prevent a recall entirely if you can be certain nothing suspect has yet been delivered to customers. Good tracing software can give you the confidence to stop recalling products simply because you’re not sure if they’re affected. Barcodes and scanners can be a huge help here. They reduce the effort necessary to properly trace everything and they eliminate transcription errors.
Build strong relationships with your suppliers and partners
Draft formal agreements that clearly spell out your expectations and what will happen if those expectations aren’t met. Visit their plants, know their people and audit them when necessary to make sure they’re delivering on their obligations. When there’s a cold chain to maintain, these relationships are all the more important: a break in the cold chain far upstream of your facility can create contamination that may be hard to detect until it’s too late, so take steps to make sure you’re working with the right partners and that meeting your expectations is something they’re both capable of and committed to. Having those expectations in writing is always good; get your lawyers involved to make sure your interests are protected.
Use the right equipment and maintain it properly
Choose non-absorbent materials to reduce contamination risk. Use equipment and work areas with smooth edges and rounded corners because they’re easier to keep clean. Establish strict cleaning and validation protocols and stick to them. Maintain the equipment in accordance with regulations and the manufacturer’s guidance. Here too, software can help you create and enforce a hygiene protocol.
Invest in effective, recurrent training for your employees
Knowledge is power here. Employees who are educated (and frequently reminded) of food safety best practices are better equipped to identify and solve problems before they can lead to a recall. Workers who fully appreciate the danger and risk involved in food production are more likely to take proper precautions and to bring issues to management’s attention that might otherwise have been missed.
Label everything properly
With inaccurate labels accounting for over 40% of all food recalls, this area deserves a lot of attention. Undeclared allergens account for most of these label-related recalls. Software that tracks every ingredient and creates ingredient roll-ups is what it takes to get this right. For such a seemingly trivial mistake, label errors cost the industry billions, so it pays to invest here.
Implement a real-time production system
When you need to trace an ingredient, you don’t have time to wait for your server’s overnight data consolidation to see where that ingredient came from and what products it went in to. Delays mean more time and effort invested in producing something that will eventually get rejected (or worse, recalled). Real-time data can stop an error chain before it leads to a recall.
These are a few of the best practices leading food producers employ to reduce the risk of a product recall. In most cases, food producers rely on integrated business software to make this level of quality control practical. With the average cost of a single recall in the region of $10 million, it makes sense to invest significantly in preventing one.
Refresher: U.S. Food and Drug Administration product recall classification
Class I recall: a situation in which there is a reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death.
Class II recall: a situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote.
Class III recall: a situation in which use of or exposure to a violative product is not likely to cause adverse health consequences.