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Route to Market & Supply Chain Blog

FMCG dummy QA recalls are not for dummies:Supply Chain Challenges

Posted by Dave Jordan on Mon, Feb 25, 2013

The recent high profile cases of horsemeat DNA appearing in products marked as beef and other meats have generated a fair amount of humour but they also place great strain on FMCG Supply Chains. Thousands of Supply Chain professionals around the globe spend their waking hours trying to get their stuff/skus/merchandise in front of customers and consumers at the right place, price and as fast as possible.

Numerous companies have invested heavily in Supply Chain improvements including S&OP and Route To Market, e.g. Unilever and you can see the effect of these and other initiatives on their share price. Unilever is now very slick at getting the right products where they are needed, when they are needed.  However, what is unfortunately just as important is how they can reverse that slick chain to recover product stocks in a recall situation.

FMCG Dummy RecallHave you ever tried pushing tooth paste back in to a tube?  Or forcing shaving foam back in to an aerosol can or an egg back in to a chicken? Ok let’s not go there but you get the idea. Once you have moved something downwards along a complicated and narrowing process or extended chain it is not easy to reverse the same. With people and process optimising a one-way street executing a potentially damaging recall is often given less attention that it deserves.

In developed markets where there is a high proportion of traditional trade a product recall is difficult enough but the number of storage points is usually limited. Producers and customers operating to a low stock holding policy will be applying reasonable FIFO/FEFO and IT systems in both parties will be accurately recording stock codes and locations. Tracing your product in an International Key Account (IKA) environment is tough but do-able.

Compare that relatively transparent situation with the fragmented Traditional Trade (TT) Route To Market (RTM) distribution commonly found in Developing & Emerging (D&E) markets. You should have batch code visibility to your in-house distribution centre or 3PLP – well, frankly if you don’t you might consider a career change.  However, you might not have visibility when stock leaves the 3PLP and heads for a myriad of TT operations. Or rather, you think you have code destination visibility but the integrity of this now relies on your distributor partners.

Some partners will be professional and maintain the recording of batch code destination. Others will simply not be equipped for this and others will be operating in basic conditions where FIFO/FEFO is not a priority or a possibility. In the event of a corporate recall this is no defence in the eyes of authorities, the public or the blood-thirsty popular press. Solutions do not have to be IT based in an expensive WMS system but a simple Excel approach or even pen and paper – remember that? – would be an improvement on admitting a lack of knowledge about where your potentially dangerous products have been sent.

Five key points to note on recalls:

  1. Ensure you have an agreed product recall procedure signed off by the operational Board.
  2. Review this procedure on a regular basis to ensure it is still relevant to your current business model. No use having the instructions to Draughts if you are now playing Chess.
  3. In the event of a recall the process should be led by a previously defined competent person who knows exactly what do to at the drop of a hat. Do not wait for the disaster to happen to find someone who can do this job.
  4. Make dummy recall incidents an important part of your business and see that they take place on a regular basis in all channels. Do not settle for a dummy recall stopping at the 3PLP warehouse. Document and time dummy recalls to monitor and subsequently improve your performance.
  5. Lastly, in the event of a real and urgent recall you need to get over the fact that it has happened. Surely, someone in the business needs to be understanding why the fault occurred in order to implement a 100-year fix but the senior team needs to focus on getting the recall executed in the most efficient way to protect both the public and your own brand and corporate image.

If you can get full scale dummy recalls into your company DNA you will be ready for the challenge that will arrive sooner or later.

Image courtesy of Imagerymajestic FreeDigitalPhotos.net


Tags: Route to Market, Dave Jordan, CEO, Performance Improvement, Supply Chain, Inventory Management & Stock Control

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