Corporate IT Systems Unprepared for Product Recalls

Peanut butter, preschool toys, children’s jewelry, spinach and cantaloupes—by the pound and pallet, consumer products are being yanked back by makers and sellers of foods and hard goods. We’ve written in-depth about how difficult it is for companies to run their supply chains backwards during product recalls.

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Now problems at Mattel, ConAgra, Wal-Mart and other big consumer product manufacturers and retailers in the past few months have prompted other companies to examine holes in their own supply chains that could hamper a recall.

Disney, for example, has decided to take over toy testing from its Chinese manufacturers, says Steven P. Davis, chief architect and vice president of IT at Walt Disney Studios, a $9 billion movie company that’s part of the $34 billion Disney entertainment empire. “In part because of what’s going on with Mattel, we’re going to even allow suppliers to test for us,” Davis said in a speech at the Society for Information Management annual conference in October.

Disney has had its own share of recalls, including red kids’ sunglasses found to contain lead paint. More than 628 recalls have been made this year, on top of 941 in 2006.

Software vendor RedPrairie, which markets its software as a way to track products from manufacturing to point-of-sale, recently surveyed 41 food and beverage companies about their capabilities to act quickly and effectively during a recall. The results show how unprepared companies are:

• 63 percent of respondents called their recall processes only “somewhat effective.”
• Though 44 percent said their products could be removed from store shelves “in a few days,” 12 percent didn’t know how long it would take them to pull defective products should the need arise.
• 34 percent reported changing some part of their recall processes, as Disney did, in response to recent product recalls.

Best practices do exist, some of which we’ve detailed here.

Smart companies should form recall task forces that include IT, manufacturing and sales, among other employees, to study federal investigative procedures to know what data they must provide, says Joe Barkai, a practice director at Manufacturing Insights, a consulting firm that, like CIO, is owned by International Data Group.

After the task force understands what data is needed, Barkai says companies should perform mock recalls to discover gaps in the availability of critical data, such as the provenance of ingredients or parts that went into the finished goods and where in the shipping pipeline products are. Retracing the steps of procurement, manufacturing and distribution to find out how a product went bad, where it is and how to get it back, highlights all your information gaps.