With a globalised supply chain, mistakes happen.
Last year, a chocolate and vanilla mousse product was flagged during routine surveillance, prompting an urgent investigation. The inquiry ultimately led the Food Standards Agency (FSA) to issue a recall of the contaminated items.
There’s no question that these recalls were necessary. Even when lives or health aren’t directly at risk, product recalls can have serious consequences for businesses — from financial losses and reputational damage to potential legal action.
Unfortunately, mistakes happen. This is why it’s so important that businesses get their supply chain processes right, and, if issues arise, know how to implement a thorough and efficient product recall process.
Here are a few steps from a supply chain perspective on how you can reduce the risk of a recall, and should the worst happen, ideas on how to handle it.
1. Stay on top of changing regulations
Product safety regulations are complex, vary between different countries, and change frequently — almost always becoming stricter. When your wholesale and distribution business expands into different international markets, compliance burdens will grow — as could the likelihood and complexity of product recall.
Having a central regulatory repository (part of a modern ERP system) would help you comply with existing regulations and to implement new ones. It provides a solid frame of reference to keep you on the right side of the law, wherever you operate.
2. Maintain robust and up-to-the-minute supply chain visibility
When a product is identified as defective, whether by consumers or higher up in the supply chain, you must determine the potential extent of the contamination, asking these questions:
- Which product batches were faulty?
- What raw materials were involved?
- Which lot or serial numbers will be impacted?
- Have we depleted the ingredient, component or part inventory?
- Is there Work in Progress (WIP) containing the recalled ingredient, component or part?
- Which other batches shared the same raw material or passed through the same production facilities?
- Is this problem new, or has it been happening for some time?
Having real-time or near real-time data is key to efficiently and confidently answering these questions. Your teams can then act swiftly, and you can avoid causing non-impacted customers’ undue concern.
Real-time business data must be stored centrally, allowing you to track information across your entire supply chain, from raw materials to production, and customer delivery.
There are many expectations when meeting regulations. Current, accurate data is critical. Your best resource is your regulatory authority. In the UK, for example, it’s the Food Standards Agency (FSA) and their page on recalls.
The good news is that with the right ERP system in place, you can have this data at your fingertips 24/7. That’s invaluable for informing your business decisions day to day, as well as equipping you to manage potential incidents better.
3. Be totally transparent, information travels fast
Consumers can access reports of product issues as quickly as anybody publishes them. A badly handled product recall can damage the reputation of your business — sometimes irreparably — so you need to control the narrative. The best strategy is to communicate with authenticity that you’re in control of the situation and that you have the right solutions in place.
Consumer trust is vital, so never make statements that you don’t know for certain to be true, especially when the pressure’s on during a product recall. This is where having strong visibility of your supply chain is crucial. From your suppliers to your customers, all members of your value chain should be able to work together to protect consumers and ultimately your company’s reputation.
4. Reduce the risk and impact of a product recall
Prevention is better than cure, and while it’s impossible to eliminate the chance of a product recall entirely, there are steps you can take to reduce its likelihood and mitigate consequences:
- Conduct mock product recall exercises
- Streamline and thin product lines and packing options
- Maintain high levels of quality control with audit trails
- Maintain strong communication with everyone in your supply chain
- Continually analyse and improve supply chain processes to minimise risk
- Monitor customer feedback, including on social media, to pick up on defects immediately
- Maintain a dedicated crisis management team.
5. Have an emergency-ready crisis management plan
Time is of the essence when dealing with a product recall. It’s advisable to have a pre-determined crisis management plan in place to ensure your business is permanently ready, just in case.
Here’s a broad outline to consider when drafting your crisis management plan:
- Determine the severity of the risk
- Identify the extent of the contamination/fault, and isolate affected batches or products
- Notify distributors and retailers as quickly as possible
- Put tried-and-tested product recall procedures into action
- Report the product issue to the relevant authority
- Publish transparent information on the recall to customers.
The right ERP system will make this simpler to instigate, not only by enabling you to access and share real-time reports across the business, but also by connecting you for easier collaboration with your stakeholders and supply chain. In addition, it should facilitate information-gathering for compliance with regulatory bodies.
These best practices benefit your business every day, not just during a crisis.
Learn more about building resilience in your business: Improving financial strategy in wholesale and distribution
Stay in control, even when the unexpected happens
Product recalls may be unavoidable in today’s complex global supply chains, but the disruption, cost and reputational damage don’t have to be.
With the right systems in place, you can strengthen compliance, gain real-time visibility across your operations, and respond quickly and confidently if an issue arises — all while protecting your customers and your brand.
Speak to our experts and discover how Sage ERP solutions help distributors and wholesalers reduce risk, streamline processes and stay recall-ready at every stage of the supply chain.
