Almost twenty-five years ago a well-known beverage manufacturer discovered traces of benzene in a sample of its product. A worldwide recall was quickly launched - but the firestorm of publicity devastated sales, profits slumped, and after two years the company was bought out by a competitor.
Supply chain traceability technology has advanced dramatically since that time and manufacturers have many more tools at their disposal. This hasn't driven the risk of an adverse event or non-conformance incident to zero, but it has given businesses the ability to respond quickly and effectively.
An overview of Supply Chain Traceability
Let’s consider the pharmaceutical industry for a second. With an estimated market size of $300 billion in annual sales, there is a very large monetary opportunity for sophisticated drug counterfeiters. In fact, drug counterfeiting has increased sixfold over the past decade. Some industry executives believe that 10% of all drugs on the market are fake “knock-offs”; that number can increase up to 50% in poorer regions and countries. In an effort to ensure consumer safety and keep as many counterfeit drugs off the market, government agencies, partners, and consumers alike are continuously increasing their already stringent traceability requirements.
The increasing demands for regulation and easy access to real-time data have made traceability programs and systems a necessity for any Life Sciences manufacturing and distribution company. Traceability is the core of most global regulations. Two concepts underpin traceability; data retention should be “one up, one down”, and every product should have a known and documented “pedigree”.
The capability to track a product using the “one up and one down rule” combines collecting appropriate information about both the source of raw materials or ingredients and their destination, organizing the information, and retrieving it as required. Linking that source data to specific, identifiable units of production within your own manufacturing operation creates a “pedigree” for each batch, lot, case or carton. Connect that to the distribution network and it's possible to determine not only when and where a particular item in a store or warehouse was manufactured, but also when its component / ingredients were produced, where they came from, and what people, processes, and technology they touched.
Benefits of Supply Chain Traceability in a Recall Situation
Life Sciences product recalls are not predictable - they can happen at any time. At any given moment, companies must be able to quickly and effectively recall products that have been deemed unsafe for the market. How a company responds to these situations is critical: failure to handle a recall successfully (either voluntary or mandatory) can have serious economic and legal consequences. With the ever increasing levels of press and public backlash associated with consumer safety and product recalls, it is becoming even more important for FDA-regulated companies to have preventative tools and controls in place to ensure safety, monitor quality, measure the potential impact of any quality incidents, and quickly and effectively perform investigations and recalls.
A well-constructed Life Sciences ERP traceability system can be a tremendous asset in such circumstances. Here's how:
- Minimize recall size: Since it's clear what product is at risk, where it went, and when, it's possible to go straight to the distributors and even retailers carrying the affected product. This keeps both the costs and visibility of the recall low.
- Respond quickly: Information can come from many sources. A supplier may detect a problem after the event, a customer could find a defective product, or internal process monitoring, control and inspection activities might unearth an issue. (“Bi-directional” traceability makes it possible to work through the supply chain in either direction.) The linkage with ERP through recipes and formulas, supplier information, and customers makes it possible to retrieve “pedigree” information rapidly and to know where the affected product went. This can be pulled up as actionable data for those working on the recall.
- Data integrity: Traceability systems that are an integrated component of your ERP systems – connecting multiple departments along the supply chain, including sales, production, quality, and distribution - reduces keying errors and generates reliable data. This minimizes uncertainty and confusion during a recall, and helps to reduce its scope and scale. It also ensures there's data to know when every at-risk product has been recalled.
- Maintain customer trust and confidence: An aura of competence is created when a manufacturer is clear about what lot numbers, batches, or distribution outlets are affected. This reassures customers that the situation is under control and there's no risk to them.
- Data for liability claim protection: Effective traceability forms the basis of systems that ensure every at-risk item is removed from shelves, protecting a company against claims of negligence. And don't overlook that an effective traceability system is actually a way to build competitive advantage since it lets a company respond quicker and more effectively than can less far-sighted competitors.
- Pain reduction: Reporting on the benzene contamination recall in May 1990, the LA Times noted that, “the costs associated with the recent recall… result[ed] in a 75% plunge in earnings for 1989.” It's not possible to say with any certainty that a modern traceability system would have lessened the costs, but given the tools now available, it seems reasonable to believe so. Should your business ever be involved in a recall, effective traceability will lessen the pain.
A recall can be devastating to a business. Rapid, accurate response is essential when the risks to brand equity and reputation are so high.
This is not to say that all Life Sciences companies must have end-to-end Life Sciences ERP or recall management systems. In fact, there are more companies running on spreadsheets and manual paper processes than on industry-specific ERP. However, as these companies grow, as their business processes and supply chains become more complex, as customers become more demanding, and as regulatory compliance becomes increasingly stringent - it will become more difficult for these companies to manage the two key requirements for a good recall process: recall accuracy and response time.
MAXLife ERP and its Materials Control Workbench streamline and automate the recall process, enabling companies to not only perform effective product recalls, but to provide concrete documentation and proof that your company followed all FDA recall procedures. By using MAXLife ERP, companies are given full transparency into the recall process, allowing them to better track the status of a recall, confirm that all of the recalled product was pulled, and quickly notify the customers affected by the recall.