Michelle Barnes: Calculating a product recall’s effect on brand reputation

April 30, 2012 1 Comment »

Product recalls are a brand manager’s worst nightmare. In the second of a series of articles on product inspection issues, Michelle Barnes of Mettler Toledo looks at the risks and solutions to avoid recalls

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Few things strike more fear in the heart of a brand manager than finding out a product is being recalled. The potential for recalls is increasing in the wake of new food and safety laws passed by governments around the world, including China and the United States. Well-publicised recalls in recent years have also heightened consumer scrutiny and awareness of product safety.

Another indicator of the trend is the rising popularity of insurance plans that provide product contamination and recall coverage for manufacturers. It’s a lucrative new niche for insurance providers as manufacturers seek protection in an era of tighter regulations, better enforcement and harsher penalties.

How do you calculate the costs of a recall? First of all there are the straightforward upfront costs such as physically transporting products back to factories, replacing inventories and publicising alerts throughout the national (and sometimes international) media. Then there are the associated costs such as compensation for retailers, and longer-term potential costs rising from consumer lawsuits.

But there’s one cost that can’t be easily measured: the damage to your brand’s reputation. Nothing tarnishes a brand like a recall, and the ramifications can range from a temporary dip in global sales to a catastrophic loss of public confidence in a brand.

In a global economy with increasingly complicated supply chains, quality control is becoming more critical. A number of supermarkets and retailers such as Walmart and Marks and Spencer have put their own quality control protocols in place, and they are requiring food and beverage manufacturers to comply with them.

This helps explain the rising reliance in x-ray inspection technology as a method of minimising the risk of recalls.  X-rays detect foreign bodies in packaging such as glass shards, metal fragments, bone, stones and high-density plastic. The technology has been around for a long time, but it has advanced to become a critical aid for demonstrating regulatory compliance with safety and quality control procedures.

X-ray detection offers more than just contamination detection; it also identifies product defects such as broken cookies, misshapen chocolates, a faulty seal on a yoghurt container, etc. It essentially offers manufacturers the capability to see inside a package and catch defects in advance, so that consumers get a “perfect” product every time.

The technology can also be integrated with checkweighing capabilities to ensure accurate product delivery. These capabilities identify product weight that is out-of-compliance down to the nearest 0.1 gram, reducing costly product give-away.

In a fiercely competitive environment with heightened regulatory enforcement, x-ray detection is becoming one of the most important tools in the food brand reputation toolbox – essential for minimising the risk of costly product recalls.

Michelle Barnes is marketing executive at Mettler-Toledo Safeline X-ray. The company has published a white paper on the issues raised in this article here.

Previous articles from this series

Neil Giles: Due diligence and the burden of proof in food manufacture