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Product recall management

Are your operations recall-ready?

By | ERP, Food and Beverage, Product recall management, Sage X3 | No Comments
ERP solution

Companies need to plan for recalls by focusing on track and trace functionality and coordinating functions across the enterprise.

Are your operations recall-ready? The costs of a food product recall are considerable, not only for the recovery operations of the recall itself, but also the potential long-term damage to reputations and market share.

Knowing how to prepare for a recall, particularly in light of the new federal Food Safety Modernization Act requirements, helps companies be responsive. The savings to bottom lines and reputations are considerable.

As noted in the article The 4-step guide to food supply chain traceability, a strong enterprise resource planning (ERP) solution that integrates data and systems can ensure that companies are ready in the case of a recall.

Measuring the costs 

To appreciate the need for recall-readiness, consider the costs. A study by Ernst & Young of Grocery Manufacturers Association members showed that 81 percent of respondents characterized the financial risk of a recall as “significant” to “catastrophic.”

Seventy-seven percent of survey respondents estimated the cost of recalls at up to $30 million, with 23 percent reporting higher estimated costs.

A 2012 study by the Public Interest Research Group (PIRG) estimated the cost of food recalls and foodborne illnesses at $77 billion in the United States alone.

Obstacles to overcome

Recalls are not pleasant events for anyone involved. There are considerable challenges that companies face in dealing with planning for recalls and executing them, including:

  • Protecting the brand. Primary efforts during a recall need to focus on public safety. However, companies also need to be mindful of the risks associated with a brand affected by a recall.
  • Recall costs and time. In addition to planning for a recall, companies need to have the resources available – financial, personnel, and communication – in order to be hyper-responsive.
  • Supplier relationships. Product recalls can affect an entire supply chain, making recall processes difficult. Many of the new FSMA rules are designed to ensure that companies have the right processes in place within their supply chain for track and trace activities.
  • Lack of experience. Fortunately, most companies have never had to experience a product recall. However, that means that considerable training and preparation is necessary to be ready.
  • Cost recovery. Many companies take out insurance policies to protect against the costs associated with recalls. In the case of a recall, multiple insurance policies and carriers, for property, liability, and specialty cases, may apply. Coordinating the cost-recovery efforts can be challenging and requires proactive planning to be effective.
ERP solution

Companies risk not only the financial costs of a food recall but also the reputational costs.

How to prepare for recalls

In order to be ready for a product recall requires a focus on three areas:

  1. Planning, including cross-functional company teams, documentation and accountability
  2. Supply chain management, including FSMA compliance documentation, strong relationships and transparency
  3. Tracking technology that harnesses an ERP solution to coordinate activity

Here are key steps a company can take to prepare for a recall:

  • Create the recovery team. Representatives from legal, operations, customer service, and corporate communications need to be involved in order to create a broad plan that involves core areas.
  • Establish recovery goals. Establish the company’s legal responsibilities, risk tolerance, and decision-making structure to ensure that everyone is on the same page for when an issue arises. Be sure the recovery team is clear on those goals.
  • Use estimation tools and forecasts. Companies should have detailed estimates of the costs and losses during early, mid-range, and long-term phases of a recall. What will be the likely scope of losses and costs and how will those costs be addressed at the time of recall?
  • Make sure records are in order. Your ERP needs to include recordkeeping on a range of issues including food brand and generic names, ingredients, sourcing, order and lot numbers, packaging descriptions, distribution schedules, and shelf lives.
  • Write it down. Create a written recovery plan and be sure that the plan is vetted by legal and regulatory officials to ensure compliance and to mitigate legal risk.
  • Find a technology partner. Identify the right ERP solution for your company.

NexTec partners with expert ERP providers to create solutions that help with recall-readiness. Sage X3 is one such solution that brings together core functionality for food and beverage manufacturers, including finance and accounting, operations, supply chain, warehouse, inventory, HR and payroll, sales and marketing, and customer service.

To learn more about how NexTec can help your company to become recall-ready,  download the NexTec Food Brochure.

product recall

Are your systems prepared to handle product recalls?

By | Food and Beverage, Product recall management, Sage X3 | No Comments

Product recalls are on the rise

An increasingly stringent regulatory environment is tightening standards that are leading to a growing number of recalls. For companies in this global economy, the mere mention of a product recall strikes fear in every manufacturing, pharmaceutical, chemical, distribution, and food and beverage organization.

A recall is complex with many moving parts involving everyone from the warehouse to the c-suite.  While many companies understand the complexities of the process, they are wholly unprepared. Besides the compliance and financial consequences, which can be significant, a recall can be as innocuous as a mere inconvenience, as significant as to cause a black eye on the company’s reputation, or as disastrous as the downfall of the entire organization.

Learning from recall mistakes

There are many companies who learned the hard way how a poorly handled recall can have significant consequences. Some noteworthy examples:

  • Peanut Corporation of America triggered a massive food recall in 2009 that impacted 360 other companies and nearly 4,000 products  after a salmonella outbreak killed nine people and caused another 700 to fall ill. The company eventually went out of business and the CEO was sentenced to 28 years in prison.
  • In 1994, Intel initially refused to replace a faulty microprocessor chip, losing the business of some major companies and angering many customers. The total losses due to the recall and delayed response are estimated to be $500 million in damages and lost business.
  • Merck withdrew prescription painkiller Vioxx  from the market in 2004 after 38,000 deaths were linked to the drug. The case became mired in a controversy with a painful and lengthy investigation from the Food and Drug Administration.

If you think about the fact that these recalls took place long before social media took hold and accelerated the rate of how fast news travels, you realize it’s even more important today to act quickly to contain any damage. The recent recall of the Samsung Note 7 (estimated to cost as much as $2 billion) is case in point.  The news was shared at lightning speed and has stayed in the public eye for a long time.

Avoiding a recall disaster – The importance of ERP

In order to contain and react quickly, you need systems in place that can track and recover product quickly. Because of supply chain and other issues outside of their scope, manufacturers can’t control every factor that might lead to a recall — but they can put measures in place to contain the damage.

The faster you can react to a recall the better off your organization will fare — ERP quality control features and inventory and supply chain management mean that you have what you need at your fingertips to take action.

  1. Planning: Like disaster planning, recall planning must involve a cross-functional team, from legal and customer service to corporate communications. Make a plan that names the parties responsible for every step along the way. Create a playbook that covers tracking and recall procedures, recall notices, regulatory reporting, and progress monitoring — and practice your organization’s reaction to various scenarios. The plan should also incorporate policies and procedures to detect problems early on.
  2. Supply chain management: Foster strong relationships with all vendors in the supply chain as partners who are invested and share in the success of your product. Implement a management system that can monitor quality and other issues along the entire chain.
  3. Tracking: A robust tracking system will isolate the root cause of the problem that triggered the quality concern. ERP systems will identify and isolate the lots that are affected as well as the unsold inventory across the distribution chain so it can be stopped before reaching the market.

To manage the varied needs of stakeholders such as suppliers, customers, and regulatory agencies, ERP will ease the process. ERP automates forward and backward traceability has extensive tracking capabilities and integrates inventory and supply-chain management to significantly ease the burden of a recall.

NextTec Group is an award-winning businesses technology consultancy that offers state-of-the-art ERP, CRM, and BI solutions, in the cloud and on-premises. Our team can help small and medium enterprises find a solution that not only effectively manages a product recall but will make all aspects of your operations more efficient and cost-effective. Contact us for a demo of our product recall software solution for Sage X3.


Food Benefits

By | Compliance, ERP, Food and Beverage, FSMA, Inventory control, Process Manufacturing, Product recall management, Sage X3 | No Comments

Top benefits of ERP | CRM | BI Software
for food and beverage

Avoid delays caused by inventory shortages

Balancing stock levels is a major challenge. With ERP you can easily manage food and beverage warehouse inventory and stock levels. ERP allows you to optimize inventory levels and meet your needs without overstocking and tying up working capital.

Lower inventory costs and eliminate waste

Perishable products have a have a limited shelf life and waste is costly. ERP enables a faster, more efficient distribution process to improve quality and reduce waste.

Improve food safety, track inventory and initiate food recalls

Quality is critical in the food industry and recalls can be a major headache. Linking to your warehouse allows you to keep track of your products lots, dates, quantities and movement in your distribution supply chain in real-time. Food is fresher and if there is a recall you are quickly able to initiate the recall.

Take corrective action earlier and continuously improve processes

Access to real-time information improves your sourcing decisions, provides better control and increases visibility over your manufacturing or production process so you can provide consistent, superior quality.

Reduce labor and other costs

By automating operations, you can eliminate redundant tasks and enable your staff to focus on the most meaningful tasks. The ability to aggregate all your financial, production and other data, will give you the ability to understand what areas could benefit from increased efficiencies.

Comply with health codes and other government regulations

Track ingredient and raw materials origins so you can provide accurate food labeling, stay compliant with changing health codes, and create summarized reports that give you an overview into regulatory compliance.

Real-time intelligence to respond to customers and management

If management wants to know how a change will impact business you have answers at your fingertips. Customers expect a quick response — generate and deliver immediate quotes, make appointments, track customer cases in real-time and enable customer engagement on multiple channels, from web and mobile to chat and social.

Product recall management 101. Can you recall?

By | ERP, Food and Beverage, Manufacturing, Product recall management, Sage X3 | No Comments
recall_egg

Managing a product recall requires careful planning.

No company ever wants to face a product recall.

Such situations can result in the loss of hundred, if not thousands of customers. Yet, when companies prepare well ahead of time for such incidents and manage the recall properly, they can actually gain credibility and restore customer confidence.

The keys are in proper planning, clear communication, technology and logistics. Being recall-ready is the soundest approach, even if the protocols are never used.

Recall management 101

A sound recall strategy needs to focus on all corporate components, considering the impact of a recall on all areas of an operation. The strategy also needs to consider all time elements from the discovery of the issue, the actual recall, to the consequences and follow-up tasks needed.

Management needs to instill in employees an understanding of the correlation among recalls, consumer satisfaction and safety, and the importance an effective recall can have on long-term corporate success. There also needs to be an open culture that allows employees to feel safe and empowered when identifying potential problems.

Once it becomes clear that a recall is necessary, there are a number of questions to be considered. What is the scale of the recall – full recall, selective recall, retrofit or repair offer, or optional recall? Is an exchange necessary or does a consumer advisory suffice? If a government agency has demanded the recall, are the charges valid or should they be challenged?

Communications and stakeholders

Before and during a recall, communication is crucial, both internally and externally. The company must determine who, other than customers, are the key stakeholders, such as suppliers, retailers, distributors, employees, regulatory agencies, shareholders and financial institutions. All parties with a vested interest in the recall need to be communicated with clearly, often, and consistently. Recall scenarios should be a part of any company’s crisis communications policy.

Communication needs to be transparent about the reasons for the recall, the causes, and the mitigation being done, not just in the recall itself, but also in a company’s internal management, policies, and procedures. Communication needs to assure all stakeholders that the solution presented will resolve the issue. Finally, communication should be designed to begin the process of repairing and restoring corporate reputation.

In a recall, companies need to be prepared to deal with increased demand for customer service.

In a recall, companies need to be prepared to deal with increased demand for customer service.

Technology and logistics

Operations, particularly logistics, inventory control, and customer service, need to be ready for the increased volume of work a recall may create. Ensuring that these systems are integrated and have the proper capabilities is essential to making a recall run smoothly.

These systems have to track reporting of possible defects, customer information, sales, supply chain, and finances. Tracing product information throughout a recall effort is a crucial step to ensure an efficient recall process.

Understanding the inter-relationship of systems is critical. When software solutions do not talk to other software solutions, it creates inefficiencies throughout the organization, flaws that can become exacerbated in a recall situation.

To learn more about how product recall management works and how NexTec can help your business be prepared, download Recall Management for Sage X3 or watch this short case study on Stash Tea (2:34).

Images courtesy of Ambro at FreeDigitalPhotos.net

Product Recall Management

By | ERP, Product recall management, Sage X3 | No Comments

Food & Beverage

By | BI, Compliance, CRM, ERP, Food and Beverage, Manufacturing, Process Manufacturing, Product recall management, Traceability | No Comments

ERP | CRM | BI software for the
food and beverage industry

Can your food and beverage company meet demands for higher growth, compliance and tighter margins? Are your systems holding you back?

hello
muffinsLabor intensive activities such as reporting, meeting stringent government compliance regulations, and product recalls add layers of complexity to your operations, making it harder to reach your goals. Top it off with pressure from management for real-time data to make critical business decisions, and you’ve got real issues to solve.

What happens if your food and beverage company is trying to do all this work using old legacy software or separate systems that don’t talk to each other? Your people resort to manual methods and that only slows the data flow… AND increases labor costs.

You can solve this problem by connecting your Enterprise Resource Planning (ERP), Customer Resource Management (CRM) and Business Intelligence (BI) software platforms. All your data is combined into one platform — that gives you real-time visibility, streamlines operations, improves traceability and operating efficiencies, and helps you stay in compliance. The end result is cost-savings and increased profitability.

Let NexTec be your partner to help you select the right software and process that connects your business and gives you the insight you need to make the right moves. We work with world-class technology, like Sage X3, and have a nationwide network of consultants with deep expertise in the food and beverage industry. As an award-winning business with a track record of more than two decades, NexTec offers innovative, affordable and personalized software solutions — for food and beverage manufacturing and processing — that will help propel your business to the next level.

Contact us. Fill out the form to learn more.

Learn more about NexTec software solutions for food and beverage

NexTec Food & Beverage BrochureNexTec has been helping food and beverage companies transform their businesses and profit with ERP, CRM and BI solutions for over 20 years.

  • Track inventory
  • Increase product quality
  • Recall products
  • Stay in compliance
  • Innovate and grow

VIEW BROCHURE

product recall

Another product recall. Are we learning our lessons?

By | Compliance, ERP, Food and Beverage, Manufacturing, Product recall management, RFID / Bar Coding | No Comments

product-recall-boxWith the recent recall scares to Blue Bell Creameries and to Sabra’s hummus for listeria contamination, one can only think about the cost involved (both product & legal) in the recall process, and how well prepared your business is if a product recall should happen.

Damage control!

With a possible product recall only a phone call away, no amount of safe years can guarantee you won’t have one tomorrow!  Blue Bell had a clean sheet for 108 years (according to the Dallas Morning News) and is now in the process of a product recall that has early estimates of between 4 and 10 million in product costs alone.  Add in the damage done to their brand, pending lawsuits, and that figure will surely rise quickly!

With Sabra, 30 thousand cases of hummus (according to The Guardian)  have been voluntarily pulled from the shelves representing an enormous recall cost, replacement cost, and damage to their brand.

Large product recalls are a threat to any manufacturer and forces you to ask the questions:

  • How ready are we? For that one phone call that turns into two, that turns into a full blown product recall.
  • Do we have a recall procedure in place? So we can quickly recognize that a recall is needed.
  • Are we using the latest technology to track inventory? So we know exactly which products are affected and their current location.
  • Have we practiced our recall procedures? So we can act quickly and efficiently when a recall knocks on our door!

Thinking ahead, the only solution!

Relying on a clean track record is not a reliable game plan in the long run. It’s important to study industry best practices for Product Recall Management and RFID for inventory control, learn from recent product recalls by following the FDA or blogs like foodsafetynews.com, and frequently audit current processes to make sure you are in the best possible position should it happen to you.

To learn more about best practices for food safety and product recalls, have a look at these free resources:

Food Manufacturing Software

Recall Management

Consumer Issue Management

RFID

Product Recall Webinar 

RFID Webinar

ERP Insight for Food & Beverage Webinar

Product recall gone well – Part II

By | Product recall management | No Comments

product recallIn Part I, we discussed how being unprepared for a product recall can not only affect your business in the short-term but can also cause long-term problems for your company and brand.  In today’s post we’ll cover how you can survive and thrive during a product recall, several points your business should consider about product recalls, and what you can learn from not having a product recall.

2 P’s in product recall

When considering a product recall and how it can affect your business over the both the short- and long-term, one of the most important ways to protect yourself is through proper preparation and planning.  Having a properly designed plan on how your team will react to a product recall will save you time & money, but will also give your team confidence when it comes time to act.  It’s critical to map out what needs to be done and which team members are responsible ahead of time to avoid duplication and key tasks being missed.

Technology to the rescue

Today’s responses need to be quick, accurate and reproducible.  Implementing a strong ERP & CRM solution will help you navigate a recall quickly, engage with your customers immediately, and save time and money.  In addition, consider adding a Recall Management Module that connects with your ERP to streamline the process and RFID technology to easily track and identify affected inventory and shipments.

A strong ERP with a product recall management solution will help you to:

  • Identify the products and quantities affected
  • See where they were shipped
  • Produce a list of remaining affected stock
  • Get supplier details for affected products
  • Flag affected stock as ‘Do Not Use’
  • Print/email required consumer notification letters
  • Create call lists in CRM to aid customer service

Practice makes perfect!

Having a good plan and proper technology in place makes for a great playbook on how to survive a product recall.  However, a great plan that has never been practiced can be a disaster.  The best teams do mock play, so on game day, everyone knows what to do and how to do it.  Likewise, your company should run mock product recalls to allow your team to:

  • Learn and practice the process
  • Gain insight on gaps in your current procedures
  • Collect feedback from your front line employees
  • Build confidence in your organization to handle a recall quickly & efficiently
  • Continually evolve your processes

Product recall made easy

No company wants to go through a product recall, but when it does happen, be prepared with:

  • A rock solid recall plan in place
  • A good ERP/CRM system with recall management to allow you to execute quickly
  • A team that’s practiced and confident in the procedures

Having all three in place will allow you to quickly identify the situation, respond, and move forward. So, you are focused on what’s next and not doing damage control.  And that is a product recall made easy!

Product recall gone bad – Part I

By | Food and Beverage, Product recall management | No Comments
Product recalls are a headache to say the least

Product recalls are a headache to say the least

Try as you might to plan, prepare, and prevent it from happening, it’s likely just a matter of time before you hear those hated words… PRODUCT RECALL. Whether it’s a defective product, contamination or human error, product recalls are a fact of life in business and bound to happen eventually.

The true problem is not within the recall itself. Your company’s real exposure will be measured in how you handled the recall and the lasting effects it has on your products and company reputation.  If you hope it goes away or deny deny deny until the FDA kicks down the door, you put your company’s good name and financial future at risk.

The key is to attack it head-on and be prepared. If you treat it as an opportunity to show the strength of your company and products. Your customers will reward you with loyalty and positive (and free) publicity.

It won’t happen to me!

So you haven’t had a recall to date…congratulations! Your company is operating just as expected and you plan on continuing that way. However, if a product recall happens tomorrow, next week or next month, does your company have a plan in place to quickly and efficiently deal with a recall from top to bottom?

Here are some key questions you should have answers to:

  • How fast can you identify that a recall is required?
  • Which products are affected and where are they located?
  • What steps will you follow to recall the affected products?
  • Are the roles and responsibilities within your company clearly defined?
  • How will you inform your customers?
  • How will you inform your employees?

If your answer is “I’m not sure”, get help or face the wrath of your customers and shareholders. In a lot of ways our businesses grow and evolve in the same way we do, by experience and going through the ups and downs of our industry. Yet, a product recall is a dangerous place to learn a hard lesson that you may not be able to recover from.

Customers are like elephants

Like elephants, customers have long memories. They also have the social media tools on hand to spread the word quickly, so the lasting effects of a recall can be devastating or elevating.

Customers will remember not only the product recall but also how your company handled that situation and how it personally affected them. All shared across the social media stratosphere!  Did you communicate well? Did you remedy the matter? Were you prompt in taking action? Or did you hide until the regulators forced your hand? Through blogs, twitter, and other social media platforms, your collective customer will remember for a long time.

Built to last?

Say you survived your first product recall. Product was pulled, replacement products shipped and refunds given as needed. Have you survived well enough to carry on “business as usual”? Or have you permanently tarnished your brand to the point that your customers have started to jump ship? Another big question… can you repeat the process in case there is another product recall?

In Part II, we’ll show you how a product recall can go well, each and every time, by building a plan and following it to come out stronger in the future.

Food recall

3 ways ERP can simplify food recall management

By | ERP, Food and Beverage, INDUSTRIES, News, Product recall management, SOFTWARE, SOLUTIONS | No Comments

recall_eggHandling a food recall is a very challenging task. At its bare minimum, customers are inconvenienced while a company’s bottom line takes a hit from having to fix the problem and compensate irate consumers. If the Food and Drug Administration or Department of Homeland Security mandates the recall, however, the stakes are far greater . With this in mind, enterprise resource planning software can have a helpful impact on the steps involved in identifying the need for, planning and executing a product recall.

Recently, Sage expert Mark Pinard of consulting firm NexTec Group hosted a webinar explaining the steps involved in a product recall. During this time, he talked about the reasons why it’s important to have a management strategy in place when food is being recalled. He also explained a useful strategy in the event a recall needs to happen, from the first customer complaint to the last defective product returned. With ERP software, though, there are ways that the process can be simplified.

1.  Consumer Issue Management is made easier

The two cornerstones of ERP are automation and database accessibility. This works incredibly well in a Consumer Issue Management module, which is a critical part of the CRM tools needed to handle a product recall. For example, the moment a call is received, a representative can determine if the person has a prior history, and if not add him or her on the fly. Instead of having to work out some complex details in the system, the support rep can record customized input boxes based on the way products are labeled and assigned. This staffer can then designate a recall or support category based on the scale of the problem automatically. Finally, any notes and issues are easily logged and are accessible to key members of the company that may need to handle the recall.

2.  Fast resolutions

In product recalls, time is of the essence. The fewer people that have access to the defective product, the better off the company will be. This is especially the case in mandatory recalls where lives and well-being may be on the line. With ERP software, resolutions at any level can be executed quickly. Once a lot number with the defective ingredient is identified, the database can determine what products have that ingredient, as well as how many were made and where it has been shipped, instantly. Notification letters can be generated and sent to distributors and retailers to remove the product off of store shelves. Call lists and CRM records can also be made to establish a paper trail for compliance.

3.  Make notes in the aftermath

When the recall is resolved, a company will need to take steps to recover from the situation. Along with the disposal of the materials, there is a need to adjust finances and accounting to effectively address this problem. Having notes to mark changes to policy as a result of a recall can be an effective solution in this regard. For example, the sales prices of shipments of particular products can be changed to reflect the fluctuating events that resulted from the recall, and delivery dates can be altered so that new products can receive added scrutiny. Matters revolving around credit can be addressed as well, including extending the credit line to take into account losses of sales. For accountants, memos can be made to write off specific lots that contained the defective product as well as making a note to accept short payments in the future, so as to ease retailer concerns.

Product Recall, Are You Prepared? – Webinar Replay

To learn more, please email info@nextecgroup.com.