February 2013 | Commentary | IT Matters

You’re Faced With a Recall. Can You Find That Product?

Tags: Logistics I.T.

Tom Kozenski is Vice President, Industry Strategy, JDA Software, 800-438-5301

Product recalls cost the U.S. economy $7 billion annually, according to the Washington Post. Yet most U.S. companies still struggle with real-time inventory visibility, and managing inventory across their network of suppliers, distributors, and manufacturers.

With the average product recall costing $10 million, the inability to quickly and effectively recall product presents a huge risk to business viability. Whether they involve a food item, drug, medical device, or consumer goods, product recalls require swift action. Days or weeks of recall delays can result in lost revenue and consumer confidence—even lives. Isolating an item—wherever it is in your supply chain—mitigates risk, minimizes liability, protects consumers, reduces costs, and preserves brand reputation.

Many companies rely on spreadsheets and homegrown solutions for tracking products and processes in their supply chain. This approach, however, creates problems related to data inconsistency, response delays, lack of inventory visibility, and limited communication with supply chain partners.

Coordinating with suppliers and distributors, locating recalled items, and responding quickly are among supply chain executives' top concerns when faced with a recall. Automated traceability technology addresses these challenges by identifying any product's exact location in the supply chain.

Armed with Knowledge

Automation combats visibility issues and ensures a complete chain of custody for any item manufactured, stored, or shipped within the supply chain. When a recall occurs, manufacturers can determine inventory location by item, batch, and lot—anywhere and at any time.

For example, in the case of a food or drug recall, companies need to locate, lock down, and remove recalled items from the market as quickly as possible to prevent illness, lawsuits, and bad publicity. Handwritten spreadsheets and homegrown systems mean plowing through paperwork and data to identify that product's location in the supply chain.

And, that data typically only accounts for goods while they are in a small window of the supply chain. Suppliers and distributors have their own unique method for tracking inventory. For many companies, this means completely pulling an item or product—rather than just isolating a contaminated or faulty batch. The extra time and cost of this effort can have a huge impact on a company's reputation and bottom line.

Automating the inventory process with bar-code technology enables companies to track when an item enters the warehouse, where it is stored, and when and how it leaves. More importantly, this technology allows companies to synchronize information with suppliers and distributors across the extended supply chain. The result is a single source of complete electronic traceability.

For a food recall, traceability tools allow companies to identify the farm where contaminated items originated. For a faulty product, businesses can track the specific truck that is carrying the item for delivery. The tools can also identify which stores and shelves contain the recalled goods.

With the right technology, companies can have complete, accurate traceability—from the moment a product enters its supply chain to the time consumers receive it. For businesses and consumers alike, these tools promise a safer, more secure supply chain.