INSIGHT & OUTLOOK: Brand reputation
Diligence product recall to reduce
The concern of product recall keeps manufacturers on their toes all the time. With food safety regulations around the world tightening further, brand owners should utilise robust product inspection technologies to detect contamination and minimise business risks.
Neil Giles and Michelle Barnes
F
ew 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 safety laws passed by governments around the world, including China and the US. Well-publicised recalls in recent years have 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. This is a lucrative new niche for insurance providers
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as manufacturers seek protection in an era of tighter regulations, better enforcement and harsher penalties.
Measuring cost of recall How does one calculate the costs of a recall? First, there are the upfront costs such as transporting products back to factories, replacing inventories and publicising alerts throughout the media. There are also associated costs such as compensation for retailers, and longerterm potential costs arising from consumer lawsuits. But, one cost that cannot be easily measured is the damage to one’s brand’s reputation. Nothing tarnishes a brand like a recall, and the ramifications
Modern Packaging & Design November-December 2012
can range from a temporary dip in global sales to loss of public confidence. In a global economy with increasingly complicated supply chains, quality control is becoming more critical. A number of retailers have put their own quality control protocols in place, and they require manufacturers to comply with them.
Demonstrating due diligence Worldwide, the safety standards of food manufacturers are coming under increased scrutiny. Companies face mounting pressure to comply with legislations, such as the new US Food Safety Modernisation Act. In light of these new legal requirements, large