Food recalls often leave a bad taste in your mouth in more ways than one. In addition to being a public health issue, food recalls also present economic issues. A joint study by the Food Marketing Institute and the Grocery Manufacturers Association found that the average cost of a recall to a food company is $10 million in direct costs.
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If an individual or group of people decide to sue a company over a food recall, the legal fees can add up quickly. Additionally, manufacturers could face government fines. In 2015, ConAgra agreed to pay $11.2 million in fines and forfeitures connected with the charge that it shipped contaminated peanut butter linked to a 2006-2007 nationwide outbreak of Salmonella poisoning.
In addition to lasting financial effects, poorly managed product recalls can have devastating consequences on a company’s reputation, market share, and bottom line. A Harris Poll found that 85 percent of Americans would get angry if a company has a crisis or issues a product recall. However, there is no data that can exactly predict how high food recall costs might climb. The scale of a recall as well as how it’s handled will have the most lasting impact in the minds of consumers.
Timing is Everything
News of a food recall can spread rapidly. According to a Freshfields Brucknhaus Deringer survey, 28 percent of all crises spread to international media within one hour, 69 percent spread to an average of 11 countries within 24 hours.
With so many aspects of organizations moving away from paper and into the digital age, it seems that the management of product recalls hasn’t quite kept up. Food recalls are serious tasks for any company to undertake, which is why they can’t be managed with outdated processes, such as spreadsheets and paper responses.
Modernizing recall management process results in: accurate and up-to-date customer data stored on modern customer relationship management (CRM) systems; fast and inexpensive notifications; easy response options for customers, and automated response reporting dashboards to show performance and hopefully conformance as a result. So how can manufacturers utilize digital platforms to make food recalls more efficient and manageable?
Dedicated Recall Management
Food recalls can be managed seamlessly and efficiently on a dedicated recall response database. This eliminates the need for complex, manually updated spreadsheets and other paper documents, and provides an accurate system to produce up-to-the-minute reports at the touch of a button. All of your customer information is stored in one centralized place with access available across departments for internal key users. This is then updated automatically as customers are notified and when they respond.
Social media has changed the speed at which organizations must respond. It has provided the public with a very easy way to vent their anger, which can then escalate at significant speed. Social media posts can quickly transform into headline headaches in traditional media outlets. However, this same tool can also allow manufacturers to quickly manage responses and handle a negative situation effectively. This is why having a digital channel strategy ready to follow is so vital.
When a recall occurs, the Consumer Product Safety Commission typically requires that social media notifications be included in corrective action plans. Steps for a product recall digital response include:
- Provide a dedicated URL in your notifications to allow your stakeholders to respond securely online;
- Allow these responses to be automatically added into your dedicated recall database, and attached directly to each contact’s record;
- Avoid the potential risk of human error when manually entering data from paper responses; and
- Build up a seamless workflow, from notifications to responses and follow-up, thus simplifying the whole process of managing recall communications.
Digital tools like marketing automation and social media monitoring provide quick communication and gain immediate stakeholder perception and feedback. In addition, they enable you to convey your message to customers and show that you are present and fully engaged with them.
When a food recall occurs, manufacturers not only have to face the public, but they typically have to report to a government agency. Recall authorities often request that companies dealing with a recall submit status reports biweekly (or at least monthly), making automation a priority. Automated reporting can include:
- Number of consignees notified of the recall, and date and method of notification;
- Number of consignees responding to the recall communication and quantity of products on hand at the time it was received;
- Number of consignees that did not respond;
- Number of products returned or corrected by each consignee contacted and the quantity of products accounted for;
- Number and results of effectiveness checks that were made; and
- Estimated timeframes for completion of the recall.
When using a dedicated recall response CRM database, this information is available to view and download quickly, whenever the authorities require it.
Proactively Partner with an Expert
Because food recalls are often complex, many manufacturers are proactively partnering with recall management experts to help them prepare for the unexpected occurrence of a recall or a crisis. This can have the most dramatic effect on the performance of any recall, as an expert can help in the following areas.