08 Dec Product recall – Suppliers are key to reducing negative impact on brand
In these highly regulated days of the supply of consumer goods, it amazes me just how often food products are recalled due to a risk arising from the production process.
According to the Food Standards Agency (FSA), in 2015 they were notified of and investigated over 1,500 foods, feed and environmental contamination incidents in the UK. This overall number of incidents was similar to those seen in recent years. However, across categories the numbers of incidents differ considerably. The four largest contributors to the total number of recorded incidents in 2015 were:
- Pathogenic micro-organisms (18%)
- Allergens (14%)
- Chemical contamination (other) (12%)
- Residues of veterinary medicinal products (8%)
Whilst within these categories some incidents are clearly more serious than others, either way the implications and costs to the retailer and the brand are the same:
- Many products and records to investigate
- Products to isolate in store and recover from the supply chain
- Payment for the return and subsequent disposal of affected products
These procedural costs are only the tip of the iceberg since the real costs are the lost sales whilst these products are not on the shelves. Perhaps more importantly, there’s a cost relating to damage to the brand when the consumer learns of the failure and product recall or when they visit the shop and find the product is not available for them to buy.
A Harris Interactive Poll found that 55% of consumers switch brands as a result of a product recall with 21% avoiding products in the same brand portfolio and 15% never purchasing that product again.
Word of mouth is also a powerful medium which can have huge impact on a brand following a recall. A case in point is millennial shoppers: Although willing to demonstrate strong brand loyalty, once they’ve have a bad experience, in 86% of cases they will take their business elsewhere. And worse still is that once they have had a bad experience, 26% of them will broadcast a negative comment on social media.
Product recalls are more visible nowadays
This is worrying for brand owners when you consider the frequency of product recalls – on average the FSA sends out alerts for a product recall 3.8 times per week.
In recent weeks there has been the following product recalls (including some relatively big brand names) announced by the FSA:
- Concerns over a company’s procedures in place to control Clostridium botulinum in production of pate.
- Dried fish contaminated with chemicals.
- Koppaberg recalling some bottles of cider because the bottles may break.
- HiPP Organic recalling breakfast cereal because they may contain small pieces of metal wire.
- Raw honey being recalled due to small pieces of metal found in the product.
So how can brand owners minimise the negative impact of a product recall?
Speed of response is critical – the less instances of affected products being sold, the better. To enable a quick response, the manufacturer of the products is a key figure. They know their products better than anyone and that wealth of information can be a valuable weapon in not only reacting to problems that require a recall, but also in preventing one in the first place.
For private brand retailers who will have large numbers of products manufactured for them by multiple suppliers, we champion Supplier Engagement as a way of retailers working collaboratively with suppliers. Part of this collaboration includes sharing product feedback with suppliers which in the case of spotting problems – the supplier may well know something crucial that the retail team doesn’t.
Being transparent with product feedback gives suppliers the opportunity to identify issues which could escalate and cause adverse problems for consumers. The supplier can then flag this with the retailer, enabling immediate action to recall the batch with the issue before it becomes a more widespread problem.
This transparency and collaborative culture creates engaged suppliers who will listen and respond when retailers need to urgently communicate with them.
Longer term, good engagement helps prevent problems arriving as suppliers focus on and adhere to compliance initiatives.
Arming the supplier with visibility over feedback about their products ultimately facilitates a speedy resolution to reduce costs, interruption to business and risk to consumers. With such a significant payoff for private brand retailers – it’s time to stop keeping suppliers in the dark.