There’s a famous Hollywood saying that you’re only as good as your last performance. In manufacturing, you’re only as good as your latest output—and a product recall can severely damage that status.
For process manufacturers, the biggest impact is often not caused by the recall itself, but in the way that recall is handled. Especially, if it takes too long to identify the source of the problem and locate all those goods affected. Sometimes, more products than necessary are recalled, just to ensure the problem is resolved. And the scale and speed of these recalls can significantly impact customer confidence.
What can process manufacturers do to manage product recalls more effectively, limiting their financial and reputational effects? Here are some suggestions…
Why Are Product Recalls So Problematic for Process Manufacturers?
While every type of manufacturing business is affected by product recalls, the reputational risk is particularly high for process manufacturers. Why?
Firstly, large batch manufacturing means a huge number of products can be affected by one recall, as goods have been distributed to a wide number of customers. One simple error such as cross-contamination between ingredients, or contamination in the process plant, can lead to thousands of products being recalled.
Secondly, the potential reach of sub-standard products makes locating and returning them a major logistical challenge. Process manufacturers need to understand what lots have been affected by a production issue, and where those products have been distributed, to take control of a recall initiative quickly.
Thirdly, many of the sectors that process manufacturers operate in are tightly regulated—so even a simple admin mistake, which doesn’t impact the actual product quality—can result in a recall. Improper labeling or missing information on the certificate of analysis (CofA) are good examples of this.
Finally, the reputational and financial impact of a product recall is significant when you’re dealing with products that could be harmful if used or consumed when the recipe isn’t followed precisely. Look no further than hand sanitizer manufacturing during the pandemic as a pertinent example.
The Food and Drug Administration (FDA) has recalled at least 75 hand sanitizer brands labelled to contain ethanol/ethyl alcohol, but which tested positive for methanol (wood alcohol). If consumers absorb methanol through their skin, the reaction can cause blindness—and even result in death if ingested. Nobody wants to be responsible for manufacturing and circulating lethal products.
How Can Manufacturers React Quickly to Product Recalls?
The best way to avoid product recalls is not to need them in the first place, and there are numerous things that process manufacturers can do to reduce the risk of production and compliance issues.
The single most powerful way to improve quality control and manufacturing consistency is to invest in enterprise resource planning (ERP) software. As this will increases the visibility and accountability of every ingredient and process.
Most manufacturers think of ERP technology as optimizing processes, but it also plays a valuable role in minimizing product recalls—helping organizations to get ahead of an issue quickly by increasing traceability.
Selecting an ERP solution with built-in traceability features enables process manufacturers to track and account for every raw ingredient or material used, from supply to finished goods. So, if there is a quality control issue, you can quickly identify the source along with a list of customers who purchased affected lots, whether those orders have been produced, and where completed orders have been shipped.
Process manufacturing ERP software integrates inventory information with your bill of materials, batch tickets, lot numbers and bill of lading, along with product line information and storage locations. Within seconds, it’s possible to view a digital footprint of your recall’s reach. And with this information in hand, you can put the wheels in motion to recall affected products.
How Can Process Manufacturing ERP Software Reduce the Financial Impact of Product Recalls?
There’s no avoiding the fact that product recalls are expensive because they hit process manufacturers twice. Firstly, the original batch of goods is null and void, and will need to be replaced to the customer free of charge. Secondly, the logistics of identifying non-compliant products and getting them back to the plant is expensive.
The direct costs involved in a product recall include production stoppage (and then overtime to replace contaminated goods), laboratory testing, legal fines/penalties and return shipping. And that’s not factoring in the reputational impact of a high-profile product recall on customer orders, or the marketing and advertising push you need to invest in to restore people’s confidence.
Process manufacturing ERP software can help you manage and mitigate the expense of product recalls, using both proactive and reactive capabilities. Contact us to request your free demo today.