Kim S. Nash is an award-winning reporter who writes about how the people at big organizations move information to fix critical strategy problems. She’s written a very interesting article for CIO.com regarding the ConAgra peanut butter recall, among other recent recalls.
The twist is that the story is written from the viewpoint of a corporation’s information technology department. The story is not so much about the recall itself, but about how companies can retrace their steps after the discovery of a defective product, and know exactly what products to recall. ConAgra didn’t have the proper technology to figure that out, and had to make revisions to the recall order.
I recommend reading the article in full. Here are some short excerpts:
One of ConAgra’s oldest and best-known brands, Peter Pan brought in $109 million in sales last year, says Information Resources, which tracks retail spending. ConAgra also supplies some of Wal-Mart’s Great Value house brand and sells peanut butter toppings to companies like Carvel and Sonic, bringing total peanut butter sales to $147 million last year. But when an outbreak of a rare salmonella strain was traced to ConAgra peanut butter, the company would have to try to get it all back.
The Peter Pan recall eventually involved 326 million pounds of its own and Wal-Mart’s peanut butter, plus 99,953 cases of toppings. So far, ConAgra has spent more than $78 million dealing with an estimated $1 billion worth of potentially infected product. Its peanut butter sales were down 63 percent in fiscal 2007, the company says.
Why Recalls Depend on the Supply Chain
Peanut butter isn’t ConAgra’s only recall trouble, either. The company has had to call back hundreds of pounds of ground beef in the past few years, and this month ConAgra’s Banquet pot pies were recalled when at least 211 people in the U.S. got salmonella poisoning, which the Centers for Disease Control and Prevention links to the pot pies. That recall is ongoing.
But it’s not just ConAgra. Recalls are blooming like flowers in spring: Dole’s e.coli bagged salads; Metz Fresh’s salmonella spinach; REI’s faulty children’s bikes; Mattel’s lead-painted and choking-hazard toys, just to name a few. Federal records show at least 628 recalls so far this year, and another 941 in 2006. (For more, check our History of Famous Recalls.) Globalization accounts for some of this surge. Many U.S. companies depend on overseas production, where quality controls are difficult to monitor. And it’s not just hard goods like toys from China. Food, too, arrives by container ship from other countries, and sometimes it’s contaminated. So far this year, for example, more than 8,660 cartons of cantaloupe from Costa Rica have been recalled for salmonella risks, according to U.S. Food and Drug Administration (FDA) records.
As soon as the decision is made to recall a product, companies should release consistent, correct information to minimize brand damage, says Joe Barkai, a practice director at Manufacturing Insights, a consulting firm that is a sister company to CIO’s publisher. “But,” he says, “now [traceability] is mainly a manual procedure. Companies don’t have it automated.”
And that’s a problem. ConAgra, for example, had to revise its recall twice as it learned more about how much infected product it could have manufactured and where it might have gone, according to FDA records. The original Valentine’s Day 2007 announcement recalled peanut butter made after May 2006. In early March, ConAgra expanded the scope to December 2005 and added toppings made in its Humboldt, Tenn., plant using peanut butter from its Sylvester, Ga., plant, where the original contamination had occurred. A week later, ConAgra pushed the date back to October 2004—22 months before the first reported illness.