A mass recall is a worst-case scenario for manufacturers. It not only results in lost revenue and destruction of products, but can wreck public confidence and drive away customers.
In the event of a recall, a manufacturer must be able to trace the history of the affected products to find the source of the problem. Such visibility is available from supply chain traceability software. When optimized, supply chain traceability can even avoid recalls by detecting problems before products ever leave the warehouse.
“Leading companies believe that the right approach is to do quality control to both prevent recalls and track them,” said Simon Ellis, practice director for supply chain strategies at Framingham, Mass.-based IDC Manufacturing Insights. “Traceability can quickly ID a problem and find where it started. In that case, you still might have to destroy products, but you won’t have to do a recall.”
Ellis said many of the big-box ERP and supply chain management (SCM) vendors, including SAP and Oracle, provide some form of traceability in their software. Traceability is often considered part of quality control, but “tracking quality is tricky because many companies will define quality in different ways,” said Ellis. While some companies incorporate quality control into the manufacturing process, others measure it by the number of product returns, he said.
Manufacturing execution system (MES) software sometimes includes a module known as quality management, according to Mike Burkett, research vice president at Stamford, Conn.-based Gartner Inc. “MES can record the manufacturing process instruction or manufacturing process planning and make sure that all assembly steps are followed correctly,” Burkett said.
Barcoding is another technology that can be used for supply chain traceability, according to Burkett. Barcode records can show where a product was purchased, which can help determine the geography and scope of a recall.
While traceability apps make it possible to track recalls more quickly, many companies are choosing to do standalone analysis and use Excel spreadsheets to record recall data, Ellis said. This may be due in part to the lack of industry-specific traceability software, which forces manufacturers to develop their own solutions. However, Ellis pointed out that some vendors are developing traceability applications tailored to specific manufacturing segments; JD Edwards, for example, has the EnterpriseOne Grower Management module, which is designed for the farming industry.
Traceability aids in meeting FDA guidelines
Adhering to federal safety and quality guidelines is a major concern for manufacturers in industries such as food and beverage, pharmaceuticals and aerospace. In January 2011, the U.S. Food and Drug Administration (FDA) Food Safety Modernization Act — a set of new requirements aimed at preventing and responding to outbreaks of foodborne illness — became law. In a recent report on supply chain traceability, IDC called this the “most significant development in recent history of the role that U.S. government and regulation will play in traceability.” Manufacturers are feeling the pressure. In IDC’s report, improving product quality was reported to be the highest-priority supply chain initiative among the companies surveyed.
Advancements in technology — including traceability software — may be a factor in the evolution of federal quality guidelines. “There are more recalls today because there’s greater scrutiny of the supply chain,” Ellis said. “As technology has improved, the bar has been set higher for responding to recalls.” Ellis also pointed to the increase in supply chain globalization. “Supply chains are also more complex today, so more can go wrong,” he said.
Celsis laboratories speed up manufacturing quality control
In the face of increasingly strict guidelines, some manufacturers are turning to outsourced quality control providers. Chicago-based Celsis International Ltd. is one such provider. The company offers rapid screening systems and laboratory testing to detect microbial contamination in raw materials, in-process goods and finished products. Celsis’ customers are in highly scrutinized manufacturing industries such as dairy, beverage, home and personal care, and pharmaceuticals.
“When companies are under pressure to increase profits, there can be a tendency to ‘ship and pray’ — send products out to distribution while awaiting test results,” said Cindy Lieberman, vice president of branding and marketing communications at Celsis. “For products that are usually clean, it doesn’t seem like that much of a risk until there is a contamination, and then there’s the logistical issue and expense of a recall of that batch and all the batches made after it.”
Despite the new FDA guidelines, concerns about microbial contamination aren’t restricted to the food and beverage industry. “In addition to medicines, over-the-counter products with an active pharmaceutical ingredient, like those in sunscreen or dandruff shampoos, have regulatory requirements,” Lieberman said. “Track and trace is vital for anything that is put into the body, from IV drugs to milk.”
In the Celsis laboratories, the growth process of potential bacteria, mold and fungus is accelerated through an enzymatic reaction, allowing for contamination to be detected days earlier than it typically would be. “As a result, companies can get their safe products out the door in 18 to 24 hours versus a four-to-seven-day wait time, detect problems sooner and recover faster,” Lieberman said.
Social networks may hold early warning signs of recalls
While product recalls may be a matter of hindsight, Burkett suggests that social media-savvy manufacturers may have a chance to respond to problems faster and, perhaps, soften the blow of a mass recall. He pointed to the recent Toyota recall caused by faulty gas pedals. “There were questions as to why they didn’t know it was such a big problem,” he said.
According to Burkett, before the recall took effect, there was substantial blogging activity among Toyota owners about the defective gas pedals. “I think there’s an opportunity to monitor websites, blogs and social networks,” he said. One way of doing that is by using sentiment analysis, or capturing the sentiment of the marketplace. “If Toyota had been monitoring this, they might have found out about the problem sooner.”