Once more unto the breach

This article is brought to you by Retail Technology Review: Once more unto the breach.

By Nick Martin, senior VP, Trace One.

As the horse meat scandal swept across Europe, consumer confidence in the food industry hit rock bottom: leaving retailers to pick up the pieces as their products, profits and brands took a battering. More than anything else the scandal has thrown a spotlight on the sheer scale and complexity of the food supply chain. Currently food retailers work with multiple suppliers, across multiple territories with multiple jurisdictions. This has made it increasingly difficult for retailers and manufacturers to manage every facet of the process and to ensure information on products on the shelf is transparent and readily available. It has also shown that where there is commercial pressure, there will always be an incentive for 'creative' ways of cutting costs to increase profits.

Time and time again

In 2005 the contamination of Worcester sauce with the illegal dye Sudan 1 brought about the largest ever product recall in the UK. As a result the food industry took decisive steps to prevent such a situation from ever occurring again. The 2011 E Coli outbreak and now the horse meat scandal have shown that product recalls are something that the food industry will always have to deal with: especially if, like the horse meat scandal, it is the result of fraudulent actions. As the accuracy of detection methods improves and food production becomes increasingly international, the odds of a product being found with unexpected contents will increase exponentially. It is therefore crucial for retailers and suppliers to use effective traceability solutions to manage product recalls, in turn enabling them to mitigate any potential risk to the public and to the reputation of the company.

The importance of traceability

Traceability is central to effectively managing product recalls. When horse meat contamination first emerged, it was crucial to know what products on the shelves could be potentially contaminated and who the suppliers were.  In situations like this it is still possible to be aware of any contamination before the news hits the media and take necessary action. Some retailers, once they were alerted to the fact that their products could potentially be affected, could conduct a database search; discover exactly which products were at risk; and contact their suppliers directly for assurances within an hour. Retailers cannot risk gambling with consumer confidence through inaction and waiting for information on the exact source of the contamination to slowly emerge.

Knowledge is power

When it comes to the effective management of product recalls, knowledge is power. Being able to quickly identify which products have potentially been affected is the first step in taking decisive action. However, this isn’t worth much unless you can communicate this information quickly to your partners and remove products from the food chain. The ideal situation is one where advanced warning is given on potentially contaminated products before any problem becomes widespread; however this it is not always the case. When a contamination scandal is unfolding and being increasingly scrutinised under the public eye, the most effective strategy for retailers is to keep the public informed of progress and developments throughout the crisis. Only then can consumers regain any confidence that the retailers can be relied on to correct the situation as quickly as possible.

Looking for the warning signs

Moving forward retailers and suppliers may take proactive measures to try and limit the damage from product recalls by horizon scanning. An example of this will be when the horsemeat issue first broke in the UK: retailers on the continent were prompted to look at their products and seek out assurances that their products containing minced beef were not affected. Some may argue that retailers weren’t to know that the adulteration of products with horse meat was not a one-off occurrence in Ireland. However, the cost of any potential fallout far outweighed the time and effort it would take to communicate with a supplier to get assurance.

Betting on the future

We have yet to learn how the prospect of contamination will impact consumers’ purchasing decisions for processed foods such as hamburgers, especially through the possibility of a BBQ season. However, in the meantime retailers and suppliers can take steps to make sure their houses are in order. Having more information available on the product supply chain and also ensuring that the products contain exactly what they say on the label is crucial. Retailers can then restore consumer confidence and make sure that next time a crisis like this occurs, they and their suppliers are able to act as efficiently as possible