No company wants to have its products recalled. However, if a recall is necessary, the priority is to minimize the ramifications and complete it as quickly and efficiently as possible. Certain industries—such as consumer packaged goods, pharmaceutical, and automotive, among others—are well acquainted with the need to properly accomplish recalls. However, many other industries also are at risk, and they might not even know it.
A quick perusal of recalls.gov reveals a startling array of US products that have joined the ranks of the recalled, and others are apt to follow. Even businesses that are highly unlikely to be involved in a recall are beginning to take notice of the potential problem and taking action to mitigate any such risk.
Outside of addressing the cause of a product issue, a successful response to a recall depends on traceability. With good records of material sourcing, product manufacturing, distribution, and all of the steps in between, a company can clearly identify where each component and material came from, what products contain the problematic materials, and where those products ended up. The best possible outcome for the producer is to be able to use this information to limit the number of recalled products to the smallest population possible. If there are gaps or uncertainties in the inventory transaction trail, more batches must be recalled to assure complete capture of all products that could possibly have been affected.
To illustrate, let’s say a product is recalled because of a safety issue. Once the problem is identified, the producer must determine the cause of the failure. Initial research identifies a defective component as the problem. Further testing then reveals that a specific batch of this component from a specific purchase is the culprit. After notifying the supplier, so that it can do its own fact-finding and tracing, the producer must identify all product lots that contain parts from that specific component lot. Next, the search moves in a downstream direction to see where each affected product lot ended up—from finished goods through the distribution chain to individual dealers, distributors, and customers. Obviously, this requires detailed record-keeping and robust data management and search capabilities to check these records.
Information Investment
Virtually every inventory, enterprise resources planning, and warehouse management system is capable of capturing the raw data, including simple inventory transaction history with sufficient identification such as serial numbers, lot numbers, order numbers, and important dates. Additional information from production and quality must be readily relatable to specific lots and orders to complete the audit trail. This is something that is difficult, if not impossible, to recreate after the fact, though. The data must be collected and stored in an appropriate database at the time the transactions occur in order to be valid and supportable.
It is important to understand that recalls are a supply chain issue and not at all limited to the producer of the faulty product. Any company making any material, component, or assembly that goes into another product—no matter how many links removed they are from the customer end of the supply chain—can be involved in the recall process. Collecting detailed traceability data at all of these levels might seem like an unnecessary expense, but when a recall comes out of left field and challenges the traceability of products and materials, its value will be apparent.
To further bolster the business case for traceability, keep in mind that such data also is important for engineering studies, product-improvement efforts, and supplier qualification and performance measurement. And it’s critical when responding to complaints or lawsuits.
Establishing the infrastructure for traceability, maintaining solid audit trails, and performing mock recall exercises are good investments in supply chain risk avoidance and mitigation, even if you never expect to face an actual recall. It’s like buying insurance: The best possible outcome is that you never have to make a claim.
Reprinted from APICS Magazine / Enterprise Insights | March/April 2016