How to prepare for a food recall before it starts
Nicole Hardin is director of product management at Sage, where she leads innovation for Sage Business Cloud Financials.
This month, a meat company in Arizona recalled nearly 7 million pounds of beef after a salmonella outbreak. To put that in perspective, that’s the amount of beef 31,000 Americans typically eat over a year. To date, 57 illnesses have been reported across 16 states. Last month, Gravel Ridge Farms in Cullman, Alabama, recalled its eggs after another salmonella outbreak, which is still having an impact across the U.S., with another two dozen illnesses reported a month later. Unfortunately, food recalls like this are on the rise. Records from the U.S. Food and Drug Administration and U.S. Department of Agriculture demonstrate an alarming trend — since 2012, the number of food products recalled by the FDA has jumped over 90%, and the number of foods recalled by the USDA shot up by nearly 85%.
However, this climb in recalls doesn't necessarily mean food is becoming increasingly dangerous to consume. In fact, the upward trend is a direct result of the combination of two recent changes: the increase in government agencies’ power to monitor and intervene in manufacturers’ operations, as well as the increased scrutiny and widespread communication between consumers, who can easily share any questionable products via social media.
For companies producing and distributing food products, there's an increased likelihood of uncovering potentially faulty goods, which can damage the company’s reputation and ultimately, sales. Here's how food manufacturers can effectively monitor their supply chain, ensure the products they produce and distribute are up-to-code and above all, keep the safety of their customers top of mind.
Keep a finger on the pulse of changing product regulations
Government agencies like the FDA and USDA consistently modify and update product safety regulations in the public interest. Oftentimes, these changes tend to be complex, and manufacturers are required to adapt to each change in regulation. Take the FDA’s Food Safety Modernization Act for example: signed into law by President Obama in 2011, it gave the FDA the power to prevent food safety problems instead of retroactively reacting to problems, forcing manufacturers to track of their entire supply chains, and document and trace every ingredient used. For global manufacturers, keeping up with regulations is even more difficult, as food manufacturing laws vary greatly from country to country. Genetically modified organisms, for example, are a staple in the average American’s diet, but are illegal to produce in countries like Russia and Peru.
Luckily for manufacturers, there are several ways to keep on top of changing regulations. First off, companies should invest in technology that is regulation compliant. Many modern software providers make sure their systems are fully compliant with existing laws, and are always updating to accommodate new ones, taking the burden off of the manufacturer. The software can also provide a solid frame of reference to keep manufacturers on the right side of the law — wherever they operate.
Manufacturers should also hire legal experts, either outsourced or in-house, to keep systems, processes and products up-to-date with ever-changing laws.
Provide granular, real-time visibility into the supply chain
As regulations become increasingly strict, manufacturers must establish comprehensive, real-time visibility into the supply chain. This helps manufacturers catch and flag potentially faulty products before they're distributed. When a defective product is identified, food and beverage businesses should be able to locate the source and determine the extent of the contamination within their inventory. With the proper insight solutions in place, manufacturers can determine exactly which product batches were faulty, the raw materials that were used and the other batches that shared the same raw material or passed through the same production facilities. Precise, up-to-the-minute data enables these businesses to determine exactly what the problem was, as fast as possible. Ultimately, real-time, data-driven insights equip businesses with the tools to address product contamination with confidence, provide market reassurance and mitigate the cost of a widespread recall.
To analyze this data in real time, food manufacturers must collect data from the entire supply chain and store their data centrally. To make the data as helpful as possible, food and beverage manufacturers should make sure they are using very specific lot codes, the unique set of numbers assigned to each batch of product. Avoid running the same lot code for many production runs, as that can result in a larger than necessary recall, potentially bankrupting a company. Instead, companies should break up production into discrete lot codes so the scope of a potential recall is as specific and limited as possible.
Establish an emergency response plan
Preventing a recall is always a better alternative than responding to a recall, and while it’s impossible to eliminate the possibility of a food and beverage recall entirely, companies should have a strategic, comprehensive emergency ready crisis management plan in place.
Time is of the essence for manufacturers responding to a recall, and having a pre-determined emergency response plan ensures they are always crisis-ready. An effective food and beverage crisis management plan should have clear steps that outline how to determine the severity of the risk, identify the extent of contamination and then isolate affected batches. Then they should notify distributors and retailers as quickly as possible, report the product issue to the relevant authority and publish transparent information on the recall to customers. All company employees should be well-versed in this plan, to ensure effective and timely execution in the event of a recall.
Always be transparent with consumers
In today’s digital age, information travels fast. Now, consumers can share and discover potential food and beverage product problems before the manufacturer has the opportunity to publicly address it. From a communications standpoint, poorly handled product recalls can damage the reputation of the business — sometimes irreparably. Look at Chipotle back in 2015, after a string of E. Coli outbreaks, the news spread like wildfire among media and consumers, and Chipotle lost control of the narrative. This PR crisis significantly damaged sales, and Chipotle’s stock was nearly cut in half as a result.
The safest strategy for a food and beverage business is to immediately communicate to consumers and assure them they’re in control of the situation. This is where having strong visibility into the supply chain is of the utmost importance — allowing a food and beverage business to be transparent about the potential extent of problems and quickly pinpointing the cause is essential to protecting a reputation. To prevent a loss of trust, businesses must only make statements they know to be true.
It’s difficult to prevent a food recall from happening, but adopting the proper technology, maintaining real-time insight into the supply chain and building out an extensive response plan ahead of time can turn a potential crisis into a minor bump in the road. The plan can also enable companies to better ensure the safety of their most important asset — their consumers.