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Reducing recall risks and costs

20 August 2023

Rob Rogers looks at how costs associated with product recalls can be reduced by focusing on quality control.

The direct and short-term costs of a product recall will include costs related to wasted products, business interruption, identifying root cause and correcting the issue, along with crisis management and potential retailer fines.

Every food manufacturer should have a product recall plan in place so that they are able to respond quickly and appropriately if an emergency arises, and part of that may well be to invest in insurance that will mitigate some of these costs. However, the impact of a product recall can extend well beyond the immediate term, affecting the company's reputation and the business over a longer period.

It is difficult to pin down the exact scale of such longer-term damage, but research published by Westgate in 2018 did shed some light upon how consumers might feel about a food manufacturer in the wake of a product recall. In this study, 21% of respondents said they would actively avoid the entire product range of a manufacturer at the centre of a recall – not just the recalled product itself. Building upon that, some 15% said they would never purchase the recalled product again.

Customer loyalty is therefore one of the ongoing factors that may well be impacted by a product recall, and this can be difficult – or impossible – to regain, depending on the severity and nature of the recall and how the brand reacted to the incident. 

Another possible long-term cost – and potentially a more serious one – is the loss of market confidence which can affect share prices and supply chain reputation. Alongside disgruntled shareholders, there is a very real possibility of significant damage to the brand, especially if a manufacturer becomes mired in difficult legal proceedings in the aftermath of a recall. 

The predicament is summed up by Investopedia, which stated in an article in October 2021 that ‘Between lost sales, replacement costs, government sanctions and lawsuits, a significant recall can become a multi-billion-dollar ordeal. For multi-billion-dollar companies, an expensive short-term loss can be easily overcome, but when shareholders and customers lose confidence, there may be greater long-term effects such as plummeting stock prices.’

Focus on quality
So, product recall costs can have an immediate detrimental effect upon a food manufacturing business, but beyond the initial costs there may well be longer-term penalties, almost unspoken compared to the obvious impacts, but holding back business success none the less.

As already mentioned, it is possible to mitigate some of these costs through insurance and decisive action in trying to manage the crisis, but there needs to be a more proactive approach centred around operational excellence – one that can significantly reduce the risks of a product recall ever becoming necessary.

A major part of the answer must be production line quality control, and it is here that food manufacturers increasingly look to product inspection technology. Systems such as metal detection and x-ray inspection allow them to detect and remove physical contaminants; checkweighers help ensure that ingredients and fill levels are correct; vision inspection and x-ray help to maintain a wealth of product quality parameters related to the package closure, labelling and product integrity.

It is important to understand that some recalls due to physical contaminants, mislabelling and not listing certain allergens, could be completely avoided with the right product inspection technology in place. Indeed, in 2021, global data indicated that 20-30% of food recalls could potentially have been prevented with the introduction of product inspection technologies. 

Product inspection technology is capable of contributing a great deal more for food manufacturers than just reducing the risk of product recalls. For example, with the right approach, different product inspection systems can improve both efficiency and use of resources, helping to cut down on waste and save money. 

Checkweighers can support good utilisation of raw materials. Early detection and removal of physical contaminants using x-ray and metal detection systems, before further value is added to the product, can save manufacturing costs and reduce product waste. Each production process can introduce contaminants, so product inspection at the end of the line is also necessary to help ensure products remain safe. 

Vision inspection can constantly monitor product and packaging quality, checking for properly matching front and back labels.  Undeclared allergens are a common occurrence that can, in some instances, be an easy check to verify the correct label was applied to a particular product batch. Alternatively, vision inspection can also check for quality in the applied label to help ensure it meets the brand standard for presentation. 

In conclusion, product recalls can be an expensive and greatly damaging occurrence for food manufacturing companies. Product inspection equipment is effective at tackling both the risk and the costs of recalls, while also delivering many additional positive operational benefits.          

Rob Rogers is Senior Food Safety Advisor at Mettler-Toledo Product Inspection.


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