Food Companies Can Save Millions on Recalls, Lawson Says
September 9, 2008 Alex Woodie
A study commissioned by Lawson Software found the food and beverage industry could save millions of dollars by reacting more quickly to product recalls.
The recent Salmonella outbreak, which first targeted tomatoes and then settled on peppers as the culprit, may leave you with the impression that the food and beverage industry moves aggressively when there’s a potential health problem.
But in fact, there’s a lot of room for improvement, not only from a safety point of view, but from the perspective of profitability, according to Lawson, which commissioned AMR Research to conduct a study called “Traceability in the Food and Beverage Supply Chain.”
The study, which included 251 participants among American, French, English, and Swedish companies, found that a majority of food and beverage companies had at least one product recall in 2007. For more than half of those companies, the recall cost the company at least $10 million, and 40 percent reported losing $20 million or more. Not surprisingly, dairy (not produce) was the biggest culprit in recalls.
But here’s the stickler: On average, it took 14 days for a food or beverage company to sense the need for a product recall, according to AMR, and 34 days to enact it. That’s just too long, according to Lawson, and ends up costing the companies too much money, especially in this age of computers.
“Despite a perception among food companies that they’re doing a good job managing product quality, the staggering cost of recalls proves ‘business-as-usual’ isn’t working,” says Rob Wiersma, Lawson’s industry strategy director.
For starters, Lawson suggests companies buy its Trace Engine, which helps food companies track information about every raw ingredient they use, such as when an apple was picked, what other products were used, and the temperature during loading. It even tracks information on packaging, which can also lead to product recalls.
“Food producers can be much more proactive in managing food safety to improve product quality and reduce supply chain risk,” Wiersma says.