Product Recalls (or the lack of it! ) in India November 29, 2007Posted by Ramnath Rangaswamy in Business, Emerging Markets, India, Logistics, Supply Chain.
India will not witness product recalls. Not because the products in India are of high quality. But because of many other reasons- poor law enforcement, weak consumer groups, callous companies and the typical ‘chalta hai’ attitude of Indians. From a supply chain standpoint, most Indian companies do not have the information systems and supply chain processes to carry out a product recall.
I have had a few experiences with recalls- good and bad. The pleasant example first.
My father owns a Santro and I took it for servicing. During the servicing the technician told me that he had to replace a part because the Santro was of a batch which required replacement of a part [ I forget whether the part was of the electrical system or cooling system]. Once the part was replaced, he filled a form noting the engine# and chasis # of the car. I was impressed.
A not so positive experience was with a food company which had no process to trace and track products once they left the plant. The company had implemented a costly ERP system!
To do a recall the information from raw materials to retail shelf has to be maintained and should be easily retrievable.
The batch# of every raw material that goes into a product must be maintained. In an ERP system, this means that batch# must be one of the fields when the matreials, as per the BOM [ Bill of Mateials], is released for production.
Once the product is produced the batch# should have details which help in retrieving the product and helping in isolating the root cause of the defect. A batch# consisting of (i) name of factory/plant where product is produced, (ii) shift, (iii) line# / cell# and (iv) date of production would be sufficient to recall the product and help isolate the cause and origin of the issue.
The batch# that is allocated at the Plant should be used right upto the retail shelf. The batch# should be recorded when the product is transfered from the Plant/ Factory to the DC/ Mother Warehouse/ Mother Depot and recorded when the stock is transferred to the depots and then again recorded when the stock is invoiced to stockists/customers. This way an audit trail is maintained.
At the warehouse the stocks should be physically checked for batch#s against the documents and information in the system.
The stocks should be stored as per batch#s to facilitate (i) FIFO and (ii) despatch by batch#s.To facilitate this batch# must be written on the outer cartons/cases. An inkjet printer or rubber stamp at the plant/ factory can do this.
The Plant/ Factory, DC/ Mother Warehouse/ Mother Depot and the depots should do monthly mock recall exercises. This ensures that the supply chain has the capability to recall products, in the unfortunate situation of having to do a recall.
A mock recall involves choosing a batch# of any 1 or 2 products and doing the audit trail. In a mock recall the quantity produced at the Plant, the quantity received at the DC/ Mother Warehouse/ Mother Depot, the quantity despached to the Depots and then the quantity despatched to the stockists/customers should be noted and verified. Doing this exercise every month ensures that the people have the skill and knowledge to do a recall are kept on their toes.
Pictorially, the Mock Recall process is as ffs;
Factory/ Plant records despatch quantity by despatch point –> DCs/ Mother Warehouses/ Mother Depots record quantity received–> DCs/ Mother Warehouses/ Mother Depots record quantity despatched by depots–> Depots record quantity received–> Depots record quantity despatched to stockists/ customers
If possible cycle counts/ IRA [Inventory Record Accuracy] should be done at a batch# level.
It would be good to see companies have a robust process for tracking and tracing products from the raw material vendor to the customers so that if and when, god forbid, a recall becomes a necessity, the supply chain does not become a reason for not being able to execute the recall.
“The more you sweat in peace, the less you bleed in war”