Ready for a product recall?

Make risk management a top priority that includes a recall strategy.

March 14, 2012   by Glenn Fraser and Cliff Trollope

A reporter contacts your company to ask for a comment on a hazard alert for one of your products. You receive notice of a lawsuit from a legal firm. A consumer reports an illness caused by one of your products. When unexpected situations arise, suddenly your company’s reputation – even its survival – may be at risk.
Would you know what to do?

The risks and impacts associated with a recall are high. It can happen to virtually any manufacturer – regardless of how much attention is devoted to the product. Quality assurance may reduce recall risks, but it can’t eliminate them. This is especially true in the food and beverage sector, which is particularly vulnerable to recalls. With the rapid growth of Canada’s food processing industry, companies are at the front line when it comes to ensuring the safety of their production. (In fact, the federal government announced in December that it’s working on new food safety legislation to improve consumer protection.)

Make risk management a top priority and addressing a potential recall should be part of the strategy. It’s essential to reassure customers, regulators, retailers, distributors—even bankers and insurers—that doing business with your company is a safe undertaking.

A documented and practiced action plan will help protect your company and your customers, while limiting your liability if the worst happens. All aspects of the crisis must be managed. Your company’s recall plan will be specific to your organization’s needs, but it should include the following basic components:

  • Recall team. Identify the individuals and departments (for example, representatives from management, quality assurance, technical, legal, regulatory and communication) who would be involved in a recall and outline their responsibilities.
  • Complaint process. A documented process identifies unsafe products and corrects problems. The process should encompass information gathering, investigation and taking appropriate action.
  • Food safety plan. Food and beverage processors need a food safety plan to address stringent government policies and regulations. These plans relate to safe food handling and manufacturing processes, and ways to keep food secure throughout the supply chain.
  • Traceability system. It quickly tracks products from suppliers through processing and packaging to finished product and distribution. This is especially important for food and beverage processors that must limit the scope of a recall and facilitate the rapid removal of problem products from distribution.
  • Production records. They’ll help you quickly determine the amount of product within or beyond the control of your organization by generating accurate distribution records with lot codes of each product produced.

Would your company survive a recall? Consider these questions:

  • Do you know what kind of impact a recall could have on your business and the reputation of your brand?
  • Can you financially withstand the downtime caused by a recall?
  • Have you calculated the effect of lost customer confidence and reduction in profit?
  • Do you have a contingency plan to maintain operations in the event of a significant disruption?
  • Have you identified areas of high risk or possible points of weakness or failure in your supply chain?
  • Do you have a plan to mitigate or prevent these risks?

You need to identify and document the specific steps your company will take to identify problems with products, possible causes and solutions. These steps might include, for example, convening the recall team, conducting a risk assessment, stopping production or delivery, notifying appropriate regulatory bodies, and establishing internal and external communications.

Conduct tests through simulation exercises and update them on a regular basis to ensure your recall plan works when needed and the team has been properly trained.

Once you have documented and tested your recall plan, communicate it to employees and your supply chain partners. Their understanding will help to ensure a recall is conducted in an efficient, co-ordinated manner.
Don’t procrastinate when developing a plan. If a crisis arises there won’t be enough time to devise an effective solution. After all, when customers or consumers think about your brand, you want them to regard your products as healthy and trustworthy – not to recall that your products were recalled.

Glenn Fraser is the leader of the Greater Toronto Region Food & Ag Processing team of MNP LLP. Cliff Trollope is MNP’s Business Resilience Practice Leader.

This article appears in the January/February 2012 edition of PLANT

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