Can your company take a hit of over $100m in lost sales due to an FDA recall? No? Read this…

Posted on June 9, 2016
  • June 9, 2016 1024 1024 Specright Specright

Every month, dozens of food products are recalled in the US. A quick scan of the FDA website provides anyone with an overview of headlines to read: Whole Foods Market Recalls Mislabeled Asparagus, Pea and Ricotta Salad Due to Undeclared Allergen, The Caramel Factory, LLC Issues An Allergy Alert, or Let’s Talk Health, Inc. Issues Alert on Undeclared Milk and Soy in Energizer Drink Mix.

According to Fortune, the Grocery Manufacturers Association surveyed 36 international companies in 2011, and over than half reported a food recall impacted their business during the previous five years. Eighteen percent of those said the hit from the recall and lost sales was between $30 million and $99 million; 5% said the financial impact was $100 million or more. And this did not take into account the long-term reputational damage to the company’s brand(s).

Failure to identify food allergens accounts for nearly 50% of all food recalls, according to the Reportable Food Registry, an electronic portal for Industry to report when there is reasonable probability that an article of food will cause serious adverse health consequences. The highest percentage of allergen recalls relate to undeclared milk, tree nut, peanut and eggs.

Registered Food Facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States are required to report when there is a reasonable probability that the use of, or exposure to, an article of food will cause serious adverse health consequences or death to humans or animals. reports 13 distinct root causes for food allergen recalls have been identified and of these, use of the wrong package or the incorrect label for a product was the most common problem.

Audit your packaging/labels to prevent recalls

How can food manufacturers stay ensure that their packaging and more specifically, labeling, meets the requirements? The best method for reducing the risk for recall/lost revenues is to develop a pro-active review and audit process for product packaging and labeling. Here are some tips:

1. Create an audit plan/timeline. Include in the plan all the SKUs/labels/packages that will need a review.

2. Identify the packaging/labels that need to be reviewed. Here are the top three reasons for packaging/label failures
a. Packages for similar products made with different allergens, or products with and without allergens packaged in similar packaging.
b. The wrong terminology in the ingredient list or the allergen “contains” statement.
c. Changes in formulation/ingredients from external suppliers not carried over to the final product label.

3. Assign tasks to marketing/branding/quality – anyone who needs to review or approve the new labels.

4. Send new labels to suppliers.

5. Audit your suppliers to ensure compliance with the new label designs/regulations. Regular audits keep your specs compliant and confirm your labels matches the certified spec, ensuring accuracy and minimizing returns and recalls.
a. Send a request to each supplier with the label/packaging specification and request they pull the package and send it to you along with the correct specification to verify compliance.
b. Schedule audits with each supplier where your staff physically audits each supplier package/label versus the latest approved spec.

Follow these simple steps and you might avert a costly recall. If your company is using outdated technology like PDF files, spreadsheets or inflexible ERP solutions to manage your packaging/labeling specs and the above tips sound daunting to implement, consider specright, the Intelligent Specification Management Platform. Our customers use specright’s Exchange to share accurate, approved specs with suppliers real-time, reducing their risks for recalls due to improper packaging/labels.

Get a demo of specright today!