The supply chain can become extremely fragile when manufacturers, distributors and other key stakeholders don't invest in the right technology to bring clarity to the movement of goods across long distances. There are many potential disrupters to the supply chain, and one that can have a lasting impact is a product pulled from shelves because of faulty parts or contamination. Just recently, the membership-based wholesaler Costco experienced a food recall.
The U.S. Food and Drug Administration explained all 12.7 ounce plastic jars of Kirkland Signature Course Ground Malabar Pepper sold at the retailer between April 4 and June 4, 2014, carry a risk of salmonella. The FDA explained this is a dangerous organism that can produce deadly infections among the very young, elderly and others who may have a weakened immune system. The government agency discovered the problem during a product sampling and advised anyone who bought the infected merchandise to dispose of it immediately.
Craig Wilson, Costco's vice president for food safety, explained on NBCNews that some bottles of the product found in Texas contained a rare strain of salmonella. The news site went on to indicate that spices are being inspected more closely because the FDA found roughly 7 percent of all imported spices over a three-year time frame were contaminated with the bacterium. Since 1973, nearly 2,000 people have become ill after being exposed to salmonella, according to the Centers for Disease Control.
Beyond the critical risk to customers' health, food recalls can spell disaster for many companies involved in manufacturing and distributing products. For this reason, food traceability has become increasingly important for food suppliers. A recent RFgen white paper looked into the need for companies to integrate automated data collection solution software with their ERP systems, to help them manage the risk and consequences of a food recall.
What Are the Risks?
Because of the diversity of the food supply chain, the financial cost of a food recall can vary significantly, but it will always have an impact. For instance, a salmonella-related recall cost Wright County Egg around $100 million, while a meat producer faced a $17-million expenses due to an outbreak of listeriosis. These figures are influenced by the amount of product that needs to be destroyed, transportation, storage and how widespread the recall is.
In the case of a food manufacturer, governing bodies will likely request to look at all records and ask to inspect the facilities where contaminated products were handled. Depending on what regulators find, manufacturers can face additional fees stemming from noncompliance.
Additionally, a food recall can have significant consequences on a company's brand and consumer confidence. The RFgen white paper drew attention to a Deloitte report, which found 57 percent of shoppers have stopped eating a particular kind of food after learning about a recall. Given the prevalence of social media chatter and the continuous news cycle, it's incredibly difficult for a business to downplay the negative effects of a recall - unless they have the right tools to handle it correctly.
How Does Automated Data Collection Help?
Paper-based food traceability processes are a food company's worst enemy when it's facing a recall. The nature of the food distribution industry results in a high volume of product being moved quickly through the supply chain, and using paper invoices and shipping documentation to follow the trail of a food recall becomes cumbersome. While just a few companies still depend on paper-based processes, 72 percent of manufacturers are only partially automated. The FDA often requires food manufacturers to deliver records within 24 hours of a request, and paperwork delays this process, resulting in higher expenses.
Many manufacturers have already invested in an ERP system that helps them keep track of data using a single interface. However, most workers still need to enter information manually, which creates additional steps. These can lead to errors in data entry and throw the validity of food traceability into question. However, an automated data collection solution that is both integrated with an ERP system and uses wireless technology, including mobile barcode scanning tools, allows information to be verified in real time. Going further, voice-enabled data collection resources can increase productivity and accuracy.
Product and food recalls can throw a wrench in a manufacturer's operations. Yet, an automated data collection solution provides businesses with the necessary resources to avoid unnecessary costs.