Industry Standards Needed for Product Recalls

A new survey by RedPrairie indicates a lack of consensus on the best approach to reverse logistics—getting products back.

RedPrairie Corp. announced the results of its 2008 survey of industry leaders on the impact of legislation regarding recalls recently proposed by the U.S. Congress. The RedPrairie survey of industry-leading retailers, grocers, consumer packaged goods (CPG) companies, food and beverage (F&B) manufacturers and third-party logistics firms focused on whether industry-wide standards or new legislation would have more of an impact in preventing and managing recalls.

Tom Kozenski, vice president, product strategy, says the results indicated a lack of consensus as to whether industry-wide standards or legislation would prove more effective. For example, while 79% of respondents indicated that recall legislation is needed, 75% believe that industry standards would be more effective in managing recalls than legislation. In addition, the survey found that:

• 56% of respondents were not aware of the proposed legislation. However, half of the respondents aware of the legislation are preparing for it.
• 79% indicated recall legislation was needed, but only 12% believe recall legislation would significantly reduce the incidence of product recalls.
• 75% of respondents believe industry-wide standards would be more effective in managing recalls than legislation.
• Brand protection (46%) was listed as the top reason companies want to improve recall processes and technology. The next two major factors were consumer demands (36%) and competitive differentiation (13%).

Keeping in Touch “It is surprising to find that 56% of the respondents weren’t aware of the legislation, given the recent increase in recalls,” says Kozenski. “However, we’ve found that companies are very much aware of the problem and seeking solutions.

He adds that RedPrairie has seen an uptick in the number of companies—especially in the retail, food and beverage and CPG industries—which have asked for help.

“They’re looking to improve their quality assurance and recall capabilities,” he says. “The challenge will be discovering the right combination of industry-wide standards, legislation and individual company efforts that will effectively manage quality issues without also making a negative impact in supply chain efficiency.”

Recalls are becoming a major material handling issue. At a high level, companies want to make sure they don’t harm their customers. They want to protect their brand, retain customer loyalty, and reduce liability. However, operationally, there are many material handling challenges in conducting recalls.

The biggest one is just knowing where products are and where they came from. The second challenge is how to get the product back quickly and accurately. When companies are unable to trace the source of the bad ingredients, for example, and track where each of the batches containing those ingredients was sent that week, they will have to recall the entire production run, rather than just the few items that are suspect. This has a huge economic impact and greatly increases the effort and complexity of the recall.

A complete summary of the 2008 RedPrairie Survey on Recall Legislation can be found at www.redprairie.com/recall.

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