Performing mock recalls is an integral part of preparing for a real-world product recall in the food and beverage industry. Having a documented recall plan is great, but until you practice it, you don't know how well it will work. Practice makes perfect, as they say, and mock recalls are your practice field.
Moreover, FDA regulations state that you MUST be fully prepared for a recall, meaning you could face severe penalties if you fail to practice with mock recalls.
Fortunately, modern ERP systems make it easy to document and store your recall plan as well as perform a mock recall. This is due to the broad, recall-enabling functionalities ERPs provide, including CRM, supplier management, production management, warehouse management, and more.
In this post, we discuss the seven things software should do during a mock recall.
#1: Early Issue Identification
Don’t start your mock recall already knowing which product and/or raw material is being recalled. Instead, you need to practice identifying issues, which is where CRM capabilities come in. You need CRM software that captures customer complaints and interactions, time-stamps them, and analyzes them to spot trends that could signal the need for a recall.
In most recall cases, there won’t be an ‘ah ha!’ customer complaint that signals the need for a recall. As a result, the employee tasked with identifying recall situations needs a system that alerts them to potential issues. Therefore, your CRM must offer workflow-enabled alerting when specific terms are entered (e.g., hospitalized, outbreak, poison, etc.)
#2: One-up Traceability
After you’ve identified the product for recall, you need to show that you can stop customer use as fast as possible (preferably within 24 hours). That means you need to know which customer locations have received the product, where ‘out-for-delivery’ product exists, and which batches of finished goods and in-production products are affected.
To quickly determine this, your software must relate all raw material inputs to finished products by storing recipes as part of a product’s data. It should also tie that data together, starting with supplier material data and going through warehouse, production, post-production, and delivery.
But you still aren’t where you need to be – that information must then relate to your CRM data so your recall coordinator can know who to call, their contact information, and which sales personnel need to know about this customer issue.
#3: One-down Traceability
Who sold you the bad raw material causing the recall? Quick identification allows you to one, stop buying that material, two, reject contaminated incoming shipments, and three, notify the supplier(s) to stop selling bad material to the market. To do so, your software must automatically relate all product data and raw material data to the associated suppliers, along with their contact details.
#4: Item and Product Flagging
While this may seem obvious, you don’t have time to physically label bad product – your software must perform end-to-end batch traceability with breakdowns of raw materials and allow you to flag those related to the affected product. As soon as a person attempts to take a warehoused batch, deliver the product, or sell the product, the software should prevent them from doing so with a “Do Not Sell/Ship/Use” message.
#5: Company-wide Recall Action Kickoff
Nearly all departments and personnel (including upper management) will need to take action during a mock recall. Because your ERP system connects every department and contains both the CRM and operational data related to the recalled product, it’s the obvious choice for kicking off response actions across the company.
Beyond identifying one-up and one-down information, the software should allow you to model workflows for automated response actions, including notifying executives, providing public response templates, and offering pointers for internal recall data and relevant documentation that details how to proceed with government entities.
#6: Accounting Adjustments
Your software’s job isn’t done when you’ve finished dealing with the physical product recall and external communications; now you need to adjust the financial reporting related to your lost revenue and wasted materials. Therefore, your ERP software should relate all lost product and its associated costs. Quantifying the full impact of the recall is critical to managing your cash flow and financial reporting.
Additionally, the software must apply discounts and penalties to suppliers while managing discounts or other offers for customers who may need incentives to remain your customers. Because of the exceptions a recall can create, the software must manage credit issues, extend special credit terms, accept short payments, etc.
#7: Evidence Provision
Government regulators want to see documented evidence of the actions your company took in response to the product recall. Therefore, your software needs to track and report on all actions taken, from customer and supplier notification to production changes and disposal of all impacted product batches. You need to know ingredients, production numbers, and where products were shipped. Call lists and CRM records can be made to establish a paper trail for compliance.
Having an ERP system that tracks and records all actions is vital to closing the loop on your mock recall.
Although a lot of work goes into performing a mock recall, it’s worth it when you know your system and staff are prepared for the real thing. It also demonstrates to government auditors that you’re well-positioned in case of an adverse event and gives your management team peace of mind knowing you’re ready to avoid the potentially catastrophic outcomes of a poorly managed recall.
For more information about recalls in the food and beverage industry, please contact us today.