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 Food recalls are serious tasks for any company to undertake, which is why they can’t be managed with outdated processes, such as spreadsheets and paper responses.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.
Determining responsibilities. Define terms and assign roles and responsibilities. Managers from across the company will be available to handle operations, production, purchasing, customer service, marketing, and finance.
Developing an online recall flowchart. This becomes the core ingredient of every aspect of recall management.
Messaging. Prepare a variety of messages for each recall class and divide them according to customer, stakeholders, and media. Have templates on hand with a choice of messages, which can easily be modified in a crisis.
Identifying the product locations. It’s the company’s responsibility to know the quantities in production, distribution, and which consumers have them and where they are. This links back to a recall CRM database, and is without doubt, the number one cause of recall announcement delays.
Notifying all affected parties. During a recall, it’s important to follow the appropriate regulatory agencies’ procedures in a timely manner, typically in this order: agency, distribution chain, and then consumer.
Commencing the recall and monitoring its stages. This includes:
- Remove: All efforts made to remove the product from the marketplace.
- Control: Ensuring recalled products do not re-enter the market.
- Dispose: Follow agency or other protocols for disposing of the item.
- Measure recall effectiveness: Check all appropriate actions have been taken and all parties notified, and whether consumer feedback is neutral, negative, or positive.
- Recall termination: Only once all regulatory parties have authorized it.
Conducting and practicing mock recalls on a quarterly basis. This includes:
- Choosing a product for the mock recall.
- Tracing the product from the source to the finished product.
- Verifying communication systems, i.e., emails, address, telephone numbers.
- Documenting each mock recall and modifying the strategy to correct any aspects not factored in.
Preparation is key in recall management, which hasn’t changed in the digital age. However, digital tools help managers respond quicker, limiting brand damage. Still, for many companies, managing a major food recall is now too big a task and the risk too great to tackle it alone. Food recalls come with real costs that can damage the bottom line and destroy a brand. Investing in a partner that can properly manage a recall can often save a company millions of dollars in lost sales and reputational damage.
Remember that all crisis communication strategies should be revised on a regular basis. By ensuring you have digital channel experts in place as part of your crisis management team, your company is already in a good position to defuse any potential damaging situations.
Gillett is CEO of Marketpoint Recall, an international recall response agency. Reach him at pgillett@Mktpoint.com.