Food and beverage product quality is so closely tied to the health and safety of consumersthat every manufacturer must be prepared to deliver a quick response to quality concerns, including a product recall. New legislation and a highly demanding public now make a recall event more of an inevitability for all food and beverage manufacturers.
Key to the increased threat of recall has been the Food Safety Modernization Act (FSMA). When the Act was signed into law in 2011, it included the expectation that manufacturers demonstrate rigor and oversight in identifying risks, predicting where such risks might arise and then preventing those risks from affecting consumers. For manufacturers that use ingredients that are at higher risk for contamination (such as chicken, beef, peanuts, fish and produce), the FSMA requires they demonstrate even more rigorous supplier quality management and strictly follow updated food and beverage regulations.
The Impact of the FSMA on Modern Food & Beverage Manufacturers
In addition to requiring manufacturers to exercise more oversight, the FSMA’s new risk-based approach to food and beverage safety also gave the FDA new power to legally mandate a recall if a manufacturer fails to perform a voluntary recall when given the chance.
A recall is a crisis that is often exacerbated by a demanding public that has high expectations for food and beverage safety, and a 24/7 media cycle that can quickly disseminate information that could adversely affect a manufacturer even when nothing is wrong with a product. This was aptly demonstrated during the 1982 Tylenol recall when the company quickly removed product from every market, although affected product was limited to a very small geographic area.
In the event of a recall, manufacturers need to be able to quickly learn if an issue of contamination is an isolated incident and determine how many products are affected, as demonstrated by the recent recall of one variety of Hot Pockets brand sandwiches. Nestlé USA quickly and proactively issued a voluntary recall of 238,000 cases of its product when the company learned one of its suppliers sourced meat from Rancho Feeding Corporation, a meat processor in the midst of a recall due to improperly inspected meat. While Nestlé did not purchase meat directly from Rancho, they thoroughly reviewed data to understand if any company in their supply chain may have purchased meat from Rancho at any time during 2013. Nestlé’s review of data revealed its control over supplier quality management and its overall urgent approach to the Hot Pocket recall. From the review, Nestlé was able to confirm that a small quantity of meat from Rancho was used at one their production operations devoted entirely to Hot Pockets, and then removed those products from the marketplace.
Timely Recalls and Profit Protection
The ability to quickly recall product via enhanced supplier quality management, as illustrated by the Nestlé example, not only protects consumers but also protects a manufacturer’s brand and limits corporate exposure. Will a recall be expensive? Of course. Data indicates that the cost of a recall can average between $10 million and $90 million or more. By contrast, a well-managed recall process can reduce the long-term negative impact on brand reputation and profits.
Integrated Enterprise Quality Management Solutions (EQMS) are key to a manufacturers’ ability to meet food and beverage regulations to respond more effectively in product recall situations, ensuring consumer safety and mitigating risk and litigation exposure. With EQMS, manufacturers can collect appropriate information about the source of raw materials or ingredients and their destination, organize that information and retrieve it as required. If a recall is necessary, that data can underpin an effective outreach program to assure consumers that food and beverage safety risk is contained and under control.
Investment in an EQMS is also a cost-saver in regard to production and quality management costs. Recent data considered by The Coca-Cola Company demonstrated that an EQMS can help reduce supplier quality investigation times by 20 to 30 percent, decrease batch recovery by 50 percent and reduce overall cycle times by up to 40 percent. According to Marketing Week, the soft drink manufacturer plans to save $1 billion in productivity by 2016 through global supply chain optimization, data and IT standardizations, and more efficient methods of resource- and cost- allocation.
For more information, download the eBook "Four Best Practices to Improve Quality in the Supply Chain."
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