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Reverse Supply Chain Improvement ProjectRecalled Products Work Group

“Do it once, right and fast”

Speakers:

Cathy LeRoux, Kellogg CompanyGary Spinazze, Nash Finch CompanyAmy Fanale, GS1 US

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Recalled Products Work Group

Gary Spinazze (Lead), Nash Finch CompanyLeon Elcock, Campbell Soup CompanyPete Bannochie, General Mills, Inc.Jeff Pepperworth, InmarEllen Harvath, Kellogg CompanyDave Jones, Kellogg CompanyDaniel Triot, Procter & GambleMike Rozenbajgier, StericycleLaura Trappe, Unilever USSteve Henig, Wakefern Food Corp.Becky Bly, Walgreen Company

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Definitions of Recalls

Class I: A situation in which there is a reasonable probability that the use of or exposure to a violative product will cause serious adverse health consequences or death. For example, salmonella in peanuts.

Class II: A situation in which use of or exposure to a violative product may cause temporary or medically reversible adverse health consequences or where the probability of serious adverse health consequences is remote. For example, foreign material found in food products.

Class III: A situation in which use of or exposure to a violative product is not likely to cause adverse health consequences.For example, minor labeling violations.

Source: Recall Execution Effectiveness: Collaborative Approaches to Improving Consumer Safety and Confidence, 2010 Deloitte

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Recall Mania

Real Examples

Class I II, III & WD Info Rx Total

Rtlr/Wlsr A 2010 total 17 75 47 181 320

Rtlr/Wlsr A 1/1/11 – 5/18/11 6 32 14 92 144

Perish Non-Perish GM/HBC Rx Total

Rtlr/Wlsr B 2010 total 136 214 60 43 453

Received from

58%FDA

21%USDA

17%Internal

4%Vendor

UPC in First Notice?

47%Yes

53%No

Source: Rtlr/Wlsr B

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The Five Stages of a Recall

Pre-notificatio

n

Manufacturer

Notifies Customer

Customer DCs

Notify Stores

Returns and

Disposal

Regulatory Close out/

Reconciliation

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Communications Multiplicity

“Growers”

Plant Retailer

Wholesaler

Ingredient/PackagingSupplier

ManufacturersCustomerDCs Stores

A

B

C

Wholesaler

Plant

Communications need to follow the same path as products

RecalledGood

77

Communications Multiplicity

“Growers”

Plant Retailer

Wholesaler

Ingredient/PackagingSupplier

ManufacturersCustomerDCs Stores

A

B

C

Wholesaler

Plant

Communications need to follow the same path as products

Recalled

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Background

Recalled Products Work Group recognizes that every company has a documented process – protocol – to follow for a recall/withdrawal event.

Goal: Increase speed and accuracy of recall communication and product removal from supply chain.

Suggestion: Read “Recall Execution Effectiveness: Collaborative Approaches to Improving Consumer Safety and Confidence,” 2010, GMA, FMI, GS1 and Deloitte*

Thought for Today: Simplify

*Available for download at: http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Consumer%20Business/US_CP_Joint%20Industry%20Recall%20Execution%20Effectiveness%20Report_052810.pdf

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Protocol Example

Potential Issue is Identified

• Supplier• Plant• Consumer• Customer• Govt.

Convene Recall Crisis

Management Team

Recall Initiate Recall

Recall Follow-up /

Effectiveness Check

Close Out Recall with Regulatory

Agency

Yes

No

Manage As Market

Withdrawal or Locally

Required:• QRO-Business/

Regulatory• Sales• Legal• Finance• Corporate

Communications• Supply Chain• Marketing

Situation Dependent• Health & Safety• Investor Relations

Customer Communication by ICS• Returns• Replenishment

Authorization• CEO & VP QRO

Recall Coordinator• QRO• Inform Senior

Leadership

Customer Communication• Sales

Media/Consumer Communication• Corporate

Communications• Rapid Recall

Exchange Portal is also used to Communicate to Customers

Sales• Customer

Information• Returns• Replenishment

QRO• Collects and

maintains documents

3rd Party• Used to Visit Retail

Stores for Recall Effectiveness Checks

QRO *• ICS Reports /

Tracking• Collects supporting

materials• Issues letter• Maintains Master

Recall File• Retains records for 7

years

• Review with Legal

PRODUCT RECALL / RECOVERY FLOW

Regulatory Status Letter

Issued

One Manufacturer’s Protocol

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Protocol Example

One Wholesaler’s Protocol

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Protocol Example

One Retailer’s Protocol

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Major Issue #1

Recommendations for manufacturers

1. Focus on identifying products and batches affected.

2. Assemble all relevant data.

3. Set a reasonable goal for notification and work to it.

Determining the problem and whether a recall is warranted by the manufacturer.

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Major Issue #2

Multiple notices over multiple days for same recall.

Recommendations for manufacturers

1. Include the maximum number of products in first notification.

2. Communicate all information in first notification including:

• All UPCs, sizes/pack counts, lot codes, expiration dates.

• Concise disposition instructions.

3. Include important system data such as:

• PO# (or copy of full PO)

• PO date, ship to/from locations

Best

Practice

Best

Practice

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Major Issue #3

Not knowing where all of the recalled product has gone in the supply chain.

Recommendations for supply chain

1. Communicate to customers who did not buy the recalled product:

• Just in case they acquired it elsewhere.

• So they know which lots and SKUs are not recalled.

2. Wholesalers who carry the item in their DC and are not sure which customers purchased recalled product, send recall notification to all.

Recommendations

1. Involve key store personnel in the recall process/protocol:

• Store manager – first line of audit.

• POS coordinator – block the item in scanning systems.

• Service desk personnel – prevent restocking of consumer returns.

2. Lock out the recalled product UPC in the POS system as soon as possible to disable scanning.

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Major Issue #4

Stores must accurately and quickly prevent consumer purchases.

Recommendations

1. Verify DCs have stopped shipping, stores have removed product. Then start replenishment.

2. Contract with service providers to:

• Remove recalled product.

• Audit for compliance.

3. Involve corporate auditors to check compliance.

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Major Issue #5

Efficiently handling returned product and closing the recall.

Best

Practice

• Press release

• Letter to customers who received recalled product

• Letter to customers who did not receive product

• Frequently Asked Questions

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A Little Help

Boiler plate communications templates from the Recalled Products Work Group:

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Conclusion

“Do it once, right and fast”

• Over-communication helps if you are unsure of product locations.

• Over-communication hurts if you are making up for incomplete or inaccurate information.

• Publish as soon as accurate and complete information is available.

Amy Fanale GS 1 US

• PRESENTATION FROM GS1

Food Safety Modernization Act• Signed into Law on January 4, 2011• Implementation phased in over 3 years – we are only half way

there!• The focus is on Prevention

– Prevention controls requirements– Expanded records access– New expectations in records maintenance– Increased inspections– FDA Mandatory recall authority– Traceability

Prevention Controls RequirementsHACCP (Hazard Analysis and Critical Control Points) required for all foods*Recall plans**MUST BE IN WRITING

Expanded Records Access to FDAFDA access to all records related to manufacturing, processing, packing, transportation, distribution, of any food for which there is a reasonable probability that exposure will cause serious adverse health consequences or death AND all records relating any food that is likely to be affected in a similar manner MUST BE PROVIDED UPON REQUEST

Prevention and Documentation

New expectations in records maintenanceThen: FDA could only access records related to the food

product believed to be adulteratedNow: FDA can request access to records related to other

food handled by the facility, including consumer complaint recordsThe FSMA requires companies to report to the FDA using the Safety Reporting Portal within 24 hours of confirming they have a reportable food

Increased inspectionsBe prepared. FDA inspections likely to focus on high risk products and ingredients

Be Prepared to Act Quickly

FDA Mandatory Recall Authority “History will be made when FDA changes its approach to inspection to take full advantage of the preventive controls framework and enhance our public health focus. This means conducting more inspections …. that better target the key elements of a company’s food safety plan and are effective and efficient in determining whether the company is meeting its prevention duty.”Michael R. Taylor Deputy Commissioner for Foods Food and Drug AdministrationFDLI Food Safety Conference January 27, 2011

Traceability Record Keeping – Are Supplier, Manufacturer, Distributor, Wholesaler and Retail Customer records matching up?

The FSMA requires companies to track and trace product back from where it was received and forward to where it was shipped

One Step Forward and One Step Back

• “Do it once, right and fast”

• Let’s talk about it!