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Enhance Your Product Recall Process

11/16/2015

Enhance Your Product Recall Process

Rarely a week goes by without news that a company in the retail and consumer product sector is subject to a recall. Over the last five years, hundreds of companies across the sector have executed recalls, with direct costs typically ranging from $10 million to $30 million.1 In 2013 alone, the US Food and Drug Administration recorded over 400 recalls2, and recent changes in FSMA that enable the FDA to order recalls could drive the number even higher. In a recent study by the Grocery Manufacturers Association, 81% of companies rated the financial risk of a recall as “significant” or “catastrophic.”3

The indirect impacts can be even more severe. Regulatory actions and consumer reactions to news of a recall can result in lost revenues and substantial brand damage. The speed of social media, and regulators’ increased expectations, have made effective recall management a strategic priority.

Obstacles to recall execution

Our experience indicates common reasons why companies struggle to execute recalls effectively, including:

  1. Failure to assign responsibility and accountability to a senior executive
  2. Inability to execute an integrated, cross-functional recall effort, due to different or competing objectives
  3. Lack of experienced, knowledgeable and available resources who can immediately assist with the recall, and who can drive the required rigor and disciplined execution
  4. Inability to rapidly ramp up/down call center teams to respond to the surge in both customer and supplier inquiries
  5. Incomplete knowledge of recall triggers, and difficulty obtaining the data and information regulators require1
  6. Poor engagement with insurance carriers leading to cash flow difficulties
  7. Inability to inaccurately track and manage the costs or scope of the recall, due to systems and data challenges

Taking definitive action within the first 48 hours is critical to success. These obstacles make it difficult to ramp up a complex recall operation swiftly and effectively.

1AMR Research, “Traceability in the Food and Beverage Supply Chain”, 2008

2FDA 2013 Recalls, Market Withdrawals & Safety Alerts

3Grocery Manufacturers Association, “Capturing Recall Costs: Measuring and Recovering the Losses,” 2011

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