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Back to Basics: Minimize Costs of a Recall

April 15, 2013
Serialization can help manufacturers take the pain out of a product recall.

Serialization and traceability are enabling manufacturers across industries to better manage the forward logistics of their supply chains. Through the use of a random alphanumeric code that "marks" each individual product and packaging level, manufacturers can better secure their supply chains through enhanced visibility, improved product logistics and management and authentication of product codes on raw materials, end-products and through sales channels to acquisition and use. 

See Also: Manufacturing & Distribution Center Best Practices

Serialization can be equally useful in reverse logistics applications. Chief among those: recall management. While all manner of products can be recalled – from cars and video-game systems, to food and toys – serialization can be especially vital for pharmaceutical companies. 

Drug Recalls – A Leaner Process

There are hundreds of drug recalls every year. Removing potentially dangerous or even deadly products from the shelves is critical for preserving public health – and the manufacturer's reputation. From an operational standpoint, drug makers put substantial time and resources into the reverse logistics of reclaiming their products from pharmacies, wholesalers and even consumers.

The process is complicated by the fact that, currently, drug recalls are typically done at the lot or batch level. If a drug maker has two production lines, for example, and one of those lines produces a tainted drug, the manufacturer often can't differentiate between the bad drugs and those safely made on the other line. Seeking to minimize risk, the manufacturer must recall all drugs from that lot or batch, regardless of which line produced them. 

Laws like California's E-Pedigree requirements for prescription drugs, however, are poised to change that process. If the law takes effect as expected at the start of 2015, pharmaceutical manufacturers that want their drugs dispensed in California will be required to include a unique identifier (serialization number) on the smallest container saleable to a pharmacy. 

If the manufacturer serializes its products with secure Unique Identification (sUID) and can trace the root cause or quality issue of the tainted drug, it can limit the scope of the recall to that single line. This capability could potentially reduce drug recalls to a fraction of today's levels – from hundreds or thousands of products pulled from the shelves in a single recall to merely dozens. In short, serialization and traceability provide a more granular view of the origin of products and their exact location in the supply chain. In case of a recall, manufacturers can pinpoint which products must be pulled from pharmacy shelves.

Other Applications

Serialization can also be used in other forms of reverse logistics. Manufacturers of retail goods, for example, can utilize serialization in returns management to help identify counterfeit products. Just as the drug manufacturer would "mark" its drug, the retail manufacturer could tag its products with sUIDs. These codes can then be used to confirm, for example, if a wholesaler or downstream distributor is returning original high-value products – or trying to deceive the manufacturer with fraudulent items. 

Serialization and traceability are also valuable for warranties and service repairs. High-tech electronics manufacturers that receive returned products for repairs or under warranty can use sUIDs to track the services needed, and then ensure the repaired products are shipped back to the customer, all while providing full product visibility every step of the way. 

Across industries, serialization and traceability offer manufacturers the advanced tools required to meet increasing regulations and customer expectations. The holistic benefits extend beyond compliance, however. Manufacturers stand to reap savings by minimizing the scale of the reverse supply chain, using less labor and reducing the communications needed across the reverse logistics spectrum.

Scott Pugh is vice president of solution and service innovation for Verify Brand (, specialists in product authentication and supply chain security. 

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